Developer Forest City proposes to finance $44 million of its $328 investment in the Ballston Mall a/k/a Ballston Quarter redevelopment project by creating a tax increment finance (TIF) district to pay for infrastructure improvements.
According to Wikipedia, “Tax increment financing dedicates tax increments within a certain defined district to finance the debt that is issued to pay for the project.”
The increments are tax collections derived from increased property assessments and other tax revenue increases attributed to the development.
Exhibit C in Staff Report 56 for the July County Board meeting indicates that the Ballston Quarter TIF district consists of the mall itself. No one else would be taxed. This seems imminently fair.
In addition only 40 percent of the proceeds from the tax would cover debt service on the bonds issued to pay for the project. The rest would go to the County’s General Fund. That sounds good too, insofar as Forest City has offered no proffers for parks and schools needed by the 400 plus residents of the 22 story residential tower to be constructed.
So what is not to like about the Ballston Quarter TIF? First, the County has already committed $9 million of dedicated transportation and parking garage funds to the project. Secondly, the County has already given Forest City six additional stories in bonus density beyond its allowable height for the residential tower. Assuming that Forest City can rent out all this space, why the gap of $53 million between what it says it needs and the financing it has obtained?
Finally although Forest City will utilize only $44 million of the TIF backed bonds to finance mall improvements, $59 million will actually be issued. The $15 million difference to be paid to investors amounts to 25 percent of the whole bond issue, which seems excessive.
Are Forest City investors gouging the County or is the project too risky? Since the County will forego approximately $60 million in general tax revenues for the thirty year life of the project–.40 X $150 million–County Board should answer these questions before approving this deal.