Before the Franklin County Fiscal Court and Frankfort City Commission can enter a Tax Increment Financing (TIF) agreement with the developers of Parcels B and C, citizens will have a chance to speak.
Jim Parsons, a TIF law expert with KMK Law in Cincinnati, gave the fiscal court an update Friday on the next steps in the TIF process. The city and county hired Parsons to serve as a TIF expert for both governing bodies earlier this year.
Locally, $5 million from the county’s tax revenue and $6.5 million from the city’s tax revenue could go toward the public infrastructure portion of redeveloping the former Capital Plaza property, but an exact percentage and amount has not been set.
Parsons said if the city and county choose to go forward with establishing a TIF district, there is a certain process that has to be followed.
First, a development plan will be drafted that includes a description of the area, why the area qualifies for a development plan under the TIF Act and a description of the project. A development plan is not to be confused with a zoning plan, Parsons added.
“At the present time, we have a draft development plan that is pretty close to final,” Parsons said. “We can still make edits to it, but that particular development plan is really a document that is only required by statute. There’s no real commitments in the development plan, specifically.
“In fact, there’s a reference in the development plan that the city and county and certain special districts, if they chose to, could pledge a certain percentage of tax revenues.”
School districts are not considered special districts, but the Franklin County Health Department could become involved with the TIF. FCHD Director Judy Mattingly asked Parsons a question Friday about the length of the agreement if the FCHD’s governing board decided to join.
Parsons said the health department’s contribution percentage and term can be different than the city and county’s.
Once finalized, the development plan will be filed with the city and county clerks. Next the Frankfort City Commission will hold a public hearing since Parcels B and C are located in the city limits.
Parsons said the city ordinance creating the TIF district cannot be adopted until 30 days after the public hearing. Then the county would also have to adopt its own ordinance to participate.
Parsons also advised the city, county and Parcels B and C developers to begin talking with the state about its participation in the TIF district since the public infrastructure includes a state-mandated parking garage.
Marty Johnson, a Hazard-based developer and the sole bidder for the former Capital Plaza property, was awarded Parcels B and C by the state Finance and Administration Cabinet in November. His New Frankfort Development LLC bid $1,000 for the site of the former Frankfort Convention Center and Fountain Plaza Shoppes. His plan calls for mixed residential and commercial units, along with a new YMCA.
During a joint special meeting of the city commission and fiscal court in February, Casey Bolton with Commonwealth Economics spoke about a TIF as a way to fund the public portion of the project, including a parking garage that was mandated by the state when it sold the land to Johnson.
According to Bolton, a portion of the money the city and county would make off increased occupational, property and sales tax revenues within a certain period would go back to the developers to pay for the public infrastructure, including the parking garage, an extension of Washington Street and sidewalks.
The amount owed to the developers would be set and if the amount were paid back sooner than expected, the TIF would expire earlier than its originally scheduled end date.
According to Bolton’s current projections, Parcels B and C are expected to generate roughly $30 million in tax revenues in 20 years between the county and the city.
Parcels B and C could bring in nearly $50 million in tax revenue for the state in the next 20 years, Bolton said. At the maximum TIF rate, the state could have to contribute 80%, or $40 million, of its tax revenue to the public portion of the project.