How tax incentives could drive more development in Mecklenburg County
Mecklenburg County economic development office wants more say over how and where projects are built in the Charlotte area.
- How they plan to get it: more tax incentives.
What's happening: Commissioners and staff are in early conversations about using the financial tool to propel more development and play a more active role in investors' plans.
Why it matters: Tax increment financing could help the county get more parks and affordable housing, invigorate downtowns and spark interest in underinvested corridors, says Roger Johnson, Mecklenburg's ED director.
- It could also incentivize office tower conversion. Several prominent Uptown buildings are more than half empty, leaving the central business district often quiet.
- Many, including concerned local officials, would like to see the towers turned into much-needed housing.
The latest: The county has used tax rebates in the past to provide financial assistance for Atrium Health's innovation district, as well as Ballantyne Reimagined. But those projects came to the county after they were already designed.
- Instead of contributing to pre-planned projects, the county should be at the table during the conceptual stage, says Johnson, who joined the county six months ago.
- That's closer to what the county and City of Charlotte almost did for the canceled Seventh and Tryon project and have agreed to with Eastland. Developer Crosland Southeast will receive reimbursements for its work on the old mall site from the increased property tax revenues it eventually generates.
- "We put out a vision of what we wanted to see in the project and then selected developers to help implement that vision," Tracy Dodson, Charlotte's economic development director, tells Axios.
How it works: Say the county wants to build a park. Rather than acquiring property and allocating tax dollars, county staff would negotiate with the private sector to include a park in development plans.
- The developer would be reimbursed for the park through a percentage of property tax returns.
- "If they don't build what they say they're gonna do, they never get the reimbursement," Johnson says.
- The county could put out a request for proposals to accomplish a project. Or, a developer may approach the county early on.
Zoom out: Here's an example from downtown Wilmington, where Johnson previously worked. About a decade ago, the city learned it needed millions to remediate a 1966 parking deck that was in rough shape.
- Instead of shoring up tax dollars, it brought on a developer to rebuild the deck and agreed to pay the developer back through future tax revenues. The developer wrapped the new deck with condos, storefronts and a public plaza near the river.
- The city got its new parking deck, plus increased tax revenue for the mixed-use portion.
By the numbers: Johnson broke down the numbers for some commissioners during an economic development committee meeting this month.
- He detailed a theoretical example in which a property worth $100 million, built on a vacant parcel, would increase tax revenue from $6,169 annually to $616,000.
- With a 10-year 45% rebate, the county would get $339,000 in revenue annually after returns to the developer. The county's revenue would about double once the decade was up.
The other side: Tax rebates don't always receive unanimous support. Skeptical commissioners are already asking about how this would line the pockets of developers.
- Before committing money to The Pearl, commissioners questioned whether Atrium truly needed financial assistance. Susan Rodriguez-McDowell raised flags over the sheer number of residents drowning in medical debt, Charlotte Business Journal reported at the time.
- The Wilmington project, for example, has been criticized for lacking affordable housing.
What's next: The economic development committee continues to discuss tax increment financing as a precursor to "opportunities" that may be coming.
- Johnson says the development community is already asking the local government to support projects in their pipelines.
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