MOUNT VERNON — City officials want to use two economic tools to pay for new development on the city’s south side.
The tools are tax increment financing districts (TIFs) and the city’s New Community Authority (NCA).
The incentives apply to the Liberty Crossing development on Newark Road. The idea behind both is that growth pays for growth rather than burdening current residents with the cost of utility lines, road work, and other infrastructure needed to support development.
An NCA is a separate entity that can acquire land, install infrastructure, levy a special assessment on property within the development to pay for the project, and issue bonds.
The city created an NCA in 2023.
TIFS are not tax abatements. Property owners still pay taxes, but TIFs divert the payments on increased property values to a separate fund.
The city has several TIF districts, including Sandusky Street, Coshocton Avenue, and the Central Business District.
Mayor Matt Starr told city council members on Monday the city is using the measures to protect itself and its taxpayers.
The NCA can issue bonds for the Liberty Crossing project. This provides cash upfront for development and protects the city from issuing debt.
The TIF money and the NCA assessment fee provide revenue streams that repay the bonds.
Once the bonds are paid off, the city can use NCA money to build other facilities needed for growth, such as a fire station or parks.
Both incentive programs apply only to property within the NCA and TIF districts, which protects taxpayers outside the districts from being saddled with additional costs.
Liberty Crossing includes 93 single-family homes, 42 patio homes, and 112 townhomes.
The logistics
“There have been previous conversations looking at different numbers about how to finance the project, and we came to the conclusion that this is the most efficient way to fund all that public infrastructure with the least risk to the city and its residents,” Michael Ringle of Bricker Graydon told the council.
On Monday, Council members gave a first read to ordinances establishing two 30-year TIFS: commercial and residential.
The commercial TIF applies to the multi-family portion of Liberty Crossing, and the residential TIF applies to the rest of the site.
Notices will be sent to property owners and school districts about the proposed TIFs.
Timeline for implementing the incentives
June 9: Second reading of the residential and commercial TIF ordinances
June 23: Public hearing on the NCA petition and residential TIF, adopt the TIFs on third reading, and waive the third reading and adopt the NCA petition
After June 23: NCA board adds the project site to the NCA, authorizes assessment fee of 4 mills, and issues bonds
Both TIFs hold the schools harmless, meaning they will still receive full funding for the first 30 years. Starting in year 31, all entities that benefit from property tax will receive their share.
The residential TIF requires the city to notify the Knox County commissioners. Starr and Sam Filkins, president of the Area Development Foundation, met with them on Tuesday.
Council members also suspended the rules and accepted the project’s development plan and overlay, approved executing a petition to add the 104 acres in Liberty Crossing to the city’s NCA, and set a public hearing for June 23 at 7 p.m.
They plan to give the TIF legislation a second reading on June 9 and pass both pieces of legislation after the public hearing on June 23.
Benefits of affordable housing through incentives
Filkins said development is expensive. The city could do nothing, leaving it to only those who can afford to build a multi-million-dollar home.
Conversely, the city could fund the infrastructure using taxpayer dollars.
“What we’re opting for here is the middle ground,” he said.
Filkins said that using the incentives reduces the price of housing within the development and eases demand pressure.
“That’s how you make housing more affordable, because you provide the opportunity for supply,” he said, citing the analogy of a new car.
“A new car is always going to cost more than an old car, right? But if we stop making new cars, used car prices are going to go through the roof because it’s going to be the only option.
“So if we stop bringing new housing in, you’re going to see the existing housing continue to go up in price because they can. The lease rates are going to go up, the sale prices are going to go up because supply and demand dictates that they can get it.”
“I know that there seem to be a lot of elements to this, but we’ve been putting them into place over the last several years,” Council member Amber Keener, chair of the city’s land use committee, said.
“If you look at it just tonight, it does seem confusing, but if you have been watching, this is intentional, and it’s the direction that we want to go.”
