ELKHART — Property tax revenue from a proposed luxury apartment complex at the former Elkhart Foundry site – touted by proponents as one of the project's pluses – may not benefit city coffers for 25 years, according to a review of financing plans released by the city.
Flaherty & Collins Properties, an Indianapolis-based developer, says their proposal to build the 200-unit complex on now-vacant land could lead to more than $400,000 a year in property tax revenue for the city. The city, however, is considering providing $4.6 million in funds to help pay for the $28 million proposal, money that would be paid back through that same expected property tax funding, according to a summary of the proposed project on the city's website.
The city is expected to contribute a total of $6.1 million toward the project. Part of that includes giving Flaherty the 6.8 acre plot where the complex will sit, worth an estimated $1 million, and providing remedial environmental cleanup, expected to cost $500,000. The former Elkhart Foundry occupied the land until it was demolished in 2010.
Of the $4.6 million, $3.1 millon would come in the form of tax increment finance bonds and the remaining $1.5 million would be financed through what's called an economic development loan. Both would be repaid through property tax revenues generated in a proposed special TIF area that would only encapsulate the luxury apartment project site. A TIF is a special district in which property tax funds generated are used for redevelopment within.
According to the city, the $400,000 in annual property tax revenue will cover all of the annual debt service on both the loan and bonds. A recent study by Crowe Horwath, a public accounting and consulting firm hired by the city, said that the expected property tax revenue will stand at $300,000. But Flaherty is willing to guarantee $400,000 a year in property tax revenue, which city controller Jeff Spalding indicates is a sign the developer feels the project will be a success.