In December of 2013, the City of Oak Ridge was given a Christmas present: a strong, viable prospective property owner that would help reclaim the center of our precious city. Crosland Southeast, well-respected developers from North Carolina, came to our city and said they could help us redevelop the crumbling mall within our city. This mall, newly named Main Street Oak Ridge, had come to symbolize the ultimate development challenge for our city.
Now, 10 months later, the time has come for the details of our work to begin to come out in the open. This project has taken several courses. First, the City of Oak Ridge and Anderson County said that they would support the development of this project with what is known as a tax increment district, or TIF. The governments would continue to receive their marginal values in property taxes, but the “new” value created by the private investment in Main Street Oak Ridge would be used to pay for public improvements on the project such as new traffic configurations, road improvements, and building demolition. In return, the private developer would borrow money at his own risk and develop major new retail shopping, with a potential hotel and residential development on the 65-acre site.
This effort has been successful, and major retail tenants have been lined up for filling a targeted 260,000 square feet of new facilities. Our Belk store will receive a facelift, and JCPenney will continue to perform. At present, stores are in the initial inquiry stages of building and will be moving to make announcements by the first of the year or shortly thereafter. I would love to tell you the names of the stores (which I have seen), but we need to honor the wishes of the companies as they make their expansion announcements. I believe the Oak Ridge community will be pleased!
The second part of the challenge of a project like this is the funding. By the time the project is done, we estimate nearly $80 million in investment will occur. The developer, Crosland Southeast, will line up much of the funding. However, the project will require TIF loan funding, and your local banks have stepped up to express strong interest in supporting this project with major investment of the TIF loan amount of $13 million. A consortium of four banks will insure that the money is there for this project. The banks have confidence in Oak Ridge, and we have worked hard to develop a strong financial plan that will repay their investment in a timely manner.
Most projects of this type are on vacant land at major intersections. This acreage has been around for years and is encumbered by a number of previous “deals” made to attract current tenants on the property. For instance, Cinemark has a requirement of parking spaces for 500 cars, which affects the design. JCPenney must have final approval on design and layout of the project. New tenants select preferred locations. As such, the city has seen over 50 designs in the past months on this project. No wonder it takes a long time!
On September 29, the city’s Industrial Board and the Oak Ridge City Council will revisit our earlier agreement made last year. With all the studies behind us, we will present them with the plan for Main Street Oak Ridge and ask that the financial plan as originally approved for 20 years be extended to 30 years. This allows and assures the banks that there will be an adequate time period to recover their loan. Remember that a TIF only involves property tax as the reliable source of revenue for repayment. However, this project is projected to create nearly 1,000 new retail jobs and $2 million in new city and county sales taxes. This plan will also be taken to the County Commission in October.
As your city manager, I am recommending to the Oak Ridge IDB and Oak Ridge City Council that they approve this change. I believe that Crosland Southeast as the developer, the local banks, and the City of Oak Ridge have worked in good faith to do something remarkable for the city. As a city, we need this project. As a county, we need this project to serve a market area of nearly 200,000 people. As a community, we need to move this project forward and become a city with a central core. As citizens, this project helps our future and creates the type of community that so many of us want. Our time has come, Oak Ridge, and there are many positive prospective projects on the horizon. The Main Street Oak Ridge project is just the start. As a friend of mine once said: “Let’s keep charging!”
Mark Watson is Oak Ridge city manager.