IDB, Council to consider longer tax agreement, road improvements for mall project

 

In two special meetings today, local officials will consider adding another 10 years to a tax incentive agreement for the long-awaited redevelopment of the Oak Ridge mall, and they will also consider authorizing improvements to public infrastructure, including the rebuilding of three private roads: Main Street East, Main Street West, and Wilson Street.

The tax incentive is known as tax increment financing, or TIF. It would use new property tax revenues generated at the mall site, which will be renamed Main Street Oak Ridge, to help pay for development costs.

A 20-year, $13 million TIF and economic impact plan were approved by the Oak Ridge Industrial Development Board, City Council, and Anderson County Commission in November, and by Tennessee officials in January.

But the IDB and City Council will now consider extending the TIF term to 30 years. The extension would also have to be approved by the Anderson County Commission and Tennessee officials.

“Over the past several months, city staff and Crosland Southeast have been working with a group of local financial institutions to gain funding for the tax increment financing portion of the redevelopment,” Oak Ridge City Manager Mark S. Watson and Economic Development Consultant Ray Evans said in a September 23 memo to Council. “While it is yet to be determined whether or not this local financial group will fund the project, they have established several requirements necessary for their prospective participation. Among those requirements is the need to have a reasonable assurance that the loan principal and interest would eventually be paid in full.”

In addition to rebuilding the three private streets to public road standards, the public infrastructure improvements would also include the relocation and placement of underground power and communications lines along Rutgers Avenue between Walmart and Wilson Street. The total estimated cost of that project is $2 million, with $1 million of that coming from $800,000 in reserves and $200,000 from the Fiscal Year 2015 Capital Project Funds, Watson and Evans said.

The remaining $1 million would either come from a grant from the U.S. Department of Commerce Economic Development Administration, or alternatively, a $500,000 grant from the IDB and $500,000 from TIF proceeds.

Establishing the reserve fund is one of the requirements of the potential local lenders, Watson and Evans said. They said the reserve fund would minimize risk and help with the uncertainties of the projected amounts of the annual property tax increment proceeds.

Redevelopment of the mostly empty mall in the center of Oak Ridge would include the demolition of the spaces between the remaining anchor stores—Belk and JCPenney—and the construction of a retail-driven, multi-use project that could contain about 400,000 square feet of retail space in multiple buildings, up to 100,000 square feet of office space and a hotel, plus the construction of up to 50 multi-family residential units.

The IDB meeting starts at 4 p.m. at the Oak Ridge Chamber of Commerce, and the City Council meets at 7 p.m. in the Municipal Building Courtroom.

See a larger version of the Tuesday site plan, which doesn’t show tenants, here: Main Street Oak Ridge Site Plan.

See the City Council agenda here.

See the IDB’s TIF extension resolution here: IDB Approval Mall TIF Revenues Thirty Years Resolution 2014.

See the IDB’s infrastructure improvements resolution here: IDB Approval Main Street Oak Ridge Infrastructure Funding Resolution 2014.