Industrial Park Drive project a go (06/13/06)

A new commission has voted to move forward with its first project.

Members of the Portland Redevelopment Commission, which was formed in February, gave the nod Monday evening to the widening of Industrial Park Drive and the relocation of a lift station. Total cost of the projects was estimated at about $1.3 million.

Also Monday, commission members agreed to back up bonds for all redevelopment projects with property taxes, which will lower the interest rate on the bonds but which could also cause taxes to rise.

This decision comes after several months of discussions and reassurances that the redevelopment commission would not raise property taxes in Portland.

The commission voted Monday to hire The Schneider Corporation of Indianapolis to do the engineering work on the lift station relocation at a cost of $45,000.

The company currently has a $93,000 contract with the city to do the engineering work for the street widening.

Bruce Hosier, mayor of Portland, said this morning some of the street project engineering fee has already been paid to Schneider.

He said he hopes the city could be reimbursed by the redevelopment commission. Hosier said the main priority is making sure there are enough funds to do the projects, he said.

Plans are to widen Industrial Park Drive to three lanes. This would include a center left turn only lane and deceleration lanes.

The curve in the street where the north lift station currently is located will be straightened, and the station will be moved to the east side of the street, said Phil Metzger, manager of business development for Schneider. The lift station also will be expanded to handle a greater capacity.

Before the redevelopment commission was formed, city officials announced plans for the street and lift station projects. Because the city initiated these projects, the city has essentially given its blessing, Hosier said.

The commission’s economic development plan includes several redevelopment projects the commission would like to see done. This plan has already been approved by the Portland Planning Commission and the city council.

Other redevelopment projects include revitalizing downtown Portland, improving and upgrading the water, sewer and storm water infrastructure, and extending Lafayette Street to Industrial Park Drive.

Metzger told the commission he would like bid letting for construction work for the street and lift station projects, which will be bid separately, to begin Nov. 1.

To pay for these projects, and other redevelopment projects, the commission will have to issue bonds, then repay the funds through increased assessed valuation generated in the tax increment financing (TIF) district.

The commission is permitted to issue bonds for up to $2 million. Seeking a bond above $2 million would require permission from the Portland City Council, said Sue Beesley, attorney with Indianapolis law firm Bingham McHale LLP.

Ffter much discussion, the commission unanimously voted to back up the bonds with property taxes.

Primary funding for redevelopment projects comes from TIF money. If the commission issues a bond for a project and the TIF district does not generate enough money to repay the loan, Portland property tax revenue could be used to help pay off the bond.

If there is a shortfall and property taxes have to be used, taxes could be increased to help make up the amount needed to pay off the bond. Such an instance could also affect money available for other city services.

Early in the discussion, Bob Quadrozzi, commission president, said, “We’ve said from the start TIF will not increase your taxes.”

“It’s a real problem for me,” Lola Joy, commission president, said of the possibility of a tax increase.

Quadrozzi asked how often property taxes are used to repay loans.

Greg Guerrettaz of Financial Solutions Group, Inc., Indianapolis, said he only knows of one instance in his 25 years of working with TIF in which property taxes have had to be used.

Backing up the bonds with property taxes could make the interest rates on loans 0.5 to 1 percent lower. The property tax revenue would serve as an assurance that the loan will be paid off.

Before the vote took place, commission member Joe Johnston said, “I think it would behoove us to try to get the lower rate” by backing up loans with property taxes.

“We believe the tax backup is of value,” Guerrettaz said.

Commission members also were presented with another option to repay bonds.

In addition to property taxes, bonds issued for redevelopment projects also could be backed up with any other sources of revenue generated in the city, Guerrettaz said. This could include economic development income taxes, and street and water department money.

In an attempt to avoid using property taxes, loans also could be refinanced, Beesley said.

In a related matter, Metzger presented conceptual drawings for what the extension of Lafayette Street could look like. This is another project commission members would like to see completed through TIF funds.

In other business, commission members voted to adopt a reimbursement resolution.

This documents states that if the city or redevelopment commission wants to be reimbursed for any money it has paid, this could be done as part of a bond taken out for a redevelopment project.[[In-content Ad]]