Oct 23, 2012 4 min read

Millcraft Industries’ Chief Financial Officer Brian R. Walker said his company wants to make the Crossroads building in downtown Washington a success, but it’s necessary a tax increment financing plan for the building be extended.”It’s a misconception that we bailed on the city,” Walker said. “I wish I could change the times.”Walker, along with Washington County Redevelopment Authority officials, including Chairman Bill McGowen, made a Power Point presentation to four of five City Council members regarding the TIF Monday night. Councilman Joe Manning did not attend because of other city business.The meeting, which followed a council budget workshop, was not specifically announced nor advertised. Three people, however, learned about and attended the meeting, but none of them were city residents.Mayor Brenda Davis said the meeting did not have to be announced because council advertised at the beginning of the year that it could hold work sessions on Mondays and Thursdays.Last month, council approved holding a public hearing to collect more information on the proposed TIF extension. Council set the hearing for Nov. 1 but agreed earlier to meet with Millcraft officials. Millcraft is looking to extend the original 15-year TIF to 2026, 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, said Walker. The TIF was approved in 2004 by the city, school district and 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 new commercial development that included a $20 million office building and $2.5 million in improvements to the existing Millcraft Center on Chestnut Street. 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 Land America title insurance company and its 350 employees.With the economic downturn, however, Land America soon abandoned the building, leaving Millcraft with a mostly empty structure. Occupancy is currently at 47 percent, Walker said. When Land America left it was down to 9 percent.Since Land America’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 $15 million to $10.7 million. By doing so, Walker said the city will only lose $647 in tax revenues annually.The move would allow the building owner to lower its rental costs and increase occupancy, which is now nearly 50 percent, Walker explained.Attorney Sara Davis Buss said that real estate taxes are “killing us” and that without a break Millcraft won’t be able to pay the bond note on the building, which could result in foreclosure. Buss said the yearly debt service on the building is $430,000.”It’s just like refinancing a home loan,” questioned Councilman Matt Staniszewski. “And, in theory, the city council have a win situation?”Walker reminded council that my having more occupants in the building the taxing bodies will experience in tax revenues through the Earned Income and Mercantile taxes as well as more use of the parking garage.Council only can make its decision after the public hearing. If approved, Buss said they will begin work to draft the legal pact and final adoption will occur at council’s Dec. 3 meeting.