Seeking to promote economic development, Mooresville has introduced a public financing program to help private developers pay for projects that would expand its infrastructure.
The program involves what is called tax-increment financing, in which developers are offered tax subsidies for public improvements. In Mooresville’s case, such payments will come in the form of reimbursements, or grants, with their worth based on the increase in property taxes where their projects take place.
Used mainly to encourage commercial development that entails infrastructure projects, the financing method is used by governments that are not only seeking to expand their tax base, but also “looking for innovative ways … to help their communities redevelop,” Mooresville Town Manager Erskine Smith said.
The reimbursements would help cover costs for things such as right-of-way acquisition, design and engineering, along with construction.
Never miss a local story.
To qualify for them, applicants must show that their projects would benefit the town and that they are unable to pay for them without financial assistance from it.
Eligible infrastructure projects include the construction of buildings, parking garages and roads, along with streetscape improvements. Those that would spur growth also would receive reimbursements.
“The public’s got to get something out of it,” Smith said.
The program was approved by town commissioners earlier this month.
Under it, the total reimbursements a developer would receive are based on the difference in the tax rate on properties before and after they are developed.
Depending on the location and type of project, a developer could reap as much as 90 percent of the increase in property taxes over a 10-year period, or until the total reimbursement the developer claims is reached.
Developers will receive no reimbursements until they fully pay their property taxes, noted Deborah Hockett, the town’s finance director. The total reimbursements the town will offer each year will not exceed 3 percent of its tax base.
The town has at least one project for the program in mind so far: the nearly $1 billion LangTree Lake Norman development.
LangTree is expected to see the building of a 12-story hotel and conference center, and a multimillion-dollar aquatic center that would cover some 51,000 square feet. The tax-increment reimbursements would help finance some of that new construction, which would encompass about 8 acres and also include a parking garage.
The program has remained a focal point for the town over the past six months or so, as officials have sought ways to more closely control development.
The town did not have to look far for a reference point.
In Charlotte, such a program has remained in place for a number of years, helping finance a range of infrastructure projects including road constructions and improvements.
The city started using the program in 2004, to finance a redevelopment project in its Elizabeth neighborhood, near uptown, which is currently taking place, said A.C. Shull, economic development program manager for Charlotte. Mecklenburg County has also contributed tax dollars to the program.
The city has since offered some $136 million in reimbursements, generating more than $3.5 billion in private investment. In addition, it has enjoyed a significant increase in property tax revenue, Shull noted.
The latest project it helped finance was the development of the Charlotte Premium Outlets, a 400,000-square-foot shopping center in Steele Creek that opened last year. For that project, both the city and county agreed to give its developers a total of $6.1 million in reimbursements over 10 years.
“It’s worked very, very well,” Shull said of the program.
Jake Flannick is a freelance writer. Have a story for Jake? Email him at email@example.com.