Nov 1, 2012 5 min read

Washington City Council seems a bit cautious about giving the go-ahead to extend by five years the tax increment financing plan provided to Millcraft Industries for the Crossroads Center building.Mayor Brenda Davis and Councilmen Joe Manning and Terry Faust said they have gone over the numbers being used in the proposed TIF modification, which is being proposed by Millcraft and supported by the Washington County Redevelopment Authority.Millcraft and authority officials Thursday night again answered council’s questions regarding the proposal. This time, they also fielded questions from only two people attending a public hearing on the matter.”Some of the figures presented here tonight, I need to take a harder look at,” said Manning. “No one here is opposed to development. It’s just how you go about it.”Millcraft is looking to extend the original 15-year TIF until 2024 so it can have more time to obtain tenants, which in the long run would mean more revenue for the city through the earned income tax and occupation tax and use of the adjacent parking garage, according to Chief Financial Officer Brian R. Walker.Without the TIF extension and the lowering of the building’s assessed value by about $5 million, Walker contends the development company will not be able to refinance its bond note and continue to keep the building open for business.The TIF was approved in 2004 by the city, Washington School District and the county with 80 percent of the new tax revenue that was paid on the Crossroads project going toward the construction of an adjacent parking garage. The remainder of the TIF payment is being split among the taxing bodies.The TIF paved the way for the new commercial development that includes the $15 million office building and the building of the adjacent public parking garage.A TIF allows the government to borrow money for infrastructure development – such as roads and storm sewers – and then pay off the debt using new tax revenue created by the project. The TIF used the increased property value to offset costs for which the redevelopment authority borrowed money to build the garage.The 160,000-square-foot Crossroads building was to become the headquarters for LandAmerica, a title insurance company, and its 350 employees. With the economic downturn, however, LandAmerica soon abandoned the building, leaving Millcraft with a mostly empty structure. Occupancy is currently at 47 percent, Walker said. When LandAmerica left, it was down to 9 percent.Since LandAmerica’s exodus, the city has been held responsible for the cost of the parking garage that, until recently, was hardly being used.Millcraft now wants to lower its TIF payments to 75 percent but at the same time is looking to lower its assessed value from $3.75 million to $2.68 million.The TIF supporters claim the city will lose only $647 in tax revenues annually while possibly gaining revenue through other means such as earned income and mercantile taxes, as well as more use of the parking garage.Faust, however, pointed out that the city has already contributed a substantial amount of money to support the original TIF and said he was concerned by how much more the city will have to spend over the life the plan, especially with the extension.”It’s money coming out of our pocket,” he said.Jeff Bull of East Washington and Anna Coen of Cecil were the only two out of a handful of hearing attendees to publicly address the issue.Both questioned whether the project was worthy of more taxpayer support and whether the terms of the original TIF plan included Millcraft agreeing not to seek tax reassessment.Walker and redevelopment authority Chairman Bill McGowen denied that the TIF included such an agreement, although Coen submitted to council a copy of a May 3, 2006, project activity report on the parking garage given by the authority to the county commissioners. The report states, “Millcraft execute the agreement regarding valuation, assessment and project completion, which say that they will not appeal the property taxes below an assessed value of $5 million during the term of the TIF.”Coen said she’s against the extension and asked council to seriously consider the proposal before making a decision.”It’s troubling to me,” she said. “We live on our budget and expect the redevelopment authority and Millcraft to do the same.”She added, “We’re funding a private development with our tax money when it could be going to schools, the city, our children.”Councilman Ken Westcott, who was mayor at the time the TIF originated, said the plan was not hastily agreed upon back then, nor would an extension be hastily entered into now, although he believes the project has proved to be very beneficial to the city.Councilman Matt Staniszewski, who was on council then, refrained from commenting one way or another on the proposed plan.Council plans to vote on the matter at its Dec. 3 meeting. The school district and county have already approved the request.