Thursday, April 20, 2006
County, city talk financing
By SUE WATSON
A Tax Increment Financing Plan will be needed to arrange financing for a proposed $170 million commercial development in south Holly Springs, according to city consultant Jimmy Gouras.
He, members of the Holly Springs Board of Aldermen and Mayor Andre’ DeBerry met with the Marshall County Board of Supervisors Monday evening to discuss the financing of water, sewer, and gas to get the project moving.
Four private investment groups hope to build a commercial shopping strip mall, a hospital and medical center and a high-end residential development - all to benefit the economy in the city and Marshall County.
The project calls for the development of 217 acres located at the intersection of U.S. 78 and Highway 7 in Holly Springs with private investment in the four projects estimated at $170 million.
Thirty acres will be set aside for a 40-bed hospital and medical center - a private investment of approximately $58.9 million. The hospital is expected to create 62 new jobs and provide an annual payroll of $1.925 million to the area.
Holly Springs Commons
A 16-acre commercial/retail development, already under construction at Holly Springs Commons, will infuse $16.5 million in private investment in Holly Springs and is projected to generate from $178,000 to $267,000 in retail tax sales revenues to the city each year.
The Commons is projected to create 183 new jobs and an annual payroll of $2.5 million.
Seventy-one acres could be privately developed for commercial markets with private investment estimated at $52.8 million. A residential component of 61 acres would put $45 million of the $52.8 million into construction of 325 lots.
The residential development group would build new housing for convenience of workers in the medical/commercial communities. The housing would increase the population base and could generate $485,000 to $728,000 in tax revenues to the city. The development could create 500 new jobs and an estimated yearly payroll of $7.5 million.
How TIFs work
Thirty-nine acres of the 217 would be used for streets and right-of-way.
The four developments are projected to bring 600 construction jobs and a construction payroll of $10.8 million.
Gouras, a city planner since 1971, has prepared over 100 TIF plans for city and county governments - all successful financing plans, he said.
TIF financing is possible through state legislation that allows private developers to invest their own money in the infrastructure and to be repaid with bonds that are financed through the new taxes generated from real and personal ad valorem property tax. Local governments can pledge all or part of the increased ad valorem tax revenues to pay off the bonds. Ad valorem taxes for schools are not affected and city and county governments are not liable for the payoff of the bonds should the projects fail. The private developer would be liable for the bonds, should a project not generate the projected new tax revenues.
Gouras said none of the over 100 TIF plans he has drawn up have gone into default.
He recommended the county develop and adopt a county-wide TIF Plan which then would make the county eligible to do specific TIF projects, if the board of supervisors wanted one.
If Marshall County government comes on board with these three private development TIF projects, a portion or all of the new ad valorem taxes generated would be pledged to pay off the bonds for infrastructure. The City of Holly Springs has already committed to pledge part of the new ad valorem tax revenues to pay off bonds for the projects.
Current taxes on the 217 acres under development planning brings in $1,235 annually in ad valorem and school taxes. The four developments are projected to generate $4 million a year in new ad valorem tax dollars.
The residential taxation will not be pledged to service the TIF bond debt.
The financing needed for the infrastructure for the four projects - approximately $5.8 million - includes $900,000 for water system improvements; $600,000 for sanitary sewer; and $4.2 million for roads.
State agencies have already pledged $3 million for the road improvements leaving $1.8 million to be paid for by either TIF bonds or contributions from other state/federal funds.
Gouras said planners typically ask counties to pledge 50 percent of projected new ad valorem taxes and cities match that figure.
A call for cooperation
Mayor DeBerry called the joint venture “a golden opportunity” for us to work together.
“I caution you not to look at this as a city development because over the long haul this will have a positive impact on the economy of the city and county,” he said.
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