Financial Impact of TIF Still Unknown
Oakmont Council discussed the possibility of participating in Tax Increment Financing for the Rivers Edge of Oakmont housing development last week.
Oakmont Council and Riverview School District officials continue to explore the possibility of financing a new housing plan in the community.
Last Thursday, council held a special meeting—with district officials and residents in the audience—to get up-to-date information about plans for a Tax Increment Financing plan for the proposed Rivers Edge of Oakmont housing development at the former Edgewater Steel site.
Brooks and Blair Homes LLC of Wexford, has asked the borough and the school board to participate in a TIF plan to help the company come up with the necessary money to redevelop the site.
Under the TIF, the property’s three taxing bodies—the school district, Allegheny County and Oakmont Borough—would divert a portion of taxes collected from the property to put it back into financing the project.
The state’s TIF act gives local taxing bodies the authority to cooperate in providing financing for development of blighted areas to increase the tax base, provide new employment opportunities and improve the general economy.
If approved, the Rivers Edge TIF would be the first residential one in the state.
The 28-acre Rivers Edge site would be located near the Edgewater at Oakmont housing development—an upscale residential community currently being built by Kacin Companies of Murrysville—and is expected to include a combination of 168 single-family homes, condominiums, townhouses, a restaurant, parks and a private boat dock.
Currently, the property is assessed at $410,000, according to Michael Pehur, a financial consultant hired by Brooks and Blair to secure financing for infrastructure. The total project is expected to cost $85 million—of that, about $10 million is for infrastructure costs, and there is a funding gap of about $6 million.
All money secured from the TIF would go toward infrastructure costs, including a traffic signal at the intersection of Allegheny River Boulevard and Plum Street.
However, contribution amounts for the borough, district and county have yet to be made public because they aren't finalized. What has been made public is that the borough and the county are expected to divert about 75 percent of the new taxes toward the TIF for a 20-year period, and the district will divert 50 percent.
Pehur said he is working on securing a private funding source—such as a loan or bond—to help finance the project along with the TIF money. He also stressed that none of the taxing bodies would be responsible for covering increased project costs, and they wouldn't have a financial obligation to bail out the project if the developer goes bankrupt.
In order for the TIF to work, however, Pehur said all taxing bodies must be willing to participate. Otherwise, plans for the development will go back to the drawing board in an attempt to reduce costs or the project could be completed in different phases versus in one shot.
School district business manager Frank Thompson inquired as to whether or not Brooks and Blair had attempted to secure other funding means before attempting a TIF plan, given that the neighboring Edgewater at Oakmont housing plan was able to secure PennVEST loans and government funding.
Pehur said the developer had attempted to do so in the early planning stages but was unable to secure anything.
"A TIF was the last resort," he said.
Officials with Kacin Companies, Edgewater at Oakmont developer, said a TIF wouldn't fit with the Oakmont community.
Larry Nicolette, the chief financial officer for Kacin, said Oakmont is a desireable community and is not considered "blighted." He said residents will be burdened if the TIF is approved.
Brett Malky, president of developer EQA Landmark Communities and part owner of Edgewater, said he "100 percent supports" the new development, but a TIF is not the way to go.
Pehur said once funding sources are secured, the TIF plan will stand for approval by the Allegheny County Redevelopment Authority. Then, the document will be made public and local taxing bodies will vote on the matter.
Officials said they hope to continue discussing the matter at upcoming meetings.
What do you think about the TIF? Do you agree or disagree? Tell us in the comments!