There’s a new number to focus on with the proposed redevelopment of Ninth and New Hampshire streets.
After weeks of debate about whether a proposed hotel/retail building should be allowed to be four stories tall, the focus now shifts to a larger number: $12 million.
City commissioners at their meeting on Tuesday will consider an approximately $12 million package of incentives that developers say is needed in order for them to undertake about $44 million worth of redevelopment at the intersection.
Mayor Bob Schumm said an independent financial analysis of the proposed redevelopment — it would include both the hotel/retail building at the southeast corner and a multistory apartment and office project at the northeast corner — indicates the project likely won’t happen without the incentives package.
“Without the incentives, I doubt they would do it,” Schumm said of the development group, which is led by local businessmen Doug Compton and Mike Treanor. “You could almost do as well leaving your money in the bank. Whether you support this or not probably comes down to whether you think the project provides an economic advantage and enhancement to downtown.
“Will there be a positive spillover into other parts of downtown and the community. I think there probably will be.”
At their meeting on Tuesday, commissioners will be asked to take a key vote that will allow the incentives package to move forward. The incentives would still have additional hearings, and likely wouldn’t be up for final approval until this fall.
But here’s a list of some of the talking points city officials have been making in regard to the incentives package, which would be one of the larger ones offered for a downtown project:
l City commissioners won’t have to find $12 million in their current budget or future budgets to pay for this incentive package. The incentives are proposed to be funded by two types of tax mechanisms that rely on new tax revenues rather than existing revenues.
The first is called Tax Increment Financing. How a TIF works is that the new property and sales taxes generated by new development will be used to pay for the incentive. Here’s a simplified example: If a piece of property generates $10 in property and sales taxes now, but will generate $100 in property and sales taxes once a new building is constructed, then the city, the county and the school district would get to keep its current $10 in taxes, but the remaining $90 in taxes would go to pay for the incentive.
The second method is called a Transportation Development District Tax. This mechanism would create a new 1 percent sales tax that would be charged only on purchases made in the new buildings constructed as part of the redevelopment.
l The city is making the developers take the risk on the project. The developers don’t get their $12 million up front. The city will pay the developers annually, based upon the amount of tax revenues the new development actually creates. If the development produces less tax revenue than projected, then the developers are out of luck. The city is under no obligation to make up the difference.
Both mechanisms will require the developers to use the incentive money to pay for costs related to either public infrastructure or private parking. Both the hotel/retail building and the apartment/office building are each planned to have about 120 underground parking spaces.
The incentives package is expected to draw opposition from the East Lawrence Neighborhood Association, which also fought the design of the four-story hotel/retail project.
Leslie Soden, president of the neighborhood association, said her group’s members — who have contended the height of the hotel building will damage an adjacent historic neighborhood — shouldn’t move forward if has to receive public assistance.
“I don’t see how this is pro-business,” Soden said of the incentives package. “There are so many businesses in this town who function and survive on their own merit. If they come up with a business plan that isn’t feasible, they work up a new business plan.”
City officials, though, have said they are concerned about how long the property at the southwest corner of the intersection has been vacant. The property has been vacant for more than two decades.
Commissioners meet at 6:35 p.m. Tuesday at City Hall.
— City reporter Chad Lawhorn can be reached at 832-6362. Follow him at Twitter.com/clawhorn_ljw