VOL. 127 | NO. 225 | Friday, November 16, 2012
Heritage Trails Financing Draws Concern
By Bill Dries
The next stop for an ambitious 20-year redevelopment plan that stretches from the South Downtown area into South Memphis is a Dec. 6 meeting of the Memphis and Shelby County Community Redevelopment Agency.
And members of the agency board were told Thursday, Nov. 15, the administration of Memphis Mayor A C Wharton Jr. may delay past December a vote on the tax financing for infrastructure in the proposed Heritage Trails area. But the administration will probably move for a vote by the agency at the December meeting on the redevelopment plan.
If approved there, the plan or plans go to the Memphis City Council and Shelby County Commission for a vote.
The proposal to finance improvements with a tax increment financing zone that harnesses and directs city and county property tax revenue to the effort has drawn concern from Downtown redevelopment agencies. The TIF zone overlaps with tax incentive zones used by the Center City Revenue Finance Corp.
Both financing methods draw dollars from the same pot of money – property tax revenues.
Two events contributed to the funding crunch.
City government, including the mayor and City Council, agreed to cap annual city capital improvements program spending at $65 million. The spending is financed with bonds.
Of that annual amount, $12 million was pledged for the redevelopment of the Cleaborn Homes public housing development, which has accompanying federal funding for demolition of the housing project and its redevelopment as a mixed-use, mixed-income development.
But before the money could get to Cleaborn Homes, the city used it on infrastructure for the Electrolux plant under construction in southwest Memphis. It then borrowed the local money for Cleaborn Homes from the federal funding and has to repay that.
The administration wants the tax increment financing district to meet its obligation on Cleaborn Homes and finance the city’s anticipated part of redevelopment of the broader area including the neighboring Foote Homes public housing development.
The city is working toward a spring deadline to apply for a federal Choice Neighborhoods grant, which would be the bulk of the government funding for Heritage Trails.
Those on the redevelopment agency board wanted to know Thursday if there is another way to finance the city part.
City Finance Director Brian Collins is re-examining that earlier decision by his predecessor in the finance office, Roland McElrath. Collins became city finance director in September.
Community Redevelopment Agency board member Luke Hill said the use of a tax increment financing zone for Heritage Trails is a critical shift in tax incentives from payments-in-lieu-of-taxes agreements as the “weapon of choice.”
“PILOTs and TIFs are almost mutually exclusive,” Hill said. “This is a policy change to say now we are going to shift gears from PILOTs and move toward a TIF.”
Hill also referred to $45 million in revenue from PILOT breaks in the overlapping area that are scheduled to roll off during the 20-year duration of Heritage Trails and flow into city coffers once they expire.
“It almost seems like we are redirecting those funds,” Hill said.
Meanwhile, Mairi Albertson, administrator of the city’s Housing Division, said the city administration has made no decision yet on whether Foote Homes would be demolished as part of the redevelopment.
She said while there is a plan for redevelopment of the larger area, a specific plan on Foote Homes is still being developed.
Foote is the last of the city’s large housing projects still standing and being used as public housing only.
For several years, city leaders under Wharton as well as his predecessor, Willie Herenton, have said they would like to see Foote Homes demolished as well.