The pieces are coming together for what Somerset Mayor Eddie Girdler calls a “monumental master plan” for his city — but officials have to wait and see if all the parts will be in place first.
Initial research has been conducted — and overhauled — on the possibility of a Tax Increment Financing (TIF) plan that would allow for a large-scale infrastructure redevelopment of downtown Somerset through redirection of tax funds, primarily sales taxes.
And it all hinges currently on the planned downtown energy center, as well as a crucial proposal that’s still being kept under wraps at this time.
In February, members of the advisory firm Commonwealth Economics met with officials from the Downtown Somerset Development Corporation (DSDC) to discuss the feasibility of a TIF plan in helping Somerset. The initial idea arose from DSDC’s efforts to look for ways to fund a renovation of the Virginia Cinema, but it became apparent that TIF money could be used to engineer an overall downtown revitalization.
Several steps were necessary, including an initial study by Commonwealth Economics to determine the feasibility of a TIF district, the possible boundaries and how much money could be expected under certain conditions. Once that was concluded and city officials got on board, the state government would then need to make their own determination on whether the investment would be worth it.
Most of the income in a successful TIF project comes from redirecting sales tax funds that would have otherwise gone to Frankfort. The tax revenue is able to pay for the improvements, even retroactively, but the state government has certain conditions that must be met before they’d sign off on the plan for a community like Somerset. If it doesn’t look like the project would generate enough new tax dollars to be profitable to the Commonwealth, they’d likely turn it down.
Under a TIF plan, local and state governments would rebate as much as 80 percent of any new tax revenue that results from a development back to its own certain area. This tax money would pay for infrastructure work needed to create the development.
First, the state has to meet a spending threshold of $20 million in the downtown area. If that figure isn’t met, no money comes back from the state, and the TIF plan isn’t feasible.
Girdler told the Commonwealth Journal that in the previous week, city officials had met to discuss the future of the TIF plan. He said that the study into what the city would do as far as developing downtown “has totally changed” over the last three months from what it had been at the outset.
“That study (Commonwealth Economics) talked about has partially been done. The only purpose of the study was to find a development area, and we did have that submitted to us, and we reviewed that, and we’ve changed all of that,” said Girdler. “Myself and city staff working with (DSDC executive director) Gib Gosser came up with the modifications.”
The scope of the city’s plans was changed by this mystery project that would help the city reach the $20 million spending threshold. Without it, said Girdler, the city found that what they were already spending, including on the $8.5 million energy center on the corner of East Mt. Vernon and College Streets, wouldn’t be enough to meet the necessary number. Something more was needed.
That something has come along, confirmed Girdler, and while it’s far from a done deal yet, the mayor is optimistic.
“We do have one major piece of the project we’ve added over the last week,” he said. “It’s very significant for development for Somerset.”
Girdler said that the city needs to make sure it has permission from the entity making the proposal before an announcement is made, but he expected it to be unveiled most likely within the next 30 days.
“Because of the number of important projects going on right now, we didn’t feel like there would be sufficient public and private funds to get up to $20 million, but with the addition of the proposed project, it will be sufficient,” he said.
Girdler stressed that none of this will come at any extra cost to the taxpayer, as meeting the $20 million spending figure will all the city to issue revenue bonds.
“We won’t issue revenue bonds if we don’t have the money to pay them off,” said Girdler. “... There’s no cost involved to the community, no obligations to the community, because if we don’t reach $20 million, then it doesn’t become a reality.”
If it does? Then expect a radically transformed downtown Somerset at some point in the future.
“We’ve come up with an extremely positive and wonderful development plan,” said Girdler. “... If the TIF is approved, I think we will have a very workable and fantastic project that everyone will be surprised and pleased with.”
He added, “I just think this is something that will change Somerset for the positive and make people come downtown.”