A measure aimed at bringing new development into the Tax Increment Financing district was approved Tuesday night at a meeting of the Bowling Green Board of Commissioners.
A municipal order including several documents necessary to the development of a commercial wrap of the parking garage at College Street and Eighth Avenue – Block 6 in the TIF district – passed by a vote of 4-1. Commissioner Bill Waltrip cast the dissenting vote.
The approved documents include a sub-developer agreement with Mills Family Realty for the wrap, the city’s lease of the parking garage intended to make financing easier and changes to the TIF Revenue Sharing Agreement. Hitcents is set to be the first tenant of the wrap when the first phase is completed. Ed, Chris and Clinton Mills, founders and operators of Hitcents, also operate Mills Family Realty.
The second tenant of the wrap is expected to be Connected Nation, according to the application for a TIF project.
Connected Nation is a nonprofit organization that works to expand access to and use of broadband Internet and related technologies, according to its website.
Hitcents CEO Clinton Mills said the lease agreement with the company isn’t signed yet but is expected to be approved Thursday by the company’s board of directors.
There is still a possibility that Connected Nation won’t sign the agreement, he said.
Hitcents has been conducting website redesign business with Connected Nation for about eight months, Clinton Mills said.
Connected Nation moving into the wrap along with Hitcents would make collaboration between the two easier, he said.
“We feel like it’s a great fit for us,” he said.
The wrap development must have about 38,000 square feet of retail/restaurant space and 68,000 square feet of office space, according to the TIF project application. It is estimated in the application that the project will generate about $14 million in TIF revenue during a 25-year period.
The city’s lease payments for the parking garage will be equal to the bond payments for the wrap. It is financed by about $22 million in bonds issued by the county and payable over 25 years. Some money will be set aside to help cover the cost of that payment, including lease revenues from the wrap, TIF revenues generated by one of the tenants and TIF revenues generated in blocks 4A, 5, 8 and 10 to the lease payment, according to the municipal order. Any revenue beyond the lease payment would go to the city and could be used to pay off other bonds.
TIF revenues from 10 other TIF blocks would also go to the city under the sub-developer agreement unless a new project of $3 million or more is constructed in the block. After an investment of that size, the Warren County Downtown Economic Development Authority can reallocate those revenues.
Waltrip said the lease agreement is a risk to the city and sets a bad precedent for the city’s participation in such developments in the future.
“I still don’t think it’s in the best interest of the city to risk our bond rating to pass an ordinance with so many unknowns,” he said.
During a work session, Waltrip read from a letter from Morgan Keegan, the city’s financial adviser, stating that the agreement could jeopardize the city’s bond rating.
However, Waltrip said he supports the idea of the development and hopes it is a success.
The city is responsible for covering whatever portion of the bond payment isn’t covered by other specified revenues and the sub-developer has to pay the city back for any payments it makes only if the company wants to buy the wrap after the bonds are repaid, said Kevin Brooks, attorney for the Warren County Downtown Economic Development Authority.
“I’m not going to predict the future nor say there is zero risk,” he said.
Chris Mills, president of Hitcents, said the agreement was an opportunity for the city to invest in keeping a successful company in Bowling Green.
“We’re very excited about the vote that took place tonight,” Chris Mills said after the meeting. “It just furthers the Hitcents commitment to the Bowling Green area.”
He said he’s confident that Mills Family Realty will be able, through a leasing agency, to find tenants for the space in the wrap.
The Kentucky base for the company can be a disadvantage as they are sometimes not taken seriously, Chris Mills said. But Bowling Green wages and cost of living compared to those in California or New York help Hitcents remain competitive.
A top-notch building will help change perceptions, he said.
“We’re just trying to portray a very high-tech company,” Chris Mills said. “And to do this, we really need a building that can actually show that, that we can showcase for our clients so that people know when they look at us, ‘This company knows what they’re doing. They’re successful.’ ”
Between the work session, where the issue was discussed, and the regular meeting, a change was made to the municipal order, altering how the city is notified of new tenants to the wrap. The process was originally set up so Finance Director Jeff Meisel would get notification of potential new tenants and their rental rates and be able to ask Mills Family Realty to go to the board of commissioners for approval if he sees a potential problem.
It was changed so the city will only get notification of new tenants and how much space they will be renting. The change was made because of concerns that the old process would make rental rates public record and complicate negotiations.