The Tennessee Comptroller has approved a $13 million tax financing agreement that could be used for the $85 million redevelopment of the Oak Ridge Mall.
The approval was announced in a Wednesday letter from Tennessee Comptroller Justin P. Wilson to Nashville law firm Bradley, Arant, Boult, and Cummings, which is working with Crosland Southeast, the North Carolina company that wants to redevelop the mostly empty mall.
The 20-year tax increment financing, or TIF, agreement, would use new property tax revenues generated at the 59-acre site to help pay for development costs, possibly including tearing down the existing space between the two remaining anchor stores, JCPenney and Belk, as well as for replacing aging infrastructure and building new roads.
The Oak Ridge Industrial Development Board has endorsed the TIF, and the Oak Ridge City Council and Anderson County Commission have approved it. There was no opposition at any of the meetings where the TIF was considered, but there was one abstention. Local officials and company executives have said the TIF would not create any financial risk for the city, county, or IDB.
Under Tennessee law, the use of the TIF must be approved by the comptroller and the commissioner of Tennessee Economic and Community Development. Tennessee officials have to determine whether it’s in the state’s best interest to use the new property tax revenues to finance the costs of privately owned land, improvements, or equipment. In the case of the Oak Ridge Mall, the comptroller said, it is.
Oak Ridge Today has requested information from the Tennessee Department of Economic and Community Development, announcing whether it has approved the TIF. On Friday, Clint Brewer, ECD assistant commissioner for communications and marketing, said he was working on a response regarding the department’s position.
Wilson said the TIF area covers 39 parcels and about 164 acres in the center of the city, excluding public right-of-ways. That area now generates about $1.1 million in city and county property tax revenues, but that amount is expected to more than double to $2.3 million with the mall redevelopment. That would leave a difference—the tax increment—of roughly $1.2 million per year and would make about $1 million per year available for debt payments on the project, Wilson said.
The redeveloped mall could boost retail sales by an estimated $78.7 million per year, create 950 to 1,000 full- and part-time jobs, and generate about $2.16 million per year in city and county sales tax revenues—as well as $5.5 million in state sales taxes. The construction will also generate building permit revenues for local governments, Wilson said.
He said approval of the TIF based on the state’s best interest means that the project “would not have occurred but for the payment, expenditure, or financing.”
In November, Tim Sittema of Crosland Southeast said marketing remained a big, important step as his company worked to attract tenants interested in signing leases.
Mall redevelopment plans have languished for years. But local officials have repeatedly expressed optimism that if anyone can successfully revamp the property, it’s Crosland Southeast, which is relatively new to this project.
Officials and Crosland say the redeveloped mall could open in 2016. The current enclosed mall would be converted into an open-air, retail-driven, mixed-use property that could include 400,000 square feet of retail space and roughly 60,000 to 100,000 square feet of office space, a hotel of about 100 to 120 rooms, and up to 50 multi-family, “walkable” residential units. It could also include three to four restaurants.
Sittema said Crosland, which is working on a total of three “dead mall” projects, could close on the purchase in the third quarter of 2014 and construction could last about 18 months. Crosland Southeast has had a purchase contract on the mall since January 2013.