Chesterfield County is pushing an increasingly popular government finance tool a community development authority to help pay for the redevelopment of the officially dead Cloverleaf Mall site.
County officials have been working for months to put together the deal, which has yet to be presented to the county Board of Supervisors for approval. If it goes as planned, the county will work with the developer of the Cloverleaf site, North Carolina-based Crosland LLC, to float up to $13.5 million in tax-exempt bonds to make the deal fly.
A community development authority is an independent agency granted permission by a municipality to issue municipal tax-exempt bonds to pay for public infrastructure. In exchange for floating debt that's off the locality's books, the locality grants the CDA authority to collect tax revenues within the district to pay off the bonds.
The Cloverleaf CDA is still being negotiated, County Administrator James J.L. Stegmaier says, and could come in lower than $13.5 million. He says the CDA is a "critical piece" to make the deal more than four years in the making financially viable.
The CDA also answers the primary question about how the county plans to recoup its investment in its sometimes-controversial push to acquire the Cloverleaf property, according to documents obtained by Style Weekly through the Freedom of Information Act.
"We want it to be successful.
We also want the county to get out of the middle of what the private sector is doing," Stegmaier says. "We're eliminating our risk and shipping it to the private sector, but we want to do that in a way that optimizes the chances of success for the private developer."
The county outbid one of the biggest African-American churches in the Richmond area in 2004 to obtain the mall buildings for $9.2 million, and has made the eastern Midlothian corridor one of its top redevelopment priorities.
In the process, the county has spent handsomely to gain control of a mall that anchors an all-but-abandoned retail strip. Chesterfield supervisors recently approved the purchase of the remaining 46 acres at the site for $7.37 million, bringing the county's total investment in the property to more than $16.5 million.
By law, CDA bonds must be used to finance public infrastructure, such as roads, utilities, water and sewer. Because the bonds aren't backed by the municipality in this case, the developer bears the burden of paying back the bonds the interest rate is higher, in this case around 6.5 percent.
The deal would work something like this: The developer, Crosland, agrees to purchase the site from the county buildings and land, the full $16.5 million. Crosland would then spend $67.6 million to redevelop the site into a mixed-used retail and residential project called Chippenham Place. With the reimbursement of the CDA and the sale of several parcels within the mall property the biggest to Kroger Co. the developer would recoup some costs, bringing its net investment to about $43.4 million.
The developer and businesses within the project would also receive other financial incentives, including a five-year tax abatement on any increases in property values as a result of the redevelopment; a one-time $100,000 business personal property tax rebate; waivers of development and building permit fees an estimated $209,103 value and a five-year exemption of local gross receipt taxes (known as the BPOL tax) valued at $212,757. That's not to mention an additional state property grant of $250,000.
Chesterfield officials say they hope the CDA deal would be finalized when the county closes on the purchase of the remaining mall acreage May 23. The bonds could be issued by late summer at the earliest, Stegmaier says. SClick here for more News and Features