Note: This is a copy of a Nov. 14 e-mail from Oak Ridge City Council member Trina Baughn to Anderson County Commissioners and Mayor Terry Frank.
Honorable Mayor Frank and County Commissioners:
Like you and all of our citizens, I recognize the need for the successful redevelopment of the Oak Ridge Mall property. My research, to include discussions with various city officials and partners from their past projects, has me convinced that if anyone can help us finally turn the mall around, it is Crosland Southeast.
The generation of added sales tax revenue from new retail is our highest priority in this venture. Not only do we desire more shopping options, but the financial health of our community is highly dependent upon new sources of revenue.
No one can guarantee that the anticipated sales tax will materialize nor is it realistic to expect such an assurance. However, there is one guarantee contained within this plan. Once demolition has begun, the terms of the tax increment financing (TIF) will be permanently secured, regardless of whether or not anything is built. The end result will lock in a 20-year freeze on the property tax collected by the city and the county.
As you know, at its peak, the property was valued at more than $60 million. It now appraises at less than one-tenth of that value. We hope to see that value and those of the surrounding properties surge upward as a result of the TIF. Should we achieve those desired results, the 60-acre tract located in the heart of the TIF district (and our city) will not produce property tax revenues beyond the rock bottom amount we currently collect.
My vote as a member of City Council hinged on this one critical, but still resolvable, impediment.
To fully appreciate the risk involved in this proposal, we must acknowledge how much we already ask of our home owners and businesses. Through our combined property tax rates, they make up for the revenues not collected on roughly 400 tax-exempt parcels located in the Anderson County portion of Oak Ridge. These abated, nonprofit, and government-owned lands represent well over $100 million in value. Many of those parcels will produce no property tax for decades due to abatement or lease deals made for similar terms of 10, 20 and 30 years.
There are a number of safeguards inherent to the TIF. The only safeguard protecting the city and county from the 20-year term, however, is a requirement that demolition begin within 30 months.
The developer has indicated an expectation for completion of the build out by December 2016. I encourage the Commission to discuss the inclusion of a risk mitigation clause. Such a clause should offer protection for the city and county but also allow for some leniency with Crosland for the unforeseen and uncontrollable. I suggest requiring that at least 65 percent of the planned new retail square footage be completed by December 2018 to avoid nullification of the agreement. Such an allowance would limit the number of years to a more reasonable timeframe should a worst-case scenario unfold while ensuring that some revenue is eventually produced for the benefit of the taxpayers.
While there are other variables (short-term tenants, economic crashes, etc.) for Crosland to surmount, it is unrealistic to set highly restrictive safeguards given the property’s current state and the lack of willing and able suitors for such a project. I applaud Crosland for taking on this task and for their willingness to invest in our community. They want to be successful, and we need them to be successful!
As elected officials, we need to set the stage so that this key project has the best chance of success. That success will be measured by its overall benefit to the Anderson County and Oak Ridge economies in the coming years. We should make the most of this important opportunity. I thank the Commission for your consideration and wish you all the best.