Wednesday, September 17, 2014

Council hears about tax-increment financing; developer says it would greatly increase Midway Station prospects

By Tessa Lighty, Paige Mullen, Sarah Brookbank and Quinn Schwartz
University of Kentucky School of Journalism and Telecommunications

It has been a roller-coaster ride for Midway Station, the failed industrial park, but the development could be back on track with tax-increment financing, which developer Dennis Anderson says would greatly increase the chances of it becoming a mixed-use development.

Tax-increment financing allows a city or county to create a TIF district and use the increase in future tax revenue from development within that area to fund the cost of public infrastructure for the development. Representatives of Commonwealth Economics, which is working for Anderson, explained TIF to the Midway City Council at its meeting Monday night.

TIF is “used to help local governments jump-start improvements in declining or underperforming urban areas where development would not otherwise occur,” according to the Kentucky League of Cities website. Turning Midway Station into a TIF project would allow the area, once developed, to use the increased state and local tax revenue within the district, to keep the money local, as opposed to spread around the state.

"It allows even the smaller cities to recover some of the tax dollars that they generate and send to the state. You don’t know where the state is going to allocate those dollars," Casey Bolton of Commonwealth Economics told the council. He said TIF does not create new taxes, tax exemptions or any restrictions on the property in the district.

Anderson (right, photo by Tessa Lighty) didn't speak during the meeting, but he told the Midway Messenger afterward, “The chances of this project happening become greatly increased with the TIF.” He said the estimated cost of reconstructing streets, utilities and other infrastructure in the 185 acres of non-industrial property for residential and commercial use would be roughly $31 million.

“It sounds like a huge amount, but it is over a 20-year period. Nine million dollars a year,” he said. “There’s a lot of infrastructure that needs to be changed. . . . When you go to change the elevation of a lot, then the street changes, the sidewalk changes, and everything changes with it. . . . Also, the electric there is not appropriate for a mixed-use community so it has to be changed as well.” Anderson said the infrastructure would be the property of the city.

The Woodford County Economic Development Authority developed Midway Station as an industrial park 24 years ago, but it has created fewer than 10 jobs. After a proposal to relocate Bluegrass Stockyards on the property ran into local opposition, Anderson signed a tentative deal in 2008 to buy and develop the property as a residential and commercial development. The area was rezoned but Anderson said in 2009 that development had been delayed by “lackluster economic conditions.” In January 2011, Anderson signed a new deal with the EDA in which he pays the taxes on the property and the interest on the $6 million debt the county and city incurred to develop it.

Prospects for development have improved recently, with rezoning of the rear of the property for a major industrial prospect the EDA is recruiting and commercial development of property Anderson owns on the south side of Interstate 64. The planning and zoning commission took no action last week on a request that some adjoining property behind the industrial area also be zoned industral.

A TIF district brings back 80% of state income tax, property tax and corporate liability taxes and 100% of local income, occupational licensing fees and real estate taxes, Brett Antle of Commonwealth Economics told the council. Examples of TIF areas are the Yum! Center in Louisville and the new Kroger-centered development in Versailles.

The council wasn't asked to do anything regarding Midway Station, but it was asked to approve an agreement with the Lexington-Fayette Urban County Government to help finance a major TIF project in downtown Lexington, the CentrePointe hotel and related development. The deal was proposed by the Kentucky League of Cities, of which Mayor Tom Bozarth is president.

After Council Member Bruce Southworth said he wanted more time to study the proposal, the council scheduled a special meeting for 8 a.m. Friday to act on it. For more information on the project, from the Lexington Herald-Leader, click here.

The council decided to wait until a joint meeting with the Versailles council to act on Woodford County Judge-Executive John Coyle's request that the cities pay the county more for emergency-management services for the current fiscal year, on the promise from Coyle that the county would consider reducing the amounts for the following year. The county wants Midway to pay about $700 a month for the services; it has been paying $500.

In other business, the council approved  a request to add three names to the Midway Veteran’s Memorial (John L. Dotson, Vietnam/Persian Gulf, and Martin Goldey and Jeffery D. Spencer, Iraq/Afghanistan); a new electricity franchise ordinance; and a permit for St. Matthew’s Church to close the sidewalk for its fish fry. It gave first reading to an ordinance on encroachment permits, a subject of some controversy this summer.

Information for this story was also gathered by Jackson L. Reams.

No comments: