Parking revenue remains on council’s agenda

January 4, 2013
A view of the Crossroads Center in Washington - Katie Roupe / Observer-Reporter Order a Print

When Washington City Council meets Monday, one of the items to be discussed will be $7,000 in parking revenue it will no longer receive from Millcraft Industries at the Franklin Street garage.

Mayor Brenda Davis said she learned Thursday that Millcraft did not renew leases for 13 parking spaces in the garage adjacent to Crossroads Center, which the company owns and where it has offices.

Davis also hopes that council’s first meeting of the new year will help it begin to resolve how it will move beyond corporate tax financing plans that she says are keeping it from getting caught up on its finances.

The annual revenue from the leased spaces Millcraft is not renewing – $7,020 – will be that much less that city can use to pay down its debt on the garage.

The move comes a month after council voted not to honor Millcraft’s request to amend the tax increment financing plan for Crossroads Center.

Millcraft had requested the amended TIF proposal to enable it to refinance its bond and continue to keep the building open for business. It wanted to extend the original 15-year TIF until 2024 so it could refinance and have more time to attract new tenants.

When the original TIF was approved in 2004 by the city, Washington School District and the county, 80 percent of the new tax revenue that was paid on the Crossroads project went toward the construction of an adjacent parking garage, while the remainder of the TIF payment was split among the taxing bodies.

The TIF paved the way for the new commercial development that includes the $15 million office building and the construction of the garage.

A TIF allows the government to borrow money for infrastructure development such as roads and storm sewers, then pay off the debt using new tax revenue created by the project.

The 160,000-square-foot Crossroads building became the headquarters for title insurer LandAmerica and 350 employees. But with the economic downturn, the company abandoned the building, leaving a mostly empty structure.

Millcraft said last month that occupancy is about 47 percent, up signficiantly from when LandAmerica departed, but still less than half full.

Since LandAmerica left, the city has been responsible for the cost of the parking garage, which has been underused.

With the amendment, Millcraft wanted to lower its TIF payments to 75 percent, at the same time looking to lower its assessed value from $3.75 million to $2.68 million.

Davis said Thursday that it was too early to discuss how the city could make up the lost parking revenue. She said it was unclear where Millcraft would pick up other parking spaces downtown.

Brian Walker, chief financial officer for Millcraft Industries, did not return calls regarding the company’s move.

Davis noted that last year, the city budgeted $150,000 in payments for the garage, but needed to spend just $75,000 of the amount because of greater than expected parking revenue collected.

Despite the lower budget obligation for 2012, Davis said the parking garage remains a major burden.

“The city’s on the hook for the bond payment. We still have to come up with revenue.”

She added that another item to be discussed at Monday’s agenda meeting relates to how the city will respond to a ruling by the county’s tax assessment office that it must refund Millcraft for a clerical error that caused the company to overpay taxes from 2007 to 2011 on its Millcraft Center property at West Chestnut and North Franklin streets. The error, made by the assessment office, occurred when the city purchased a portion of Millcraft’s property for the parking garage on Franklin Street, but the company continued to pay on the land it no longer owned.

Davis said the city contends that the value of Millcraft’s Crossroads Center building should have been increased, but lost the appeal because a building receiving a TIF can’t undergo a reassessment in value.

She said the city initially refunded $10,000 for the overpayment in 2012, but will discuss Monday how it wants to approach the order for the earlier four years, which would cost it another $40,000 in refunds.

“We have to see if we’re going to accept the county appeals decision,” she said, adding that the biggest challenge is for the city to get beyond corporate tax breaks.

“The city needs time to catch up from years of tax breaks,” she said. “(It) has never had the opportunity to catch up because of tax breaks” that have gone to businesses, she said.

Michael Bradwell has been business editor for the Observer-Reporter since 1995, and was named editor of The Energy Report in 2012. He joined the newspaper in 1990 as a general assignment reporter in the Greene County bureau and has also worked as a copy editor. A 1974 graduate of Pennsylvania State University with a degree in English, he began his career at the Bedford (Pa.) Gazette. Prior to joining the O-R, he served as public relations director for Old Bedford Village, account executive at two Pittsburgh public relations agencies and copywriter for the country’s largest wholesaler of mutual funds.

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