A developer who received a $5.6 million tax break for a speculative building is asking the Greenwood City Council to amend the agreement because of a change of plans.
Back in 2021, GLA Properties, LLC was approved for a $5.6 million tax abatement for a speculative 182,000-square-foot commercial building at an expected cost of $8.5 million. The building was Building 4 of their project within the Worthsville Commerce Center, located on the city’s southeast side.
The developer had asked for a 10-year, roughly $5.6 million tax break. They are expected to pay about $5.5 million in taxes over the 10-year period, according to city documents.
The speculative building was expected to be built on nine acres at the southeast corner of Collins Road and Allen Road. But these plans have since changed.
Building 4 is now planned to be an approximately 89,527-square-foot building, expandable by an additional 27,780 square feet. It would sit on about 35 acres of land, officials say.
Although the plans represented a “significant reduction” in square footage, Scannell Properties Development Associate Justin Olashuk wrote in a letter to the city that increased pavement, utilities and other infrastructure costs would offset the decreased building costs. Scannell was not requesting any modifications to the $8.5 million investment from their initial abatement application, the letter shows.
GLA and Scannell first attempted to amend the abatement last fall, but the city council rejected the request in a unanimous vote on Oct. 16. Council member David Hopper took issue with the decrease in the building’s size, saying it would lead to a deduction of assessed value — which is what tax abatements are based on.
Although the first request was rejected, GLA and Scannell wanted to re-present the request to the city council with more information addressing their concerns, city financial consultant Adam Stone said during the council’s Jan. 17 meeting. From the city’s review, the changes were still mostly consistent with the original commitments and investments, he said.
The assessed value of Building 4 was the primary concern for the city council in October, and is not expected to change much from the original plans, said Alexis Sowder, director of client services for KSM Location Advisors. With the revised Building 4, the estimated assessed value will be $12.55 million, according to Sowder’s presentation.
Hopper questioned the developer about whether more truck traffic would be coming through the area compared to the previous proposal, as the new speculative building would feature a freight terminal. Olashuk told the city council the developer and property owner updated their traffic impact study, which showed traffic would fall within what was assumed in the earlier study from around 2020 or 2021.
“It would not be anything different than what was previously approved,” Olashuk said.
As for the assessed value, Hopper said he had doubts that the property would be assessed at the estimated value by officials. He asked whether the developer could commit to the estimated value they gave.
Stone told the city council there could be an agreement on the minimum assessed value floor. There are appeal restrictions in the structure of a tax abatement that essentially say that if a value is below the minimum level agreed upon, it would be required to rise to this number, he said.
The council also has the option during the annual abatement compliance process to reevaluate the abatement based on the commitments, Stone said.
Olashuk did reveal some information about the tenant, who is a “long-term partner” of both Scannell and Greenwood, he said. This tenant could provide 163 jobs with an average hourly rate of $30 and an average annual salary of $80,000, he said.
However, these numbers are from April 2022, and the project has grown and changed since then, he said. It would be a 15-year lease for the building, Olashuk said.
“In addition to the tax benefits, you’re getting your full tax amount for five years. There’s two, five-year extensions at the back end,” he said. “Additionally, you’re inserting a great amount of money to the citizens of Greenwood because, quite frankly, this is higher. It’s the tenant that you want here. It’s the one who’s paying the high wages, and it’s more than you would have gotten out of Building 4 even at a larger square footage.”
The amendment resolution was introduced to the city council on Jan. 17. It will have two more readings before a final vote could take place, likely near the end of February.
