River Project agreement on tomorrow’s city council agenda.
By Dan Schroeder
The Ogden City Council, acting as the Redevelopment Agency (RDA) Board, will decide tomorrow night whether to give 6.4 acres of land in the River Project area to SouthRiver LLC for a planned development of townhouses, apartments, and retail space.
The assessed value of the land is over $2.4 million, but SouthRiver would pay little or nothing for it. Instead, the RDA would receive tax increment on the development. Tax increment is the additional property tax generated by a new development, which in redevelopment districts, for a period of time, goes to the RDA rather than the usual taxing entities.
News reports in April had indicated that SouthRiver would pay the RDA $741,000 for the property, but that has apparently changed.
The terms of the SouthRiver agreement are described in tomorrow’s 293-page RDA agenda packet, a 62-megabyte download from the city council web site. I’ve removed the many pages of architectural drawings and geotechnical studies, and compressed the rest of the packet into a 3.4-megabyte file that you can download here.
Despite its tremendous length, the agenda packet contains no estimate of the amount of tax increment that the RDA will collect from the project. Tom Christopulos, Ogden’s Deputy Director of Community and Economic Development, said he couldn’t provide such an estimate but that a detailed consultant’s report on future tax increment for the entire River Project area would be released in a few weeks.
Based on the stated value and timing of the SouthRiver development, my own best estimate is that its tax increment generation will come to a little under $1 million by 2019, when tax increment collection is scheduled to expire.
As some of us anticipated, the city intends to ask for an extension of tax increment collection on the River Project redevelopment area past 2019. The documents in the agenda packet indicate that the extension would be for seven years, which I estimate would generate a little over $1 million of additional revenue from the SouthRiver project for the RDA. The extension would have to be approved by six out of eight members of the Taxing Entity Committee. The city, Weber County, and the Ogden School District each get two votes on the committee; the Utah Board of Education gets one vote; and the last vote represents the Weber Sewer District and other smaller taxing entities.
The SouthRiver development area is shown in the map below, along with the rest of “Phase 1” of the River Project. Current assessed values are indicated for all parcels (click to enlarge).
The townhouses would be in the yellow-shaded area along 20th and Grant, referred to in the agreement as Section 1. The apartments and retail would be in the orange-shaded area along the river, referred to as Section 2. The new Bingham Cyclery building is on the blue-shaded parcel, while America First Credit Union owns the pink-shaded parcel. The two unshaded parcels along Washington Blvd. are owned by the RDA but are not part of the proposed agreement. According to Christopulos, the hope is that these two parcels can be sold for approximately their assessed values in a few years after the economy improves. (Note that this map differs from an earlier version that I created on the basis of information that was apparently incorrect.)
The 69 townhouses in Section 1 would be built in four phases, with the property transferred to SouthRiver separately for each phase, contingent on 80% completion and occupancy of the prior phases. The schedule calls for construction to begin this summer and for the entire project to be completed by the end of 2014.
If the proposed tax increment extension is approved, SouthRiver would pay nothing for the 6.4 acres of vacant land. If the extension is not approved, the terms of the agreement require SouthRiver to pay Ogden $258,952 for the Section 2 property, but to be reimbursed for most or all of this expense from whatever tax increment is later collected on Section 2.
In addition, the agreement calls for the RDA to perform “soil mitigation activities” to remediate the inadequate soil compaction in the area. Christopulos indicated that the RDA would pay either the city or a contractor to do this work. There would also be an estimated $400,000 cost for materials and fuel, which could be paid by the RDA or by the city’s Capital Improvement Fund, according to Christopulos.
Meanwhile, the RDA owes approximately $3.7 million in debt associated with purchasing and clearing the land for this portion of the River Project. A bank loan with a balance of $1.7 million was recently repaid by borrowing the same amount from a city reserve fund, according to Christopulos. The RDA also owes $2 million to the city’s refuse fund for a loan made from the proceeds of the insurance settlement from the burning of the Shupe-Williams Building in 2006. Christopulos said that both of these loans are accruing interest and that the plan is to repay them using tax increment revenue, together with proceeds from the eventual sale of the two parcels along Washington Blvd.
If absolutely everything goes according to plan, including the SouthRiver development, the sale and development of the two additional parcels, the development of the America First Credit Union parcel, and the tax increment extension, then it appears to me that Phase 1 of the River Project might barely generate enough revenue for the RDA to pay off the existing debt. If even one of these stars fails to align, it will fall upon the next administration to deal with the budget shortfall.
Update 7/13/11 9:00 a.m.: The Salt Lake Tribune reports that the Council/RDA last night unequivocally voted to get moving on the SouthRiver LLC project, approving the proposed development agreement by a unanimous 7-0 vote:
Update 7/13/11 9:00 a.m.: The Salt Lake Tribune reports that the Council/RDA last night unequivocally voted to get moving on the SouthRiver LLC project, approving the proposed development agreement by a unanimous 7-0 vote:
