MOUNT VERNON — City council members are expected to vote Monday on a financial agreement that pays for the $3.465 million in infrastructure costs for the Liberty Crossing development.
Council members discussed a draft agreement in a committee meeting on Aug. 11.
The $3.465M includes water and sanitary lines and a turn lane on Ohio 13 (Newark Road). It also encompasses engineering costs and fees and permits.
The agreement is the latest in a series of legislation council passed relating to finances for the subdivision.
In June 2023, the council created a New Community Authority. The NCA is a separate entity from the city.
Under an NCA, property owners in the NCA pay an extra fee in addition to regular taxes.
These fees go into a special account and are used for new growth-related infrastructure. Uses include water or sewer lines, road improvements, police or fire, or parks.
Highland Real Estate (HRE), developer of the Liberty Crossing subdivision, joined the NCA. It will assess property owners in Liberty Crossing an additional 4 mills.
In June, council members passed legislation stating 2 mills will go to the NCA, and 2 mills will go to the city.
Also in June, the council created a Liberty Crossing TIF (tax increment financing) district. Under a TIF, property taxes on new construction go into a separate fund.
TIF money pays for improvements within the TIF district.
The cooperative agreement pulls all of those elements together.
Agreement calls for issuing bonds to pay for infrastructure
The agreement calls for the NCA to issue up to $3 million in bonds.
“That debt issuance will not be a city issuance. It will be a community authority issuance,” Caleb Bell of Bricker Grayden, counsel for HRE, told the council on Aug. 11.
“That’s important because you are not putting your general credit or your bond capacity behind this project.
“Rather, the special revenues from the project support the debt.”
According to the draft agreement, the NCA will use money from the bond sales to “pay or reimburse the developer for such public infrastructure costs.”
Money from the TIF fund and the NCA (the extra 2 mills from the subdivision’s property owners) will pay back the bonds.
“Put those two things together, and that’s what gets us enough money to pay for this $3.465 million worth of costs,” Bell said.
Consequences of not using public finance support
Bell said without this type of public financial support, the developer would divide the $3.465M in infrastructure costs among the subdivision’s lots.
That makes each lot more expensive.
“What it does actually is bring quality down just a little bit because instead of it being $10,000 a lot for infrastructure, it might be $50,000 a lot for infrastructure,” Bell said.
“You’ll get a little less quality out of the total package because so much of it is going to be going upfront into infrastructure.”
Bell said that if HRE cannot follow through on development for economic or other reasons, the city is not at risk.
“These bond holders who are investing in this site with their money, they’re actually bearing that risk, and they charge an interest rate for that,” he told council members.
“The developer is putting this ground on the hook, so they can’t walk away. The ground gets tied up.”
Bell said that is important because it puts the city in the driver’s seat in the event of a problem later on.
During the Land Use and Development committee meeting on Aug. 11, Councilman James Mahon said he expects the agreement to go its third reading on Monday.
