May 13--Just a few hours after the Capital Improvement Board pledged millions more for a major downtown improvement, the city's Redevelopment Commission did the same thing -- and outlined steps it has taken to protect taxpayers and investors should problems arise.
The Commission Monday agreed to make about $22.9 million in tax incremental financing (TIF) funds available for repayment of a bond to finance construction of a parking garage for the Ash Brokerage/Hanning & Bean office, commercial and residential project. TIFs make property taxes collected in a specific area available for improvements in that area. Mayor Tom Henry confirmed last week that the city's portion of the project had grown from an initial estimate of $19.5 million to $39 million, in part because of poor soil and the need to move utilities but also because the city-funded garage had been increased from 750 parking spaces to 1,200 to accommodate expected future demand.
Earlier in the day, the Capital Improvement Board added $4 million to its initial pledge of $6.5 million, and Director of Community Development and Planning Greg Leatherman said the board is also expected to provide another $4 million that had been set aside to repay Grand Wayne Center construction debt ahead of schedule.
The board's contribution, and $5 million in Legacy funds requested from City Council, reduces the amount of money the Redevelopment Commission must borrow to pay for the garage, reducing interest costs.
Ash Brokerage, which is building its national headquarters, is expected to invest $29 million; Hanning & Bean Enterprises plans to spend about $30 million on a residential tower. But the city's development agreements with its private partners spells out what will happen if either fails to perform as expected.
The agreement calls for Hanning & Bean to have its financing in place within 90 days and to produce a $4 million letter of credit. If necessary, the city could claim that letter and $6 million in state tax credits if the residential portion fails to materialize, reducing the size of the garage accordingly, attorney Tim Haffner said. The credits could be used to attract another developer, and the bonds would be repaid with property taxes as a last resort.
Ash has also qualified for about $6 million in credits and must post a $1 million letter of credit -- smaller than Hanning & Bean because it has substantial assets and will occupy the building, he explained.
"I both walk away, that's another discussion," he added. Commission members stressed they do not expect any problems, however.
Ash hopes to occupy its new headquarters by the summer of 2016. To make room for the project, Cindy's diner will be relocated from Wayne and Harrison streets to Berry Street and Maiden Lane. The commission Monday agreed to spend up to $330,000 on the move.
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