Laurel Highlands yet to decide on Cedarwood offer
The Laurel Highlands School Board remains undecided as to whether it will or will not entertain a $500,000 offer from an Ohio developer seeking financial support in its effort to bring new business to the Fayette Business Park.
The school district is the only entity that has yet to ink a tax incremental financing (TIF) agreement with Cedarwood Development Inc.
South Union Township, county commissioners and the county redevelopment authority have already offered their respective support for the long-term financing plan to aid Cedarwood in completing a strip mall complex adjacent to Walmart, along Walmart Drive.
District Superintendent Jesse Wallace said that the board will decide prior to its Thursday meeting whether the matter will be added to the agenda.
“It is up to the board,” he said last week. “The board has not given me any direction one way or the other.”
The district is scheduled to meet Thursday to adopt its 2014-15, $46.77 million budget that continues to show a $1.425 million shortfall.
At an earlier work session, the board discussed options to eliminate the overage, including delaying planned projects, using construction savings or increasing its property tax rates.
Randy Hake, vice president of Cedarwood Commercial Development, said that without the board’s support, the project will not go forward, resulting in the loss of future jobs, further economic development and added tax revenue for the county, township and school district.
“The rejection of the TIF plan (by the board) takes it all off the table,” said Hake.
A ‘for sale’ sign has already been placed on the vacant 27-acre property that is owned by Cedarwood.
Last year, Cedarwood approached the redevelopment authority about the final phase of development for its property and the TIF proposal it hoped would be acceptable first to the authority board and secondly, to the municipal governments and school board.
Hake said that the financing plan was rooted in the inability of the company to finance the entire project and the lack of state or federal funding to help defray infrastructural costs.
With rising construction costs and preparation of the property along with potential store leasees seeking low rental costs, Hake said the overall $26 million project fell short by $2.67 million.
“We all think and know that retail is the best use of the property and we were hoping that a TIF could bridge that (financial) gap,” he said.
If approved, the county redevelopment authority would secure a loan in the needed amount. It would be repaid by the real estate tax deferments by the three entities.
While two other plans have crossed the school board table since February, the current plan offers a 60/40 percent split of the future real estate taxes, with the district recouping 40 percent of the revenue and 60 percent going to pay off the loan. The agreement would call for the district the be a part of the TIF for 15 years. The county and township will participate for 20 years.
Cedarwood has also agreed to give the district a one-time payment of $500,000.
While the developer believes the company has been generous with the school district, it does not appear the board is supportive and speculates the reluctance is due to the negative information being offered by Wallace.
“This deal is unprecedented and it comes at a time when the district is looking at a tax increase,” said Hake.
“How can you say to your residents that you are going to raise taxes when you know that you have a guaranteed $500,000 sitting on the table?”
Jeffrey Mills, attorney for Cedarwood, said that there was board support early on when there was no monetary outlay, but now there is little to none.
“We had one-on-one meetings with four board members that had expressed their reluctance for the plan, but, when they walked out the door, we believed we had their support,” said Mills, adding that signing off on the TIF also translates into jobs, mercantile and earned income tax revenue and added real estate tax income for the district. “I just do not understand.”
Wallace admits he is apprehensive about the district entering into a long-term plan but denies he has swayed the board members.
“Each board member has their own perspective,” he said. “All I do is present the information and let the board make their decision.
“Whatever direction they take is on their own. I have not tried to sway them one way or the other.”
Wallace said that the focus of the school board is to provide an education for its students, not economic development.
“My responsibility and what the board is charged with by the (state) General Assembly is to provide revenue to educate the young people of the Laurel Highlands School District.
“Whenever you start giving revenue away, you are doing a disservice to your district and the community.
“You cannot fund economic development on the backs of the school district’s students.”
The TIF plan is based on real estate tax income when the retail stores are constructed and operational.
Currently, the property is assessed at $672,250, with the county receiving about $3,000 in tax revenue from Cedarwood. The township recoups about $400 and the school district $13,755 in tax revenue.
When completed, the value of the property is expected to rise to nearly $15 million, with the county to potentially recoup $67,500 annually; the township, $8,970 and the school district, $229,470.
During the repayment period, the taxing bodies would be allocated a portion of the future revenue in addition to their respective current income from the property. The remaining amount — or increment — would be earmarked for the loan payment.
Andrew French, redevelopment authority executive director, said that the rejection of the TIF plan would be detrimental to the school district and county.
While there have been some comments made that once the TIF is approved the school district will be inundated with offers and would need to enlist staff to review documents, French said that it would be him and the authority staff that would handle initial offers.
“The school district can put in place guidelines or criteria that must be met for it to consider other TIFs,” he said.
“That information would be forwarded to developers seeking a TIF by the authority, and, if the terms could not be met, that would end any discussion.”
Hake, meanwhile, said that Cedarwood has been a good community neighbor and because of the development of past years has brought added revenue to the school district and will continue to do so with the new development.
“We have paid $1.4 million in real estate taxes to Laurel Highlands over the past four or five years,” he said. “That has bought a few books and paid a few teachers.
“We are hoping the board puts this on the agenda and it is supported.”