For the first time in the city’s history, Greenwood is giving a taxpayer-funded incentive to a residential developer who has already started construction on a luxury apartment complex.
This marks the first time the city has committed taxpayer dollars to a residential development, said Greg Wright, city controller.
The Garrett Company, a Greenwood-based national multi-family developer, is building a 180-unit apartment complex, recently dubbed VERGE, on 6 acres across the street from its headquarters on Greenwood Springs Boulevard southeast of Emerson Avenue and County Line Road.
The city’s redevelopment commission on Thursday unanimously approved a unique incentive.
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Here’s how it works: The company has realized that it can charge higher rents in other states and asked the city to make up the difference in its revenue — about $1.24 million — so that the company can charge comparable local market rates on the new complex in Greenwood. The company has the cash it needs to build the project, so for the next nine years, the city will return most of the company’s property tax payment to it, basically paying an incentive over the course of several years rather than a one-time cash handout.
So the company will get its own property tax payment back until the city has repaid the company its $1.24 million investment, plus interest, to total $1.72 million.
Giving an incentive to a residential development has not happened locally because, typically, TIF funds cannot be used on housing unless there is some sort of economic development benefit to that TIF district. In this case, because Garrett’s headquarters is located in the same TIF district and having this showcase apartment complex nearby is expected to improve business, this incentive was allowed, Wright said.
Rents are lower in Indiana as compared to other places, said Rob Martinson, Garrett’s vice president of investments.
"We want to be able to offer a similar type of product here in Greenwood despite rent comparables not being at the same level that we could achieve in our other markets," Martinson said.
Rents for the one, two and three-bedroom apartments will range from $900 to $1,450, making it the only market-rate apartment complex within city limits, said Kevin Steinmetz, capital projects manager. The closest comparable market-rate complex is just across the county line — The Timbers — which the developer wants to stay competitive with.
The city estimates the property will be assessed at about $14.5 million, which would generate about $290,000 in annual property tax payments, which will go into the tax-increment financing district, said Jennifer Hudson, a financial adviser the city hired to work on this project. The property taxes owed before the land was developed will remain collected by the city, outside the tax-increment financing district.
Any amount collected beyond what the city owes the developer as part of its incentive will be kept by the city, Wright said. The loan would need to be paid off by 2028, which is when the Eastside TIF expires, he said.
"Instead of just going into the market and getting a bond issued, which is what you would normally do, and then handing them the cash, they have the cash to build their project. They just need a little bit of offset to make up for this difference in the market," Hudson said.
The apartments, which are already in the beginning stages of construction, will include brick and stone exteriors, Martinson said.
Interior finishes will feature granite countertops, stainless steel appliances, crown molding, vinyl wood plank flooring and tile backsplashes in the kitchens and bathrooms.
The development will be comprised of two buildings, a courtyard, clubhouse, resort-style pool and dog park.
"What this incentive has allowed them to do is raise the bar. This allows them to meet those standards they’re talking about," Steinmetz said.
"It’s definitely going to raise the bar on apartment living in Greenwood."
It is slated to open in the summer of 2020.
