Tax Increment Financing benefits are normally meant to incentivize developers to build new projects in blighted areas of town and, if possible, spruce them up.
But developers who want the same benefits for a new project at tourist heavy Fifth and Broadway in Nashville, across from Bridgestone Arena, say TIF is too sweet a deal to pass up.
As reported, the developers OliverMcMillan and Spectrum I Emery want $25 million in TIF benefits.
They defended this plan in an emailed statement Wednesday to The Tennessee Star.
“A Metro commitment for $25 million in tax increment financing has been a component of the convention center site redevelopment project since the public-private partnership agreement was approved by Metro Council in 2015,” they said in the email.
“Low bond market interest rates and the ability to lock in a fixed rate for the full term make a TIF bond the best business option. Since market interest rates are at low levels, the amount of interest MDHA pays on the bonds is minimized. Since the bonds are secured by the project’s property tax payments there is no risk to any Metro Nashville Agency.”
The development, called Fifth + Broadway, will have 230,000 square feet plus of retail and entertainment, as well as the National Museum of African American Music. Developers also plan to build residential and Class A commercial office space there.
As reported TIF subsidizes companies by refunding or diverting a portion of their taxes to help finance development in a certain area. These areas often must meet certain criteria for blight, including property abandonment, building code violations, or aging house stock.
TIF usually pays for, among other things, infrastructure improvements, acquiring land, or demolishing buildings.
The Tennessean, meanwhile, calls Fifth and Broadway “the city’s most prime commercial real estate.”
If the plan goes through, officials with Nashville’s Metropolitan Development and Housing Agency will oversee the city’s end of things.
Earlier this week, The Star asked MDHA spokeswoman Jamie Berry why developers weren’t using private funds instead. Is it possible, for instance, the developers tried, and a lender turned them down for reasons unknown?
Berry referred those questions to the developer.
The developers, in their emailed statement, did not address The Star’s questions on that.
Berry previously said the area in question was blighted, and Metro Council members approved a certain amount of TIF loan capacity developers can use until exhausted or until the district expires.
“TIF was part of the overall package to redevelop the convention center site, as desired by the Metropolitan Government,” Berry said.
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