Washington council says ‘tough’ to TIF

December 6, 2012

Millcraft Industries Chief Financial Officer Brian Walker stormed out of city hall Thursday night after Washington City Council shot down the company’s request to amend the tax increment financing plan for the Crossroads Center building.

“I’m very disappointed with the vote,” said Walker, adding he will now have to go back to Millcraft’s board to determine how the company wants to proceed.

Just moments earlier, during the public comment portion of the council meeting and prior to council’s vote, Walker’s demeanor was much more pleasant as he thanked council for the time and effort it had given to the TIF proposal.

But, little did he know his hopes for the amended TIF plan would be quashed by a 3-2 vote. Mayor Brenda Davis and Councilmen Joe Manning and Terry Faust voted against the plan which called for extending the original 15-year plan until 2024 so the company could refinance and have more time to attract new tenants.

“After much thoughtful consideration and examination of the financial documents provided by Millcraft Industries, I have concluded that any extension” of the plan “is not in the best interest of the city of Washington or its citizens,” said Manning in a written statement.

Manning, who is out of town, did not attend the meeting but was contacted by cellphone to cast his vote for this specific issue. The councilman, however, had prewritten his statement that was then read by Solicitor Lane Turturice.

Manning also said while every member of council would prefer to see growth rather than decline in the city, he did not see anything in the TIF proposal that would guarantee further development especially since the same mechanism has been in place for several years without success.

“Any revenue that is deferred during the length of this agreement must be borne by the remainder of the taxpayers, and that would be unfair,” he stated.

Faust concurred with his colleague but pointed out while he voted in favor of the original TIF, he has found it to be a burden on the taxpayers and could not rightfully vote to extend it.

Davis said she knew little about the matter when appointed to the TIF advisory committee earlier this year, but believes she has gained vast knowledge about the matter to vote against it.

Davis, who is just finishing her first year as mayor, said since taking office she has always put the city at the forefront as well as the people who elected her to the position. At Monday’s agenda meeting, Davis hinted to some concern when she questioned Walker and Washington County Redevelopment Authority staff on the TIF.

Meanwhile, Councilmen Ken Westcott and Matt Staniszewski said the city will definitely feel the impact of council’s decision.

“I’ve looked at what revenues have come in and how they’re going to continue to come in,” Westcott said.

Staniszewski said the city now stands to lose “hundreds of thousands of new tax dollars.”

The amended TIF proposal, according to Walker, would enable Millcraft to refinance its bond and continue to keep the building open for business. It was suggested throughout the TIF process that Millcraft might walk away from the building if the modification was not approved.

The original 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.

With the amendment, Millcraft wanted 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. Supporters of the TIF contended 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.

Although Washington School District and county commissioners had approved the TIF plan, passage was completely in city council’s hands.

Linda Metz has been with the Observer-Reporter since 2000, covering Washington County courts and politics, as well as the city of Washington. She previously was employed by the Tribune Review. She is a graduate of Point Park College, now a university, in Pittsburgh.

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