Washington County Economic Development Council CEO Mitch Miller told the council’s board of directors Thursday that Mountcastle Corp. President John Marshall decided to walk away from the development agreement for the multimillion-dollar retail project after learning the expansion of the surrounding tax increment financing district, a key part of the shopping center’s funding, would not be approved by the city and county by June 1.
“There were still a lot of questions to be answered about the TIF,” Miller said. “Mountcastle wanted everything to be in place by June, but there’s no way for us to make that now, so they decided it was in their best interest to get out.”
Mountcastle had a brokerage agreement with the council, whereby the company would market the site to retailers and receive a percentage of the proceeds when the land is sold.
Miller said the loss of the Johnson City company gives the EDC the freedom to find a new developer that can afford to buy the 100 acres of undeveloped land outright and reduce the amount of municipal money needed to fund the project.
“We have got to be responsible with taxpayer dollars,” Miller said. “It makes it easier for the city and the county if someone else can take this site down. It works better from the financial standpoint.”
After Miller’s announcement Tuesday, Washington County Mayor Dan Eldridge said pursuing a developer to purchase the land would be the only viable course of action for the Boones Creek project.
“It’s the only way to make the TIF work,” he said. “It takes the city and county out of the developer role, which we have no business of being in in the first place.”
In March, Eldridge warned the EDC that investing too much public money would put taxpayers at risk.
He said the Young Farm development could quickly become like The Falls in Bristol, Va., where the city has borrowed more than $40 million to purchase land, grade the site and improve access to a 1.5 million-square-foot retail shopping center near Interstate 81’s Exit 5.
Eldridge, who owns property in the path of the TIF district’s expected expansion, has frequently urged local leaders to properly assess the impact of increasing the size of the funding area.
Municipalities create TIF districts so they can borrow money against the expected increase in property tax collections after the land contained within the district is developed.
For months, the WCEDC has discussed expanding the district between the interstate and Highway 36 to capture the Boone Ridge Townhomes site before the residential development is completed.
Miller and his staff will travel to Las Vegas this weekend to attend the International Council of Shopping Centers’ Retail Real Estate Convention. He’d hoped to have an expanded TIF district in hand and to be searching for potential anchors for the 717,200-square-foot retail development, but now he’ll also be interviewing developers for the site.
“It helps to have the feasibility study that shows what the market can support,” he said. “We’ll talk to potential tenants and see if we can find a developer that wants to work in the Johnson City market.”
The WCEDC voted Thursday to reimburse Mountcastle Corp. for the feasibility study the company funded.
The $27,500 study performed by Jeff Green Partners showed that the site was near key demographics that could support entertainment-themed businesses unique to the Tri-Cities.
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