NEW PALESTINE — The Becovic Management Group of Fishers, who plan to to create a $61 million upscale apartment complex on 27 acres next to the new Healthway Park complex, informed town officials they’re going to need help securing funding for the development.
Buzz Krohn of Krohn & Associates LLP, who has represented the town on several projects, gave a presentation to the council at the April, 20 council meeting. Krohn told town officials the developer needs to have at least a $5 million TIF (tax increment financing) bond that guarantees money coming in for the project before they can secure the funds to break ground.
Due to the fact the new apartment property won’t be taxed for a few years because of construction and delays in state taxes on assessed property, the builders are asking town officials for 75% of tax monies.
While the town’s redevelopment commission would get the remaining monies, 25% to be used for capital projects for things the town needs, town officials have not signed off on the $5 million TIF bond just yet.
“The way I understood the presentation is, it means in order for the developer to get the $61 million in financing, they have to be able to show they have a revenue stream as income for the project,” council president Bill Niemier said.
During the presentation, Krohn said the town would not be giving cash to the developer, but that having the $5 million TIF bond would in turn give the town money they would not be getting otherwise.
“We’ll give them a piece of paper then over the next 18 to 20 years they would then get a portion of the incremental property taxes back to retire the TIF bond — that piece of paper,” Krohn said.
The initial proposal, 75% for the developer, 25% for the town, is based on what Krohn feels the assessed value on the project will be, he said.
“This is a commercial project, but it is multi-family so it is at a 2% tax cap instead of 3%,” Krohn said. “Homesteads are only 1%.”
Krohn noted the project is different because the developer is supposed to come up with all the capital for the build while people who build housing developments rely on home buyers to fund some of the project.
“Those projects can take 10, 12 years maybe longer,” Krohn said. “This project will only take a couple of years and a year following the assessments you can start capturing incremental property taxes.”
Niemier questioned how the developer came up with a $5 million TIF bond and not more or less. Krohn said they didn’t want to be too aggressive while at the same time let the town capture some funding.
The town is already getting some $50,000 from the Wellness Center project with a similar type of funding, Krohn said. He is projecting the town would take in between $180,000 to $200,000 per year for the apartment complex if this proposal goes through.
“From what I understand, this is a very important aspect of what the developer needs in order to get their financing,” Krohn said. “That TIF revenue stream is part of their portfolio when they go to get funding to do the project.”
Plans surrounding the construction project mentioned the first phase of the development would begin in mid-2022 with completion set for spring of 2023. The upscale apartment complex is set be built behind the Hancock Wellness Center complex near the southwest corner of U.S. 52 and Mt. Comfort Road and will have 282 units. They are supposed to have 102 single-bedroom, 148 two-bedroom and 32 three-bedroom units with rent ranging from $1,100 to $1,900 a month.
“High end developments like these need local support,” Krohn said.
The council could make a decision on the bond as soon as the next council meeting slated for 7 p.m. Wednesday, May 4 at Town Hall.