New proposal shows value of incentives

For the past few years, several locals have argued that economic development shouldn’t need incentives –  no property tax abatements (also known as edates) or cash incentives tied to job creation and average wages, like Navy Federal Credit Union and ST Aerospace Engineering received.

Inweekly has taken the opposite position – incentives are necessary tactics to create jobs, build prosperity, enhance our schools and diversify our economy.

The Community Maritime Park has seven parcels that have been vacant for nearly a decade. A master plan recently was developed with public input from the community. Following the master plan, Silver Hills and Edwards Communities Development Companies have proposed to build between 375-450 apartments, 10,000 square feet of retail space and a 1,050-car parking garage on two parcels – an estimated  $60-million investment.

The garage is larger than what the apartments require, costing them an additional $10 million, but the developers are willing to do it in exchange for a 99-year lease and the ability to apply the extra $10 million to their land lease payments. The developers also are asking for a 10-year tax rebate through the Community Redevelopment Agency, which is equal $4.4 million over the 10 years.

The bargain is a $60-million investment with a parking garage that will spearhead even more private investment at the park – in exchange for $14.4 million in incentives.

The public schools will still received their taxes, and downtown businesses will have 1000-1200 more customers–an additional economic multiplier.  Plus, it will make downtown more attractive for companies to relocate their corporate headquarters and, thus, help diversify our economy.

No incentives, no deal. And there’s not another $60-million offer on the table to replace this one.

 

 

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4 thoughts on “New proposal shows value of incentives

  1. Terri, Thanks for writing. 1) The two parcels have been available for local developers to make offer for nine years, and none have. The out-of-state developer has agreed to the city’s Covenant for the Community, which means 70% of the workers on the construction will have to be from the local area.

    2) Parking garage is twice as large as Silver Hills needs. None of the other parcels can be developed without a parking solution. The city’s share of the cost is $10M – which developer says the city can pay using the land lease fees from the developer. Plus, the city can lease its parking spaces to other developers creating an annual revenue source of $100,000-$200,000. Not quite a rebate, more of a reimbursement.

    3) The developers are asking for a 10-year abatement for about half its property taxes. The city is getting no property taxes now on the two parcels, hasn’t since it bought the land in 2000. Half of something for 10 years and then all the remaining 89 years of the lease isn’t a bad deal for a $60M private investment. Plus, the developer still have to pay the local property taxes for schools – over $100K annually.

  2. Idk about most people, but bucking millions in rebate to develop prime downtown waterfront property doesn’t sound like the “Strong Towns” approach to me.

    We have the hottest real estate market on record right now. Why do we need to be rebating millions back to out of state developers to build on city-owned waterfront land?

  3. CJ,
    Sounds the city needs to come up with $70 million to complete you plan, none of which will go on the tax rolls since it will be owned by the city.

  4. The Silver Hill proposal presented to the City Council in October said that they needed a “25-year rebate” on city and county property taxes. My working assumption here is that if they can trick the City Council/CRA into the first ten-year increment, they will come back later to get another ten years and then another five years. The city should build the parking garage that has always been part of the original Community Maritime Park plan going back to the 2006 Master Development Agreement. Then, the City Council should ask city residents what they want done with the site. I doubt that any city residents are eager to build even more expensive apartments on public land let alone in a city park. Why not build an apartment complex in Bayview Park? What’s the difference other than the fact that District 4 only has 184 black voters? The City is never going to build what was promised in 2006 so let’s all just agree that we need a new plan. It should be a plan that benefits city residents not enriches Quint Studer who is insisting that everything done has to enhance the value of his 18-acres on Main Street. Heck, the city should just buy it from him and turn it into a large park. That last thing we need is more housing in a storm surge zone when the city cannot even deal with the current flooding problems. I think that most city residents would love to have a “public” version of the private Downtown YMCA for use by city residents. The city could build something much bigger and much better with a conference center component and performing arts and fine arts facilities. I like the idea of a swimming pool on the roof, for use by city residents only. It could be a world class facility, for city residents. A bad deal like this Silver Hills deal is always going to be bad.

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