MOUNTAIN PARK — Mount Airy officials came before the county Board of Commissioners looking for help with the Barter Theatre project. They got part of what they wanted.
Mayor David Rowe and Commissioner Steve Yokeley spoke to the county board at Monday’s meeting at Mountain Park Elementary School.
“‘A rising tide lifts all boats.’ What’s good for the city is good for the county,” Rowe said about the development of the former Spencer’s land along Willow Street in downtown Mount Airy.
A 500-seat theater is to be developed on the former Spencer’s industrial property bought by the city government in 2014 along with a boutique hotel with 90 rooms (its grand ballroom seating 350) and an upscale apartment complex with 67 units, with possibly more development coming later.
Yokeley said at a recent city meeting that this represents an investment of more than $40 million.
Mount Airy’s recent vote obligates the city to build a state-of-the-art theater costing about $13.5 million. That is expected to be reduced to a net of around $3.6 million due to the receiving of tax credits involved with the transformation of the former textile complex into its new uses.
This is a complicated project, Yokeley told the county Monday. It wouldn’t be feasible without those tax credits. The city would appreciate any help the county could give to help finance that $3.6 million.
Commissioner Larry Phillips agreed that this is complicated and added, “We’ve had three weeks to look at this, and you’ve had three years.”
Three weeks refers to how in late February, the city sent a proposal to County Manager Chris Knopf with three ways the county could help.
Mayor Rowe said he apologized for the short time, but the city was working to put together details as best it could. He also added that in order to get those $8.6 million in tax credits, the city must start work on the property by June 16, so time continues to be tight.
The proposal states:
• Part I would be a “refund” of property taxes the city would pay on the theater to the county.
• Part II would be $1.5 million in construction costs, spread out over up to five years.
• Part III would be “equitable sharing” of extra tax dollars created by rising property values downtown.
For Parts I and III, the county wouldn’t be losing anything, noted Rowe. This is money the county isn’t receiving now.
As local government, the city wouldn’t pay property tax, noted Commissioner Larry Johnson.
However, both Rowe and Yokeley said the city had to form a limited liability corporation in order to receive the tax credits, which is subject to property taxes.
So the city would only pay taxes on the location until the theater is paid off and ownership transfers from the LLC to the city, Johnson asked. Both men agreed.
Knopf said Part I is similar to the economic incentives the county gives to new businesses that come to town. The business pays its property tax, and the county gifts all or part of it for a certain period of time.
In the past, such arrangements have included refunding 80 percent of property taxes paid over five years.
Since the city wouldn’t normally pay taxes anyway, this is revenue the county wouldn’t get, so Johnson said he was okay with letting it be gifted back to the city. He said he estimated that would give about $70,000 a year on a $12 million theater, and if the real number is $13.6 million, then the value would go up some.
The rest of the board agreed with Johnson on approving Part I.
“Part II is out for me,” Phillips said of providing money for construction costs. If it comes to deciding to ante up more money for school resource officers at elementary schools or construction costs in Part II, he would vote for school safety.
Commissioner Van Tucker said he would love to say $3 million toward construction, but he just doesn’t think the county can afford to give anything without “doing the dreaded thing” of raising taxes.
Commissioners Johnson and Eddie Harris also seemed to agree.
On Part III, Johnson said he believes the hotel and housing developments are a no-brainer to support, and he believes the theater could be good for the city. However, he wasn’t in favor of the full scope of Part III.
This isn’t just sharing the new tax revenue from the hotel and housing, but neighboring properties, Johnson said.
If the Spencer’s development causes the property values of adjacent lands to go up, then this would be new revenue the county wouldn’t have had before, Rowe and Yokeley said. The city is just looking for a share of the added revenue. If the property values don’t ever go up, then this part doesn’t come to pass.
Johnson said he wouldn’t agree to the whole map area that the city provided, just the two new projects.
“One of the big problems in this county is tax base,” said Chairman Harris. The county needs boosts with new businesses and jobs. “This is tax base that we do not have right now.”
It wasn’t an easy decision to make for the city, said Harris, but it could be important for the county.
Harris said he supported Johnson’s idea of passing Part I and approving a modified form of Part III. Phillips said he, too, could agree to Johnson’s suggestions.
Tucker said he wouldn’t support Part III right now. The hotel and housing projects haven’t progressed yet and property values won’t go up for a long while, so he doesn’t see a need to pass this right now. He would be in favor of waiting until next year to discuss this one.
Johnson said he would make a motion for his plan.
Knopf noted that any tax incentive couldn’t be extended more than 10 years by state law.
Johnson said he would be fine with six years for both Parts I and III. Even though it wouldn’t be as much as the city wants, he figures the deal could be worth three-quarters of a million over six years.
The board then voted 4-0 for Johnson’s version, which will have to go back to the city for confirmation since the agreement was altered.
While this deal doesn’t seem to leave much property tax for the county, Johnson pointed out that the county gets two and a quarter cents back in tax for every dollar spent by those who will use these new facilities, so the Spencer’s deal can still be a boost to revenue.
Jeff is the news editor and can be reached at 415-4692.