Brownfield Redevelopment Authority Approves Trowbridge Developer’s Request

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Thursday, September 25, 2014, 5:37 pm
By: 
Chris Root

The Brownfield Redevelopment Authority (BRA) voted at its meeting on September 25 to favorably recommend to the City Council a second amendment to the Tax Increment Financing (TIF) plan requested by River Caddis Development for the Trowbridge Road development that is underway.
 
TIF plans allow developers to be reimbursed for certain development expenses from all or part of taxes owed on the expected increase in value of the property that results from the development - the “tax increment.” (The taxes on the base value of the property before development continue to go to the city and other taxing authorities.)
 
In the spring, the City Council adopted a TIF plan for River Caddis that split the tax increment between the developer and taxing units 50/50 over 16 years up to a capped amount of $1.4 million, based on eligible expenses of $2.8 million for the project.
 
The amendment recommended by the BRA would eliminate the cap of $1.4 million on reimbursement for eligible expenses, in addition to changing the split between the developer and taxing authorities from 50/50 to 65/35. This would allow the developer to be reimbursed for taxes of up to as much as $2.6 million over 16 years.
 
City Manager George Lahanas, who is a voting member of the BRA, was the only “no” vote on the recommendation. He argued that that there is a perception that the city does not need to worry about getting more tax dollars in the future, but the City does need to be concerned about this. He said he would have been willing to increase the 50/50 split somewhat, perhaps to 60/40, but he thought the 65/35 split was too much. He said that not agreeing to the full increase requested by the developer did not constitute pulling the carpet out from under the developer. Rather, the City Council is trying to balance legitimate competing interests.
 
Kevin McGraw of River Caddis requested the TIF increase because of an error that his firm made, and that the City assessor did not catch, in calculating the anticipated taxes that would be owed on the apartments in the new building he plans to build, resulting in higher anticipated tax expenditures. He also said that the he thought the assessor’s estimate of the value of the apartments was too high. At the September 23 City Council session, McGraw told the City Council that this change would reduce his profit margin to single digits; at the BRA meeting, however, McGraw said that not getting the increased TIF would put him “way under water” on the project. He also said he regretted having possibly set a precedent with the new City Council by agreeing to a 50/50 TIF plan.

For ELi's report on McGraw's appeal to City Council on this issue earlier this week, click here.

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