To propel redevelopment, share burdens and profits
Published June 18, 2006
Nearly a decade after New Port Richey completed its downtown renovations, commercial and residential redevelopment efforts remain in limbo.
The unexpected high price delayed progress on a pedestrian-friendly Railroad Square; the hoped-for private sector management of the historic Hacienda building is off the table for now, and, most notably, the privately financed Main Street Landing town home and retail complex along the Pithlachascotee River is in severe financial straights.
Tuesday, the New Port Richey City Council, acting as the Community Redevelopment Agency, will be asked to amend its deal with Main Street Landing developers Ken McGurn and former Mayor Peter Altman.
The terms are far from optimum. According to the developers' data, the city will forgo $6.7-million in property tax payments over 23 years to give the Main Street Landing the opportunity to form a Community Development District.
The projected tax payments will be used to retire a $3-million CDD debt accumulated now to build a parking lot and do drainage and other infrastructure work.
The city's help is needed because rising construction costs and other delays over the past two years have pushed the project price from $30-million to $45-million. The developers say they now just want to break even.
In essence, this deal takes away the city's ability to use all of the property tax payments from the project for other redevelopment efforts. Still, there are some safeguards. The development guarantees an annual 18 percent increase in payments to the CRA, on top of the debt service. Over the life of the 23-year agreement, that is a minimum of $2.85-million to the city with the potential for up to nearly $6.4-million, according to the developers.
The downtown area also gets a 150-space public parking lot, separate from the parking needed for the 55 town homes, that will be owned and maintained by the community development district. Additional downtown parking is one of the CRA's goals.
The developers also are forfeiting a $1.25-million incentive grant from the city due when the project is completed. That frees up cash for the city to do other redevelopment work like Railroad Square more immediately.
About half of Main Street Landings town homes, varying in price from $300,000 to $600,000, are spoken for. Altman said the prices on the others have been increased to reflect higher construction costs. Regardless, we still believe it is reasonable for future residents and business owners in Main Street Landing to share the burden of retiring the CDD debt. An annual assessment, on top of the maintenance and administrative charges associated with the district, should be considered.
Altman also suggested Friday the developers would be willing to share with the city any profits the project would generate. Get it in writing.
Under those terms, with town home owners and businesses sharing the repayment obligation, and the city getting a piece of any profit (though none is anticipated), the council should move forward with this deal.
It is a tough agreement to swallow. Using future tax payments to pay up-front costs that should be covered by the developers and incorporated into the price of their product is an undesirable precedent But, so, too, would be the failure of the first major private-sector investment in New Port Richey's downtown redevelopment.
[Last modified June 18, 2006, 07:13:01]
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