Greenwood is leading the way again, this time on a first-of-its-kind incentive for a locally-owned national apartment developer that some taxpayers and city council members opposed.
This marks the first time the city has committed taxpayer dollars to a residential development, city officials have said. The city’s argument is that they are not actually handing over any money to the developer or obligating themselves to any debt, but rather foregoing some tax dollars.
The Garrett Company, a Greenwood-based national multi-family developer, is building a 180-unit apartment complex, recently dubbed VERGE Luxury Flats, on 6 acres across the street from its headquarters on Greenwood Springs Boulevard southeast of Emerson Avenue and County Line Road.
The city council on Monday approved the incentive on a 7-2 vote, with Bruce Armstrong and Ron Bates voting against it.
The city’s redevelopment commission, which oversees the spending of tax increment financing dollars, had already approved it. It had to go to city council for final approval because the incentive was valued at more than $1 million.
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.
Bates voted against the incentive after talking to some of his constituents in District 4, the council member said during Monday’s meeting.
“As councilors, when we vote for or against something, we should have some reasoning for it. I know in this case, with this particular ordinance, I’ve been perplexed by it … I don’t believe when the TIF districts were created that this was the intention,” Bates said.
“The bottom line for me is that this measure is actually subsidizing a housing project. I may be wrong, and if so, that’s OK. If I’m right, I’m voting against this measure and I’m safe, and if I’m right, I won’t say I told you so.”
Redevelopment commission member Bryan Harris spoke in support of the project because of the city’s return on investment, he said.
“We may forego some taxes initially, and it may require a little bit of investment on the city’s part to do this project, but when I look at anything we do on the RDC, what is the return on our investment?” Harris said. “And if we can take a project — a parcel — that has a current assessed value of $9,400 and we can turn it into a ($14.5 million) assessed value, that’s a pretty good return on our investment.”
“It is a much better use of the land than what we could expect without this incentive package. And if successful, other high-end builders and developers will consider Greenwood for more upscale multifamily housing projects in the future,” Mayor Mark Myers said in an email.
Construction had already started, and development was underway, when the company approached Greenwood about the incentive.
Jay Hart, a Greenwood resident who ran unsuccessfully for city council in the May primary election, calls it an incentive after the fact. The developer has already started construction on the project, so the city would see property taxes from the development regardless of whether the incentive is given.
“I’m no expert, but I would guess that millions of dollars of work has been done there. If this company is going to put that much work into something and they’re going to teeter on $1.2 million of our dollars, and they’re going to abandon it if we don’t give them that money — a ($24 million) project — that’s a dangerous risky company,” Hart said.
“If there were an argument that they were going to leave or abandon the project, then at best, we’re investing in a risky dangerous company,” he said.
“This is not an incentive. It is a gift to this company. It’s wrong. We’re conservatives in this town. Let’s act like it.”
Sam Hodson, an attorney representing the city on this project, said there are many reasons to support it, but the financial benefits to the city is one of them.
“This is very conservative. This is a smart way to use tax money — if you spend $1.2 million, and that turns into $5.5 million in revenue,” Hodson said. “This is a very good deal for the city. It’s smart deals like this that keep our taxes low. These are not the sort of things that we ought to pass on.”
It will be the most upscale rental community in Greenwood.
The apartments will include brick and stone exteriors. 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.
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. The closest comparable market-rate complex is just across the county line — The Timbers — which the developer wants to stay competitive with.
“This is the housing of choice for young people who have just completed college and do not yet have families. This is our opportunity for those folks to experience Greenwood without taking the risk and the commitment of buying. But hopefully, after they’ve experienced our community, they want to stay and become permanent residents,” Hodson said.
While some council members were surprised by the location, between Interstate 65 to the east and Goodwill to the west, council member Dave Lekse said it is an ideal spot.
“A ($14.5 million) of assessed value that’s literally in nobody’s back yard is a win for all of the residents of Greenwood,” Lekse said.
[sc:pullout-title pullout-title=”By the numbers” ][sc:pullout-text-begin]
Here is a look at some of the financials of the property VERGE Luxury Flats is being built on:
$9,400: Current assessed value
$274: Current annual taxes generated
$7,368: Taxes generated in 20 years without development
$24 million: Planned investment
$14.5 million: Estimated assessed value once flats are built
$290,000: Annual taxes generated after development
$5.5 million: Taxes generated in 20 years with development
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