City Tax Abatement Request for Mixed Use Building 338 S Walnut St

I was recently appointed to the City of Bloomington’s Economic Development Commission (EDC), as a County Council nominee, and just received word that we will be considering a tax abatement request for a mixed-use development at 338 S Walnut St downtown. One of the primary roles of the EDC is to evaluate and make recommendations on requests for tax abatements. The EDC is purely advisory; the City Council has the ultimate authority to approve tax abatements in the City of Bloomington.

Monroe County also has an Economic Development Commission, which makes recommendations on tax abatements in the unincorporated part of the county. This will be my first time considering a tax abatement on a project with a residential component; County projects have all been for employment-generating facilities (manufacturing and logistical facilities), at least during the time I’ve served on the Council.

The photo below shows the currently vacant lot currently on 338 S Walnut, along with a bit of the two adjoining properties — 340 S Walnut to the south (owned by the same owners as 338 S Walnut) and the old Costume Delights to the north.

338 S Walnut St
338 S Walnut St

Interestingly, 338 S Walnut St used to be the home of Monroe County Health Department’s Futures Family Planning Clinic; the clinic has since moved into the basement of the Monroe County Health Building. The building has already been demolished, and the lot is currently vacant.

Former County Futures Family Planning Clininc
Former County Futures Family Planning Clinic

The following is an architectural rendering for the planned project provided as part of the tax abatement application. The building is expected to be mixed-use, residential and commercial, and provide a total of 14,400 square feet. It will also include some on-street landscaping.

Renderings - 338 S. Walnut St._Page_3
Renderings – 338 S. Walnut St._Page_3

The owners anticipate investing around $2M in the property, and are asking for a 3-year phase-in of the property taxes associated with the new assessed value. This means that the new assessed value would be 100% abated the first year, 66% the second year, 33% the third year, and subsequent years would be taxed at the full value.

The property currently generates around $4000/year of property tax. At full value, the new project will generated around $40K/year of property tax, so even after the first year of the abatement, the new project will be generating 3 times as much property tax as it is currently.

The following abatement schedule (from the EDC packet) shows the estimated taxes with and without the abatement:

338 S Walnut Proposed Abatement Schedule
338 S Walnut Proposed Abatement Schedule

The EDC meeting to evaluate this application is on November 21, 2014 at noon. I’m not yet sure when this application will appear on the City Council agenda.

2 thoughts on “City Tax Abatement Request for Mixed Use Building 338 S Walnut St

  1. Geoff – This is helpful information. It helps to know the current tax revenue being generated versus the hoped for revenue. The project looks like it fits in with the corridor.

    My questions are:

    How long has this property stood vacant? Has it taken a long time to get to this point?

    What is the track record of the developers for making good on their promises in previous projects (here or elsewhere)? What is their plan for filling the commercial space as well as the residential?

    Why do the developers need a tax abatement?

    They say they will invest $2 million in the project – what is their estimated or expected return on investment? Over the long term?

    Are the developers giving the City anything to help with maintaining services and infrastructure that benefit the project and its future residents?

    What is the City’s plan for this area and does this project fit in that plan?

    The City and its residents will be giving up possible $80,535 in revenue (if you ignore that we only get $12,000 for the same period if nothing is done) for public services and infrastructure, plus it will take another two years before we receive the amount that we gave up – we won’t make up the amount we forgave. Is this project viable over the next 5-10 years? More importantly, what has been the city’s experience in comparable past projects with tax abatement – over a five year period did our revenue increase exponentially, and maintain a high level over a longer period of time due to the project so that it justified giving up 3-5 years worth of taxes? Many people tell me that tax abatement is crucial to economic development so I presume they have the data to prove it.

    Bloomington needs affordable housing options for low and moderate income people – how will this project help?

    Thanks for sharing this process with us,

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