One of the most important facts that any candidate for office in Grandview Heights must know is how the tax negotiations with NRI were made, and the results that we can expect from those deals in the future. TIFs are complex, but all candidates, both city council and school board, will have to deal with them, and understand how they affect current policy. We have had a slow start to the development, but with more housing units on the way we are well into dealing with the outcome, and it will be a top concern for years to come.
If a candidate comes to my door, the most important question I could ask would be “Can you give me a short lesson on the TIF agreements with NRI in the Grandview Yard development?” If they sputter and talk in generalities and obviously don’t know what was done in those TIF agreements, they have not done their homework, and should not receive your vote.
To help give you a better base of knowledge on the TIF here is a post from July 2009 that covered the negotiations with the school board. Be sure to read both the post and the link it contains to the TVN story about the deal.
(From July 2009)
A story in the TWG had a lot of detail for the negotiations with NRI over the compensation the schools will get from the G.Y. project. Read the story for the exact numbers, the school seems like they have worked out a sliding scale of increased compensation with steps in the number of housing units.
I sent an email asking O’Reilly about the quote where he seems to imply that accepting the deal from NRI on the number of units is not up for negotiation.
You are quoted saying about a possible cap on the number of housing units in G.Y., “If we put in a cap the 11% is gone and the other pieces are gone”.
Can you explain what would be gone if a cap was put in place?
How do you know that those elements of the deal with NRI would be gone with a cap – has NRI said that it is nonnegotiable?
This was his quick reply:
I am assuming you are expecting a complete answer from me and I wish to provide that to you.
I would prefer to wait until the negotiations are finalized and approved. However, I can tell you it is my feeling that it was going to be extremely difficult to get agreement on any caps that would be meaningful.
In addition, we were able to negotiate receiving a higher percentage of compensation as the number of residential units increases.
In providing more information surrounding my quote, if we pressed for a hard cap and NRI would agree, we would have needed to renegotiate our compensation package (which includes 11% of the total increase taxable valuable of the improvements plus an additional percentage of any residential growth) with the city to lower levels than we are set to receive (if NRI would actually agree to a cap).
I will also share that in order for the finances of this to work out for NRI, they will need to self-impose residential limits. Money to pay the bonds from the TIF will be generated at a much greater rate from the commercial side versus the residential side. Ed O’Reilly.
OK, the deal is still on the table. But the question is still present – why can’t Grandview place a hard cap on the number of units? What is NRI going to do, walk away from the table? The school has a limited ability to accept new students without hitting the wall and becoming required to build a new school. When that happens, the money gets tight fast.
I understand NRI makes more money from retail, and Grandview gets more taxes. But what happens if the market for new retail is not there? What if NRI crunches the numbers and finds that 800 or more lower end units (under 200K) can be sold and turns G.Y. into a primarily residential project?
More to come – the negotiations with NRI are hot right now, and news will develop fast. Too bad so many of Grandview residents are out on vacation right now (or was this an NRI strategy?).
O’Reilly part two
I asked a few more questions about the G.Y. deal, noting that there is some overcapacity in the school facilities now, but asking what number would require a new school to be built (from an Aug.4 email).
Here are a few thoughts to consider. Currently, we receive one student for every three housing structure that exists in the school district. G.Y. is approximately 90 acres with about 10 of those acres already being committed to phase 1. In typical housing developments, you can build about 4 houses per acre. This figure would include streets and other infrastructure. Quickly doing the math, if this development went to a single housing format, the maximum number of houses in that area would be approximately 320. We would be able to handle that type of increase in student population.
If the City allowed NRI to build one and two bedroom apartments instead, the number of units would increase, but the number of students we gain from apartments would decrease. I do not foresee student population from this area becoming an issue for the school district. In addition, because the build-out is beginning with hotel/office/business, we should begin collecting additional tax dollars before any housing is built on he property. It will be important for us to continue to mindful of how we utilize our funds so that when we do begin to see students coming our way, it does not create a burden for our tax payers.
We do have a great deal of capacity in regard to student space in our district. The high school alone could accommodate a minimum of 125 students without adding classrooms.
I will tell you that if we need to undergo major construction to add capacity to our district, we would need to ask our voters for permanent improvement dollars. However, the school board, the city, and NRI do not foresee this as a possibility.
I do appreciate your questions. They are some of the same we asked ourselves throughout the process. As I shared with you before, the project cannot support itself if too much housing is involved. As you heard last night, NRI is purchasing the bonds. If they are going to make money on this project, whatever they build will need to be able to pay for the bonds. As part of our agreement with the city, the school district always receives payment before anyone else. NRI simply cannot afford to place a large number of residential units in the Yard. Ed O’Reilly.
And the experts are always right, don’t worry, be happy.
The number of possible housing units has nothing to do with the present density of Grandview, or “typical” density. We know that it will be high density housing, possibly four or five story structures. I just don’t understand why the announced possibility of up to 800 units is so far fetched. If NRI has no intention of building that many units, why keep the option open?
(From July 2009)
Postscript in 2013 – The NRI TIF has been good for the schools because the number of new students that have moved into the new apartments is much lower than expected. Residents tend to be DINKs (dual income, no kids), under 35 and not ready to settle down with kids. Some of this is because of a economy related trend, which might change. For now, the schools have no problems.