Officials with Millcraft Industries, the developers of the Crossroads Center in downtown Washington, might still be steamed following a decision by city council Thursday to not extend until 2024 the tax increment financing plan they had received almost a decade ago.
They would be better off to take a deep breath and redouble their efforts to find a marquee tenant for the building.
Some history is probably in order: Millcraft, the developers of the property between Beau and Chestnut streets, were awarded tax increment financing, or a TIF, by the city, county and the Washington School District when they were advancing plans for the structure in the early part of the last decade. Under the deal, 80 percent of the tax dollars that Millcraft would have sent to those three entities instead went to the financing of a parking garage that is adjacent to the structure.
Millcraft’s argument then was sound: Having a spiffy office building in downtown would, over time, draw yet more business, boost tax revenues and inject new life in the area. Giving them a TIF made sense.
But TIFs are a mechanism offered by governments as an incentive to help distressed properties, not as lifelines for faltering businesses. The Crossroads Center is, clearly, not a distressed property. Carrying a price tag of $15 million, it’s one of the finest structures in the community. Millcraft, however, is perhaps distressed about the problems they have had filling the 160,000-square-foot building. The economic slide that started in 2008 kept potential tenants away and led LandAmerica, a title insurance company, to pull up stakes and take its 350 employees with it. Though occupancy in the Crossroads Center is now said to be around 47 percent, it had been as low as 9 percent.
Millcraft wanted to extend the TIF in order to undertake refinancing and, they said, keep the building open. Throughout the process, representatives of the firm had hinted darkly that they might leave Washington if they didn’t get their way. But council decided, correctly, that a dose of tough love is in order – neither the city, the county nor the schools are drowning in dollars, and it’s time for Millcraft to pay its share.
Councilman Joe Manning said it best: “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 also pointed out that if the TIF had been extended, there was no indication that Millcraft’s luck would change in any meaningful way.
Council’s decision carries risks, but it sends an important message – business is welcome in Washington, but they are subject to the same risks and rewards as everyone else who labors in the free enterprise system. Taxpayers shouldn’t be expected to help them indefinitely.