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West Side Zoning

The 268 acres has been owned since the 90's by entities under control of a single person.  During that time the City has leaned over backwards to facilitate development.  We formed a tax increment financing district to permit a developer to preferentially recover infrastructure cost.  We rezoned the property to PD-88 to permit the commercial uses the owner requested.  Despite this, the owner kept the property in an ag use exemption, costing the city about $245,000 per year in lost property tax revenues.  We built a new fire station to serve development promised 10 years ago.  The owner has passed on opportunities to sell, depriving the city of additional tax revenues from development.

Why should we refuse the request to change the zoning from PD-88?

1.  This is the last remaining block of open land in the City.  It must be used for its highest and best use to provide the tax revenue to continue high quality municipal services throughout the City.  The current Mercer Crossing zoning offers 40-50% greater taxable value and tax revenues than the proposal.  Furthermore, we know that municipal services for residential property typically cost more than its tax revenue.

2.  The proposed zoning is inconsistent with the Comprehensive Ple for the City in two significant respects; first, by allowing 566 home in a commercial area, one introduces all manner of incompatibility, particularly with existing commercial zoning (like Monotronics) and a potential gas well.  Second, by allowing additional apartments, one significantly overruns the 5,000 unit limit in the Comprehensive Plan and risks future deterioration which can occur in areas of high apartment concentrations.

3.  The developer wants the City to form a Public Improvement District, or PID, which would borrow $41 million to pay for infrastructure and carrying costs.  The PID tax rate will be .60% of the PID's assessed value, about the same as the City's present tax rate.  The PID falls within the Valwood Improvement Authority which has a .24% tax rate.  Property in this PID would pay more than double the normal City tax rate.  Thus the PID property will be uncompetitive.

To remedy this, the developer wants the City to rebate 48% of the future property tax attributable to the development to offset half of the PID tax rate.  The upshot is that for 30 years there would be little upside to the City which still must provide municipal services to the development.  In other words, taxpayers in the rest of the city would be subsidizing this development because municipal services to it cost more than it generates.

4.  Branch Forum is sensitive to claims that this property will, according to claims heard from P&Z, "never" be developed if the change is denied.  That argument illogically projects the past into the future and ignores economic reality,  We should not be bullied or threatened by the land owners.

5.  The developer may be involved in a larger legal issue.  On February the FBI raided the developer's lender's offices as part of an inquiry into claims that the lender is defrauding its investors by shifting loans among funds.  See DMN article.  Branch Forum believes this should be cleared up before consideration of zoning for this developer.

The matter of the zoning was approved 3:2 by the City Council March 15.  However the related matters of forming a Public Improvement District and a long term property tax subsidy are to be discussed in the future.  Click here to watch the council discussion and refer to the staff briefing for the zoning matter.

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