Setting a dangerous precedent.
That was the fear many had while Metro Finance Director Richard Riebeling negotiated the tax increment financing deal for the redevelopment of the Bellevue Mall property.
At-large Councilman Charlie Tygard, a longtime champion of the deal that was completed earlier this month, worried that the new policy would set a dangerous precedent.
As Tygard put it: “We don’t want every developer looking to build a Walgreens to come and say, ‘I’ll build it here if you give me a million dollars in TIF.”
In the end, the Bellevue Mall deal made sense, according to Riebeling, because it met a stringent set of criteria.
Most importantly, Metro is committing $12 million in tax breaks, because the Bellevue community at long last will get a community library, something Tygard had long requested.
To help fund projects, TIF deals allow future property taxes that are generated by the increase in property value to be granted to a developer to pay off debt.
Cat’s out of the bag
Although Riebeling created a threshold for when Metro will award TIF funds for private developments, it didn’t take long for a private developer to challenge the policy.
The same day Council approved the Bellevue Mall deal, the developing firm of Newton, Oldacre and McDonald sent a letter to Metro stating it deserved retroactive TIF funds. The firm had developed the $125 million mixed-use Nashville West project that had brought Best Buy and Dick’s Sporting Goods to the west side of town, and had put $6.65 million of its money into infrastructure, which it wanted repaid.
“If a local public policy decision is made in favor of assisting retail developments, Nashville West should warrant incredibly strong consideration,” the letter from Newton, Oldacre, McDonald to the mayor’s office states. “We simply want an even playing field; thus, we would like to request reimbursement for our $6.65 million spent on public sector improvements.
“A reimbursement agreement with Nashville Metro Government seems to be a possible structure, as the public improvements could be repaid from revenue stemming from the development.”
Newton, Oldacre and McDonald wasn’t the only group sticking its hand out after the Bellevue Mall deal passed. Metro Council members queued up as well.
Before a vote on the deal was taken, Antioch Council members Sam Coleman and Robert Duvall said that the Hickory Hollow Mall, which has lost prominent tenants this year like Dillard’s, deserves attention too.
Conversely, District 5 Councilwoman Pam Murray wanted to know if Metro would do its part to assist with the Dickerson Road area. And that’s not to mention the Council members like Buddy Baker, Jason Holleman and Anna Page who also believe their districts deserve Metro assistance.
Although those Council members say it doesn’t have to be TIF financing like the Bellevue Mall received, their point is pretty clear. If the Bellevue Mall was blighted and deserved a Metro fix, then what about Nolensville Road, Dickerson Road, the Hickory Hollow Mall area or stretches of Charlotte Pike?
There are two tools Council members are pointing to for assistance in their districts. There are redevelopment districts, which have been wildly successful in places like Music Row and East Nashville, and there are the TIF funds recently approved for the Bellevue Mall.
But the question is how far will Metro extend its TIF funds through deals like Bellevue Mall or MDHA-approved redevelopment districts. With both tools, Metro loses out on property tax dollars, which are supplied to the developer in exchange for coming into a struggling area.
With its nine MDHA-controlled redevelopment districts in place, Metro has $68 million remaining to be potentially paid out by those deals. The redevelopment districts have already paid out $139 million in tax breaks since 1977.
MDHA Director Phil Ryan championed the effectiveness of the existing redevelopment districts, while stating that developing a “best practices” policy for when enough is enough on TIF funds is the responsibility of Metro Council.
“I think what we’re doing is we’re encouraging private entities to invest,” Ryan said. “That’s the goal. You can’t make everything a redevelopment district or else it would have no ability to attract investment.”
Riebeling’s threshold — which states that a property must be under-performing in terms of property value and that the developer must be willing to contribute significant private funds — has not limited the number of Council members wanting to know when their turn will come.
Coleman has begun holding community meetings on issues surrounding Hickory Hollow Mall and indicated he intends to ask for assistance from the Metro Development and Housing Agency, which controls Davidson County’s nine redevelopment districts.
“After this, my solution includes asking MDHA to do some things similar to what they’re doing in inner-city Nashville around Demonbreun,” Coleman said. “The inner-city has moved to places other than north Nashville and downtown.”
Page, whose district includes the 100 Oaks area and Nolensville Road, pointed out that Metro assistance makes sense for those key areas.
“I have generally discussed with the administration using this authority to make some of Vanderbilt’s exciting plans for 100 Oaks a reality someday, but at this point we remain in very preliminary stages of discussion with that idea,” Page said. “It is a great tool, but you need a fairly specific idea or project on one parcel to make it work I understand.
“Additionally, as [Mayor Karl Dean] set out with the Bellevue project, the use of this type incentive needs a large project as a driver and a very strong link to some public attribute in addition to the private redevelopment project,” Page said.
Paul Ney, the mayor’s economic and community development director, said it was understandable to see Council members asking where projects in their districts stood on the heels of the Bellevue Mall plan passing.
“As to whether it opened the flood gates, I don’t think I’d characterize it as such,” Ney said. “It’s heightened the profile of the [TIF] tool, which is one of the few the city has. It’s not surprising.
“I know there are some Council members whose view is that part of our responsibility is helping identify potential opportunities in their districts and I agree fully with that,” he said.