MOUNT VERNON — A new housing subdivision working its way through the process will not come at the expense of Mount Vernon residents. Instead, city officials say the growth will pay for itself.
City council members gave second readings on Monday to two ordinances that create incentives for the Arista Villas subdivision on Vernonview Drive: a tax increment financing (TIF) district and joining the city’s new community authority (NCA).
Darby Dooley, public finance associate with Bricker Graydon Wyatt, said the incentives are really about the public infrastructure needed to support residential development.
“The NCA, it adds a little bit of an additional charge to pay for that infrastructure,” he told council.
“The TIF redirects some real property tax revenue from other directions to help pay for that public infrastructure. But the focus is that you’re changing this revenue from one public purpose to another.”
Dooley said a developer can build without the incentives if the circumstances are right, but the incentives exist to help communities that struggle to support the housing they need to keep up with growth.
“A common way of summarizing these incentives is growth pays for growth,” he said.
“Only the [new] community itself is affected by these incentives. It doesn’t affect any other property outside of the new development. The idea is that the new development creates revenue that helps pay for the new development.”
Public hearings are scheduled for both pieces of legislation. The NCA hearing is set for July 27. The TIF public hearing is slated for Aug. 10.
How the NCA and TIF work
Under an NCA, future subdivision homeowners pay an additional charge on their property taxes to help pay for infrastructure.
The charge will be capped at 10 mills for Arista Villas.
“As of right now, the property owner has requested 8 mills, with 2 mills being left over for the city. That would still be negotiated, and we can bring that down,” Dooley said.
A 10-mill charge would generate $3.53 million over 30 years. The city’s 2 mills represent about $705,980.
Dooley said 8 mills is a standard NCA fee.
In a TIF, the property owner still pays property taxes. Instead of going directly to the municipality or schools, it is redirected into a special fund.
However, Dooley emphasized that the schools will “be made whole.” In other words, they will still receive the full amount they are due.
In the TIF, the developer supplies a cost estimate, and the city then typically limits how much TIF revenue goes to the developer.
“All those business terms are yet to be decided,” Dooley said.
However, he said passing the TIF does not require final details to be in place.
“Once we authorize the TIF from the final approval, the mayor would have flexibility to negotiate those business terms a little further, so long as it’s not materially adverse to the city,” he said.
He said negotiations should start in the next week or two and that a draft TIF agreement will be available before the public hearing.
‘Developers have deep pockets’
Resident Robert Beck questioned why the developer does not pay for his streets. He said covering development costs and recouping them through sale prices is standard practice for builders.
“Maybe the people of this town don’t want their tax money to go to the developer for his bottom line,” he said.
Beck raised concerns about the school getting its money and the use of the emergency clause in the ordinances.
He asked the council to postpone the third reading until after the public hearing, remove the emergency clause, and reconsider using taxpayer money to benefit the developer.
