Having reviewed the recent unveiling of the new "Grand Junction Plaza" in Westfield through the Indy Star, and gathering more data, I have serious concerns and questions about the financial impact of this project. The Mayor and Council are claiming it as a "financial positive" for the community. I question this claim and the following information explains why.
Looking at the southeast corner of State Road 32 and Union Street, the building include BMO Bank, Erika's Place Grand Junction Brewing and Jan's Village Pizza and Ice Cream. Collectively, the parcel totals .6 acres. These are old buildings, but these same buildings have an Assessed Value (AV) of $824,100 and pay annual taxes of approximately $23,012. Estimating and mathematically making this parcel proportional to 1 acre of land, the AV would be $1,373,500 and $38,353 in tax revenue. Multiply this by 6 acres, (acres in the Grand Junction), it equates to $230,120 in taxes paid annually.
Consider, for a moment, newer nearby development. Thinking about PNC Bank at State Road 32 and Carey Road, it pays $42,300 in annual taxes. Across the way is AutoZone which pays $35,080 annually. Each of these sites is .85 acres with significant parking lots. Making each of these properties proportional to 1 acre, one would arrive at approximately $91,035 paid in annual taxes. Multiplied by that same 6 acre figure, the community would realize $546,211 in annual tax revenue.
At this time, we should recognize that PNC Bank AutoZone aren't sites typical for a downtown location. Downtown sites don't have such large parking lots and they're typically more than one story. Realistically, we could fit two buildings on each site by removing the parking lots. This would double the taxes to more than $1 million dollars. Add a second or third story and the tax revenues increase.
Analyzing the plan to borrow $39 million dollars, this park will generate $0 dollars in tax revenue. Yes, I said $0. None of the $39 million dollars has included the costs for land acquisition, razing the buildings, the legal and accounting expenditures or the monies spent on developing the plans, etc. It also does not include interest and other costs. As the plans have yet to disclose the real costs thus far, could we assign the debt a cost of $65-80 million dollars? If the administration plans to repay the Bonds over 25 years, the payment would equate $2.6 million dollars annually.
On the other side of the coin, would be the potential to develop six "downtown" acres into businesses that would pay taxes. That's $1 million dollars in tax revenue, increasing most years due to reassessment, in assessed value. The results from the administration's plan pays $3.6 million dollars (that's $2.6 in payments plus $1 million in operating expenses according to the presentation) rather than receiving, at minimum, $1 million dollars in tax revenues. It creates quite a disparity in potential outcomes with a $4.6 million dollar flip.
I would be remiss not to factor in the loss of revenue to the schools, library, township, and public safety due to Tax Incremental Financing. TIF will impact taxpayers in two ways:
A) The school recently presented the community with the impact TIF has had on their revenue. According to the Power Point Presentation, the school lost almost $4 million dollars in revenue during 2018. They are projecting a loss of approximately $4.3 million dollars in 2019. This is important to note because there are four TIF districts the city to use to repay the debt on Grand Junction. These TIFs have been in existence for several years and according to the City, they wouldn't be used to repay the debt for 3-5 years after construction. These TIFs will require extensions, further depriving the schools and other government services revenue for three decades or more. (This isn't unusual. As an example, the Village Park Plaza TIF was set to expire back in the early 2000's, but the Town Council and County government extended it, so we're nearing the 20-year mark of that extension.)
B) We are currently paying higher property taxes due to referendums which, if the approximately $4 million dollars wasn't diverted from schools, they may not have been needed, partially or wholly. I question if we should add the costs of these referendums (high taxes) as part of the costs associated with Grand Junction.
When considering Grand Park, it has never financially lived up to the hype created by the "vision" of the Mayor and Council. It doesn't cover its own employee salaries with operational revenues, which means it will never repay the debt incurred to build it. It's been a financial failure with a current debt load of more than $113,000,000 according to the Westfield Examiner. The administration of the City of Westfield and the Council should concentrate on lowering taxes, be considerate of spending, and allow private developers to redevelop Westfield's downtown area and make it a true economic benefit to the community. Readers should send these thoughts to their own financial consultants and ask if this plan makes good fiscal sense. In the meantime, I would encourage you to direct email to the entire Westfield City Council at: firstname.lastname@example.org
About the author: Ron Thomas is a 20-year resident of Westfield who formerly served on Westfield's Town Council and also served as President of the Advisory Planning Commission for one year.