It’s pretty unusual for a public project to have that much security.
ST. ALBANS CITY — St. Albans City completed the sale of the former Brickyard Tavern site on Federal Street to a private developer just before the end of the year.
ReArch Company, doing business as 27 Federal Street, LLC., paid $2.5 million for the .287 acre parcel and 170 spots in a parking garage being built on an adjoining site by the city.
The garage will adjoin a new state office building that ReArch will build and leased to the state. The building will house more than 150 workers from the Agency of Human Services.
The city purchased the Brickyard site in 2008 for $225,000.
The $2.5 million will be placed into a capital reserve fund, explained city manager Dominic Cloud. Initially, the funds will be used to make payments on the city’s tax increment financing (TIF) bonds.
In tax increment financing, up to 75 percent of the property taxes – both education and municipal – on increased building values within the district are used to make bond payments for debt on public infrastructure. The taxes on that increased value are typically referred to as “increment.”
The city will be taking out a bond for $14.5 million to pay for the garage. The increment to pay for it will come from a number of projects in the city, including the sale of the current state office building on Houghton Street to Mylan Technologies, Inc. That sale will return a building valued at $5.4 million to the tax rolls, and 75 percent of those taxes will go to pay for the garage.
The same is true of the new state office building. Because a private developer will own it, the building will not be tax exempt. Seventy-five percent of the taxes on the new building will be used to make bond payments.
The city can also use a portion of the taxes on a recently completed expansion at Mylan Technologies, Inc. on Lake Street, the St. Albans Cooperative Creamery store built on Federal Street last year, and the new Ace Hardware store being built on North Main Street to make payments on TIF debt.
However, it takes time for the new appraisals and tax bills to be sent out. “Essentially there’s a year lag time between expenditures and the creation of the increment to pay for it,” explained Cloud.
The city has an advantage because it already has increment income from the St. Albans Cooperative Creamery and Mylan. It will also have the $2.5 million from the sale of the office building to make bond payments if needed. “It’s pretty unusual for a public project to have that much security,” said Cloud.
As increment comes in, any funds taken from that $2.5 million to make TIF payments will be repaid.
Ultimately, the $2.5 million will likely be used for other development projects within the city, such as the Federal Street multi-modal connector, redevelopment of the former Fonda factory site, or a new hotel on Lake Street, according to Cloud.
One of the best parts of the deal, from Cloud’s perspective, is the sale of the parking spaces. “No one else has done that,” said Cloud. The usual approach with a parking garage is to built it and hope people parked in it.
The city has secured users for 170 of the 370 spaces in the garage.
In addition to paying for the spaces, ReArch has agreed to pay the city an annual fee for the maintenance of the spaces. The first year the fee will be $250 per space or $42,500 payable in monthly installments.
That fee will increase annually by the rate of inflation in the Northeast, with a minimum increase of 2.25 percent.
In return, the city assumes all responsibility for the maintenance of the garage, including repairs, window washing, and trash removal, as well as paying for electricity and providing security.
The city agreed to insure there are 170 spaces available for use by state employees and visitors to the state office building between 6 a.m. and 6 p.m. on weekdays, or at other times requested by the state.
However, under the agreement the city may use the spaces for public parking in the evening and on weekends.
City officials have previously said utilization of the spaces would likely be controlled by computer. As users enter and exit the garage, the computer will track how many members of the public are parked in the garage and how many state employees. If all available public spots are taken, the computer will bar any additional members of the public from entering the garage while continuing to allow state employees, until more spaces become available, for example.