Grant County Council Wednesday approved the establishment of an Economic Development Commission (EDC) following a request from a private developer.
Zeke Turner of Vita Investment Holdings, LLC presented a proposal for a $40.2 million affordable senior living facility to be built on Adams Street directly across from the Indiana Wesleyan University entrance on land that was recently annexed into the City of Marion.
According to a project overview submitted to council, the mixed-use development would hold 80 assisted living apartments (70 affordable units and 10 market rate), 27 affordable independent living apartments and 32 market rate memory care units. Turner estimated the project would bring 300-350 temporary construction jobs and 60 full time equivalent permanent positions with an annual payroll of approximately $2 million.
Turner and his development team are seeking the issuance of $30 million in economic development revenue bonds to finance the construction of the project. These types of bonds are tax exempt and must be issued through a city, county or the state that acts as a pass-through conduit to the developer, and Turner is requesting that Grant County act as the issuing municipality for this project.
“The advantage there is by getting tax-exempt bonds we’re able to lower the cost of financing of the project and be able to pass those savings through in more affordable options to the residents that will live there,” Turner said. “As part of that then, we also commit for a 30-year period of time to keep that project affordable.”
State statute requires that any municipality that issues these bonds must have an EDC set up, and council approved the establishment of the EDC by a vote of 6-1, with Councilman Frank Hix voting against it.
Councilman Jonathan Perez said he thinks the county should have an EDC regardless of Turner’s specific request if council members mean it when they say they want to encourage business growth and development in the county.
“We’re not serious unless we have our own EDC as a tool and there are very few tools we have left as governmental entities to use for pass throughs for deals like this to be an incentive for business,” Perez said. “If we’re serious about these things that we want to champion we need our own EDC and we need it to keep it going and not just create EDCs for project-specific deals.”
According to the ordinance establishing the county’s EDC, the commission will be made up of three members, with one member each nominated by county council, county commissioners and Marion City Council. The commissioners will take the recommendations into consideration but have final say on the commission appointments.
Council considered making its recommendation for its EDC member Wednesday, but council attorney Phil Stephenson said it was unclear if a council member was eligible to serve and advised waiting until that issue was cleared up. Instead, council gave President Shane Middlesworth the authority to make the recommendation to the commissioners after making sure the person he has in mind for the position is willing to serve.
The EDC has the authority to meet and conduct business for any potential project that requires the use of the commission, but Stephenson said it will not have final authority but will rather make recommendations for council to act upon. The county uses a similar structure with the health board, board of zoning appeals and area plan commission making recommendations to the commissioners.
“The EDC then meets within 30 days and elects a President, Vice President and Secretary,” Stephenson said of next steps following the commissioners’ appointments to the EDC in an email to the Chronicle-Tribune Thursday. “Presuming there is a filing with them for a request for the issuance of bonds, the EDC must then hold a public hearing on the request. The EDC then must approve or reject the request. If it is approved, it is sent to the Council who would decide if the bonds are to be approved by ordinance.”
Turner’s bond counsel, Scott Krapf of Frost Brown Todd LLC, said the project would start the bond inducement process, which gets the bond issuance started, as soon as the EDC is able to hold meetings. Assuming the EDC and council approve those stages, the EDC and council would then be asked to approve the final bond ordinance and issuing documents at a later date.
Turner and Krapf said there is absolutely no risk to the county or its taxpayers for issuing this kind of bond, since the county is a pass through to make the bonds tax exempt.
Stephenson said state statute specifically states that the county would have no obligation to pay off the bond and that the bond is not able to be paid for by county tax revenue.
“Thus unless the council specifically looks to back them from other means beside taxation there is no responsibility to the county,” Stephenson said in the email. “So as long as the documents properly indicate all of this, the County has no liability.”
Turner said the county will encounter legal and issuing expenses of approximately $2,500, but he plans to sign an agreement to reimburse the county for any costs incurred.
County officials had mixed reactions to the proposed project. Councilman Mike Roorbach said he thinks the project is a win-win since it comes at no short or long term costs to the county and will provide a needed service to the community.
“This will generate jobs which is income for the county, taxes, and then this place will pay taxes as well,” he said. “Zeke, I want to thank you for coming to us. We need this in Grant County.”
Auditor Jim McWhirt asked why Turner did not seek Marion City Council’s approval for the issuance of a bond if there is no risk and they already have an EDC established since the property is within Marion city limits.
Turner said he had conversations with city administration and was met with hesitation due to the city’s prior negative experiences with bond issues.
Turner claimed Mayor Jess Alumbaugh requested he pay a $25,000 due diligence fee for the city’s consultants Ice Miller to review the proposal before moving forward with the city, a price he considered too high. Since the project is designed to serve the whole county and the bonds can be issued from a city, county or the state, the development team decided to avoid the $25,000 cost and pursue the bonds from the county, he said.
“I didn’t know what the amount was, I hadn’t heard from the mayor, but one reaction I guess I had when I heard that is if I’m speaking to someone that’s backing me and they want to do some review I would be willing to let them review whatever they wanted to review to make sure that they feel good about it,” McWhirt responded. “I was surprised to hear that you didn’t do that.”
When asked why he chose to pursue the bond issuance from the county rather than the state, Turner said the state typically prefers the bonds go through local municipalities and that going through the state would carry an additional $300,000 issuance cost.
Turner said, “It just makes the project less viable and potentially we haven’t run the numbers yet but potentially more difficult to get done. It’s a lot of cost for a project like this to bear,” Turner said.
Councilman Mark Leming questioned how a $300,000 additional cost would “make or break” a $40 million project, and Turner said while it would not make or break the project, it would make the process more difficult.
Councilman Mike Scott said he likes the idea of the project but is concerned that it may be too good to be true and echoed McWhirt’s concern of why this is not going through the city.
“I don’t know what our role in it is as a governmental entity.To me the red flag is if it’s so simple, why the city of Marion didn’t take it. I don’t see this as a gift to Grant County,” Scott said.
Scott asked if the county even had the authority to issue bonds for a property in city limits, and Stephenson explained the county has authority since Marion City Council approved a resolution on Tuesday ceding its jurisdiction and consenting to the county issuing the bonds.
McWhirt asked if Turner would be requesting a tax abatement from the city, and he responded that abatement “is still an open question” that would be based on other project costs. Turner did affirm that there are no plans to use Tax Increment Financing (TIF) for the project as it does not fit into the rest of the project’s financing plan.
McWhirt said he is concerned about the county getting involved with a project that they will not have total jurisdiction over when it comes to tax abatements. Because of this, he said he would prefer for the bonds to be issued by the city.
“I definitely don’t want to see the project receive property tax abatement,” McWhirt said in an email to the Chronicle-Tribune Thursday. “The tax abatement question, if presented, will be answered by the Marion City Council, not the Grant County Council.”
Scott said he believes the county and city need to be on the same page and communicating if the bond issuance is going to move forward.
“I know it’s a unique situation, but we are supporting something that’s not county property. It’s city property,” Scott said. “And in a way we’re kind of taking over what they should be doing. I just want to make sure those agreements are in place...I want to be forward thinking, make sure we have everything covered in front of us and we’re not going to be surprised by anything coming up.”
Turner said while Marion city council did not ever vote on approving the bonds itself, council members have spoken in support of the project and did approve the annexation and needed zoning.
Leming said in his experience businesses have a tendency to “overpromise and underdeliver” in terms of the projected number of employees and payroll and questioned the benefit to the county of being involved with this project.
“A $2 million payroll with 60 people is not a very high payroll,” Leming said. “I just don’t know if you’re really moving us forward...I understand it. It looks great, but it’s another pass through and we’re putting our name there. What do we get out of it?”
Perez noted the county is currently not receiving any property tax from the site, so any income and/or property tax received is a net positive.
“I mean even if they did the development and God forbid if it failed or if someone is going to own it, someone is going to be paying property taxes,” Perez said. “Right now, it’s a field with a church on it that we don’t get anything on.”
Turner and Krapf said if council decides to move forward they hope to get final bond approval in late June or July, with construction starting in September or October of this year and the facility opening to residents in January 2022.