Public Hearing Scheduled on New TIF District for Cook Redevelopment of GE Plant

IMG_1864Note: This version of the posting has been revised to address some questions from an early reader.

The last stage of the process of splitting off two parcels from an existing Tax Increment Finance (TIF) district and creating a new TIF district to support the planned Cook Group redevelopment of the shuttered General Electric property in the County’s Westside Economic Development Area has been scheduled for Wednesday, March 21, 2018 at 4:30PM in the Nat U. Hill Meeting Room at the Monroe County Courthouse. This meeting of the Monroe County Redevelopment Commission (RDC) will include a public hearing, followed by an anticipated vote on resolutions creating the new TIF district and pledging any TIF revenues from the new area towards paying the bonds for the redevelopment.

Old GE Plant Before Cook Renovation
Loading Docks at the GE Factory

This public hearing culminates a series of actions that began with the RDC passing an initial resolution on January 17, 2018 that stated its intention to pull the two parcels of the GE plant purchased by Cook Group out of the County’s Westside Economic Development Area (WEDA), sometimes referred to as the Richland TIF, and create a new TIF district (referred to as an allocation area in the documents) consisting solely of these two properties. Since then, the Monroe County Plan Commission and the County Commissioners have both approved this action. On February 13, 2018, the Monroe County Council approved the issuance of $6.2M in economic development bonds to support the redevelopment project.

The following map shows the proposed new TIF allocation area. The purple shaded area illustrates the City of Bloomington’s incorporated area. On October 18, 2017, Cook Group and the City of Bloomington signed an agreement for Cook to pay the City of Bloomington $100K per year for 15 years in order to avoid annexation by the City. The new TIF district would last for 25 years. Note that this proposal does not actually increase the number of parcels in Monroe County in a TIF district — it simply splits off two parcels from the Westside Economic Development Area and creates an independent allocation area out of the two.

Screenshot 2018-03-11 07.44.01

The RDC’s stated purpose for the creation of the new TIF allocation area, from Exhibit B in the resolution is:

Site clean-up and preparation; paving of parking lots; hardscape and soft-scape landscaping including streetscape improvements, curbs and sidewalks; site access improvements; and exterior building improvements. The estimated cost of the entire redevelopment project is $125 million, and the Commission’s contribution to these costs will be based on what may be financed from the new tax increment revenues derived from the project.

Based on representations of the Companies, the Commission has determined that the development will not proceed as planned without the contribution of tax increment revenues to be derived from the Cook Allocation Area to the projects described above.

Essentially, Cook is estimating the cost of the redevelopment of the sprawling factory at around $125M. The County is providing $6.2M in bond funds towards this effort to support streetscape, access, sidewalk and walking trail, and exterior building improvements to what has become a blighted area of the County’s westside — all improvements that will benefit the public as well as Cook.

The sole source of repayment of these bonds will be the additional property taxes generated from this new TIF district (the so-called “increment” in Tax Increment Finance) resulting from Cook’s redevelopment efforts. This includes both real property and personal property (equipment).  Further, the bonds have been structured so that Cook (or a related business entity) will purchase the bonds, meaning that the risk of any shortfall in revenue would be borne by Cook, not the County taxpayers. Once the bonds have been paid off, any additional revenues can be spent on improvements in this new district or in the larger Westside Economic Development Area.

Old GE Plant Before Cook Renovation
Inside the Shuttered Former GE Plant, Site of New Cook Group Project

If you really want to get into the weeds of the estimated revenues and payments from this proposed TIF district, you can see the analysis performed by the County’s financial analyst Financial Solutions Group, Inc.

One of the questions that has come up from a reader of a previous edition of this posting is why to create a separate TIF allocation area at all — why isn’t the existing Westside Economic Development Area adequate? The answer is that creating a separate single-taxpayer TIF district constrains the risk of the project. First of all, if by some chance the developer is unable to generate the required revenues to pay the bond (unlikely, but is within our due care duty to prevent against) it is only they who will suffer. The rest of the taxpayers of the westside TIF will not have to make up the difference (or have to shift resources out of other important westside projects). Secondly, if the project were funded out of the Westside, then the revenues (increment) from the rest of the Westside TIF would need to be pledged for repayment of these bonds as well. The need was to have the revenues from Cook’s investment and only those revenues pledged for repayment. The structure of an independent allocation area provides both of those protections.

IMG_1868
Power substation at Curry Pike and Profile Parkway

In my view, this project represents a generational opportunity to redevelop a blighted and abandoned factory and allow it to return to providing jobs for Monroe County residents (Cook is pledging at least 500 new jobs from the project), and also represents an effective and responsible use of tax increment finance to improve the well-being of Monroe County residents.

This public hearing gives you an opportunity to make your thoughts known about this project to the Redevelopment Commission. Please come on Wednesday, March 21, 2018 at 4:30PM in the Nat U. Hill Meeting Room at the Monroe County Courthouse.

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$3M Upgrade to Monroe County Youth Facilities Considered

Old YSB House Before Demolition
House in Front of the Youth Shelter That Would Be Demolished

This past Tuesday, the Monroe County Council discussed a request for major capital improvements to Monroe County’s facilities for youth services, including the Binkley House Youth Shelter (located at 615 S Adams St).

 

Back in February of 2017, the County Commissioners GSD Contract in partnership with the architecture and design firm RQAW to review existing facilities and recommend a plan for renovation and expansion based on the analysis of current and future needs.

The report from the consultants was received in July 2017, and provides an extensive review of the needs of the programs, condition of existing facilities, and proposed combination of renovation and new facilities. Major recommendations include:

  1. Demolition of an old house that is currently used for a few offices and storage, and whose maintenance costs have become unsustainable (I included a picture of the house above).
  2. Additional parking along South Adams St, including improvements to allow delivery truck access, and a nature path and pavilion outside.

  3. Upgrades to the Binkley House Shelter portion of the facility, including paint, carpet, restroom upgrades, better separation of recreational from study spaces, more storage for youth belongings, and a walk-in freezer to allow more bulk purchasing. The shelter currently serves up to 15 youth; there are no plans to increase this capacity.
  4. New large multi-purpose space that can be used as a gym, classroom, group meeting room, space to take youth out of stressful situations, etc.
  5. Upgrades to the Administrative wing of the facility, including creation of small conference/meeting rooms, better waiting areas, secure file storage, additional office space, and public restrooms.
  6. Furnishings, including office furniture and furniture for the shelter.
Screenshot 2018-03-03 08.51.11
Feasibility Study

The Feasibility Study (Exhibit A) includes a description and rationale for all of the recommended upgrades, demolition, and new construction.

 

Last week, the County Commissioners approved a follow-on contract with RQAW for approximately $190K to provide detailed architectural design documents for the project. These documents would then be used to solicit bids for the demolition and construction work. This contract is subject to appropriation of funds by the County Council; the Council will consider this request at our regular meeting on March 13th.

The total cost estimate for the recommended facilities range from $2.9M and $3.2M. As per our role in the process, the County Council spent most of our time discussing potential sources of funds for the project. Options include:

  • One-time funds (in the Juvenile Services Non-Revering Fund) of around $1.1M saved from excess property taxes collected for child welfare at the time the State took over child welfare funding. The County Council earmarked this money to be spent on juvenile-related services and initiatives.
  • $1.7M in the County Per Diems fund, which consists of money paid by the State to the County for court-ordered and Department of Child Services (DCS) placements.
  • One-time funds (in the Juvenile COIT Rainy Day fund) of $164K from past distributions of the juvenile county option income tax from the State.
  • Funds in the Location Income Tax Special Purpose (formerly known as the Juvenile COIT) could potentially be used for the furnishings (not bricks and mortar construction) component of the project.
  • Future general obligation bond (paid for by a property tax rate).

It appears that a large proportion of the project (if not all of it) could be paid for out of cash (in the above funds). However, there is also concern among some (including me, along with the director of Monroe County’s Youth Services department) that it would be prudent to hold back some cash reserves, particularly in light of the turmoil and chronic underfunding in the State Department of Child Services.  One option would be to pay for a majority of the $3M out of cash savings, and the rest from bond issue.

The County Council will continue this discussion at our regular meeting on March 13, 2018, at 5:30PM.