City OKs TIF plan for Colony Park
By Leah Square
With nearly $400 million spent on developing luxury retail and office space along Highland Colony Parkway, developer H.C. "Buster" Bailey went before Ridgeland city officials this week to attempt to maximize his reimbursement from the city for out-of-pocket infrastructure expenses.
In a 5-2 vote, the Ridgeland Board of Aldermen on Tuesday agreed to a 20-year term on $35 million in municipal bonds, which will be issued to pay back Bailey and his co-developers for roadwork, traffic signals and other infrastructure improvements associated with the development.
While most of the board supported a 20-year repayment period, other board members favored a truncated schedule of 15 years, saying the city may not be able to generate enough tax revenue from the development to support a longer payment schedule.
Known as "Colony Park," the mixed-use commercial development stretches from Old Agency Road to Madison Avenue along Highland Colony Parkway, which is easily accessible from I-55.
The development, which is still under construction, entails upscale retail mall Renaissance at Colony Park, mixed-use lifestyle center The Township at Colony Park and three office parks. Tenants like the Butler Snow law firm, Cellular South, Ruth's Chris Steak House and Ann Taylor clothing have made Colony Park their home.
Bailey and his co-developers Andrew Mattiace and Jim Barksdale took up the cost of the related infrastructure improvements with the expectation that they would be reimbursed by the city through Tax Increment Financing, a public financing method in which municipalities use future gains in taxes to pay for improvements.
Ridgeland City Clerk David Overby said municipalities are normally responsible for a new development's associated infrastructure costs.
"But if the developer puts those things in, then he qualifies for TIF," Overby said.
Like other TIF projects, Colony Park is expected to generate increased tax revenue. Overby said the city plans to reimburse the developers with the increased revenue, which will be used to cover the costs of repaying the bonds.
Four years ago, the city made an agreement with the developers that stated the city would reimburse them about $35 million over a period of up to 20 years.
During meetings this week, some board members appeared hesitant about OK'ing a proposal from the developers that asked the city to firmly agree on a 20-year bond repayment period.
Alderman-at-Large Gerald Steen said he favored a repayment period somewhere along the lines of 15 years, saying the city would end up deep in debt if the development did not produce enough tax revenue to pay the bond holder over a longer, 20-year period.
Bailey said anything less than 20 years would negatively impact future plans for Colony Park, which is not even halfway complete.
"It burdens the development plan by reducing by about $5 million the amount of money available to go forward (with construction)," Bailey said.
Even so, some on the board also said they were uncomfortable agreeing to a 20-year period without knowing what kind of interest rate will be tacked onto the bonds. A longer repayment schedule also would carry a higher interest rate.
"A high interest rate does indeed have a long term impact" on the city's ability to honor payments, said Alderman Ken Heard.
In an attempt to ease fears, Demery Grubbs, the city's financial counselor, assured the board the city could afford to issue its first bond this year for about $22 million of the $35 million promised based on actual and projected tax revenue from Colony Park.
The city likely will issue one additional bond in order to reimburse the developer the remaining $13 million, Overby said.
According to the developers' numbers, property and sales taxes from Colony Park have generated about $1.3 million in additional tax revenue for Ridgeland in only four years.
Bailey said the developers have spent $390 million constructing Colony Park's nine office buildings with more than 900,000 square feet of space, two hotels, seven banks, more than 500,000 square feet of retail space and nine restaurants.
The development is about 40 percent finished, Bailey said. "We have a lot more to do."