Friday, December 19, 2014

Council gives first reading to tax-increment financing for redevelopment of Midway Station; passage set Monday

By Nicole Hennard
University of Kentucky School of Journalism and Telecommunications

The Midway City Council had a special meeting Wednesday morning to give first reading to the tax-increment financing ordinance for Midway Station, after delays in production of documents prevented action at Monday's regular meeting.

Attorney Doug Martin and his law partner, city attorney Phil Moloney, presented a package of documents, some of which are posted online with the proposed ordinance. They included a development area description and map; a development plan; a pending interlocal cooperation agreement with Woodford County, which is expected to participate in the TIF district; a Local Participation Agreement between the city and Anderson Communities Inc., the Lexington developer that is paying the $11,400 monthly interest on the $4.7 million in bonds still outstanding on the property in return for the option to buy it; a master development agreement between the city and the developer; and a report from Anderson's consultant, Commonwealth Economics, forecasting the progress of development and generation of tax revenue.

Eighty percent of the additional property- and payroll-tax revenue created by the development will be dedicated to reimbursing Anderson $31.5 million for development of public infrastructure and payment of fees to create the TIF district.

Martin said the investments in the project will total $126 million and are expected to take place over a 20-year period. The project is expected to support over 4,000 jobs annually and have $7 billion in statewide economic impact.

“Any new taxes that flow from the area will be allocated to infrastructure, administrative costs, and redevelopment assistance related to the development area,” Martin said. “The report estimates that over a 20-year period, the project will generate approximately $93.8 million in tax revenue.”

The documents make clear that the office of the mayor is the agency responsible for oversight, administration and implementation of the ordinance and special fund. The ordinance is being passed shortly before mayor elect Grayson Vandegrift’s term begins at the start of the new year.

The council scheduled a special meeting for Monday, Dec. 22, at 8:30 a.m. to give second reading and passage of the ordinance.

The ordinance was drafted after months of discussion with the Woodford County Economic Development Authority (the land owner) and developer Dennis Anderson, who is paying the interest on the bonds that financed development of the industrial park (which has largely failed).

Included in the ordinance is a requirement that the city receive 2 percent of the fund’s disbursements to cover administrative costs. The council questioned whether that would be enough to cover such expenses as legal and accounting fees. Martin said that if the 2 percent was not adequate, the city would be reimbursed from the special fund.

Council Member Sharon Turner questioned who would establish the special fund. Martin said the office of the mayor would be in charge.

Council Member Bruce Southworth questioned whether the engineering review costs would be considered administrative. Martin and Moloney agreed that it would.

The city council will be responsible for reviewing and analyzing the process of the development from year to year.

The meeting concluded with a statement from Mayor Tom Bozarth: “We’ll meet Monday and move this along.”

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