MIchelle Monroe, St. Albans Messenger
ST. ALBANS CITY — Absent any additional development, St. Albans City could repay all of its tax increment financing debt and still have money left at the end of the 20-year bond period.
That was the word this week from consultant David White, of White + Burke Real Estate Investment Advisors, Inc. of Burlington.
The city has borrowed $14.5 million in TIF funds so far, which have been used to pay for work on the new Ace Hardware store site, the major streetscaping project downtown, and the new parking garage.
The city currently has $3.7 million to place in a working capital reserve fund in unused TIF money and other revenues, primarily the sale of the new state office building site on Federal Street to the ReArch Company.
A tax increment financing (TIF) district allows a municipality to build new infrastructure with borrowed funds in order to attract new development and then use the majority of the property tax revenue from that development to repay the debt.
The city also will receive additional TIF revenue from the following projects:
• the Ace Hardware building;
• expansion of the St. Albans Cooperative Creamery and the new co-op store;
• Mylan Technologies, Inc. expansion on Lake Street;
• Mylan’s purchase of the old state office building, bringing a formerly tax exempt building onto the tax rolls;
• the new state office building, which the state will lease from a private company.
Using those revenues and the $3.7 million in the working capital reserve fund, the city will be able to repay the TIF debt and have approximately $760,000 left over after 20 years.
“You can pay the bills,” White told the council.
The city is working with possible developers of 43 Lake St. with the intent of building an 80-room, nationally branded hotel on the site.
If the hotel is constructed, the city will be able to afford more infrastructure improvements, explained White.
With the hotel, which White valued at an estimated $7.2 million, the city would be able to invest $1 million in streetscape improvements on Lake and Kingman streets and $1.2 million to improve the Lake and Federal street intersection. White also estimates the city would spend about $150,000 on remediation of the hotel site prior to construction.
The city could use a combination of the working capital reserve funds and new TIF debt to pay for the new infrastructure and still repay all of the TIF debt, according to White’s estimates. Under this scenario, the city would have $300,000 left after 20 years.
Should development of the former Fonda/Solo paper products manufacturing site at the north end of Federal Street (now owned by the city) or another major project valued at $5 million occur within the city in the next few years, along with the hotel, the city would be able to increase its investment in the Lake and Federal street intersection to $2 million.
White assumed the city would need to invest $500,000 to cleanup the site, which faces Lower Newton Street.
Under this scenario the city would have $420,000 remaining after repaying the TIF debt.
White’s model uses conservative estimates for property tax increases and for increases in the value of properties not part of specific projects. For example, if the properties around the new state office building increase in value, the property tax revenue generated on that increased value would also be part of the TIF revenues.
“This is a very conservative scenario,” White said.
The city still has several years in which to take on TIF debt. “You can choose to do more investment if you find that there’s additional growth occurring,” said White.
In addition to the hotel and the potential for development at Fonda, the Handy site on the corner of Fairfield and Main is a possible redevelopment site and Mylan may expand within its current Lake Street site again, potentially providing the city with more TIF revenue.