Worthington tweaks TIF to reflect mall's revised valuation
The tax-increment-financing exemption for the Shops at Worthington Place has been tweaked to better reflect real numbers as development continues.
Worthington City Council approved the changes Feb. 4, with members commenting that the city continues to benefit from development at the mall.
Under the 30-year agreement, the mall pays 100 percent of real estate taxes on improvements as service payments to the county. Those funds are redirected to the city to pay for improvements at the mall and to reimburse the schools for a portion of the tax dollars diverted.
Changes were necessary to reflect that the mall was purchased for less than anticipated in the original agreement and that the valuation of the mall has not reached the point it was expected to reach by 2013.
Figures in the agreement had to be adjusted downward to reflect the final purchase price of the mall at $4.36 million, not $6 million, as was written into the first TIF. The agreement was written as negotiations were progressing. Only in follow-up conversations with Worthington Square Venture did the city learn that the purchase price was lower, according to Worthington economic development manager Jeffry Harris.
The company, comprising investors who include Worthington resident Tom Carter, purchased the former Worthington Square Mall in late 2010. The name was changed to The Shops at Worthington Place, and extensive renovations have occurred, with new stores and restaurants opening.
The new purchase price adjusts downward the point at which the schools would begin receiving a portion of the compensation for which they would be eligible without the TIF.
The base valuation, at which point the schools receive 85 percent of taxes they would be due, becomes $16.86 million instead of the original $18.5 million. The midpoint will be $19.86 million, at which point the schools will receive 80 percent; and the ceiling will be $22.86 million, with any valuation beyond this point requiring that the schools receive 100 percent of the real estate taxes for which they are eligible.
The city makes payments from the TIF fund to the schools twice a year.
Because of tax dollars lost with the reduction in the mall's base value, the developer will make a one-time payment of $37,200 to the schools in 2013.
Not only has the mall's committed floor valuation been reduced to $16.86 million from $18.5 million; the deadline for meeting the floor valuation has been extended from January 2013 to January 2014. The city will begin making TIF reimbursements for improvements at the mall only when the floor valuation has been met.
If the $24.5 million in valuation is met, the city may spend TIF money on any public improvements after the schools are made whole.
The new agreement also allows the city to reimburse the developer only with TIF funds for projects completed by Jan. 1, 2014, and limits the projects that are eligible.
The original TIF specified a wide array of projects that would be covered because they have a "public purpose."
Now those projects are limited to work on and around the south, east and northeast entries and related general conditions and fees.
The city also is expected to enter into a separate TIF with the developers who want to build apartments on the north and northwest sides of the mall. The TIF also would cover adjoining land on which the James Tavern once stood. The land first must be subdivided from the rest of the mall.
Council voted 6-0 for the changes to the TIF, with members commenting that the deal seems to be benefiting the city.
Only 8 to 10 percent of the city's revenue comes from real estate taxes, councilman Scott Myers said. Roughly two-thirds of the city's revenues come from income taxes.
"As far as real dollars go, we're getting a lot of bang for our buck," he said.