$61m apartment complex hinges on tax breaks – The Daily Reporter

A rendering shows what the new apartment complex will look like in New Palestine. The developers say they need a $5 million TIF bond in order to secure funding for the project.

Picture provided

NEW PALESTINE — The Becovic Management Group of Fishers, which plans to create a $61 million, 27-acre upscale apartment complex next to the new Healthway Park complex, has told city officials they will need assistance in obtaining financing for development.

Buzz Krohn of Krohn & Associates LLP, who has represented the city on several projects, made a presentation to the board at the April 20 meeting. Krohn told city officials that the developer must have at least $5 million in tax-increase financing (TIF) bonds that secure the money coming in for the project before they can raise the funds needed to innovate.

Due to the fact that new apartment ownership will not be taxed for a few years due to construction and delays in state taxes on assessed property, builders are asking municipal authorities for 75% of taxes.

While the city’s redevelopment commission would secure the remaining funds, 25% to be used for capital projects for city needs, city officials have yet to sign the $5 million TIF bond. dollars.

“The way I understood the presentation is that it means for the developer to get the $61 million funding, they have to be able to show that they have a revenue stream as revenue for the project,” said board chairman Bill Niemier.

During the presentation, Krohn said the city wouldn’t give the developer any money, but having the $5 million TIF bond would in turn give the city money it doesn’t. wouldn’t get otherwise.

“We’ll give them a piece of paper and then, over the next 18 to 20 years, they’ll get some of the extra property taxes back to get the TIF obligation off — that piece of paper,” Krohn said.

The initial proposal, 75% developer, 25% city, is based on what Krohn estimates the estimated value of the project will be, he said.

“It’s a commercial project, but it’s multi-family, so it’s subject to a 2% tax cap instead of 3%,” Krohn said. “Homesteads are only 1%.”

Krohn noted that the project is different because the developer is supposed to provide all the capital for construction while the people building the subdivisions rely on home buyers to fund part of the project.

“These projects can take 10, 12 years, or even longer,” Krohn said. “This project will only take a few years and one year after the assessments you can start capturing the additional property taxes.”

Niemier asked how the developer came up with a TIF bond of $5 million and not more or less. Krohn said they don’t want to be too aggressive while letting the city get cash.

The city is already receiving some $50,000 from the wellness center project with a similar type of funding, Krohn said. He predicts that the city would receive between $180,000 and $200,000 per year for the apartment complex if this proposal were accepted.

“From what I understand, this is a very important aspect of what the developer needs to get their funding,” Krohn said. “That TIF revenue stream is part of their portfolio when they go to seek funding to do the project.”

Plans surrounding the construction project mentioned that the first phase of the development would begin in mid-2022 with completion scheduled for spring 2023. The upscale apartment complex is expected to be built behind the Hancock Wellness Center complex near the south corner -west of US 52 and Mt. Comfort Road and will have 282 units. They are supposed to have 102 one-bedroom, 148 two-bedroom and 32 three-bedroom units with rent ranging from $1,100 to $1,900 per month.

“High-end developments like these need local support,” Krohn said.

Council could decide on the bond at the next council meeting scheduled for 7 p.m. on Wednesday, May 4 at City Hall.