Batavia school board opposes TIF extension for One Washington Place

Plans to build a $40 million mixed-use development in downtown Batavia hit a financial roadblock this week when the District 101 school board rejected extending the life of a special taxing district.

That could be enough to derail the One Washington Place project at North River and State streets, where developers have proposed building 194 apartments, a parking garage and 6,000 square feet of commercial space. But city officials say they're not ready to give up just yet.

"I think there are so many positives to a project like this that the city will do anything within its power to try to see it through," City Administrator Laura Newman said. "We'll leave no stone unturned."

Per a deal with Geneva-based Shodeen Group, the city planned to issue $16 million in bonds to fund the public parking component and other eligible project costs.

But multiple development delays have "eaten up" the first three years of a 23-year tax increment financing district, resulting in a shortened timeline and an anticipated shortfall of at least $3 million needed to pay off the debt, Newman said.

The most feasible solution would be adding 12 years to the life of the TIF, thus extending the amount of time the city could capture incremental property tax revenue generated at the site, she said. The move requires state legislative action and the approval of each taxing body affected.

In a TIF district, property taxes above a certain point are funneled into development rather than to local governments.

The measure was approved by the city council earlier this month and was later backed by the Batavia Park District. But that momentum came to a halt Tuesday when the Batavia Unit District 101 school board unanimously denied the city's request.

Though the district is supportive of the city's development efforts, Superintendent Lisa Hichens said, residential TIFs like the one created for One Washington Place are "generally troublesome for school districts."

"Given the scope of this particular project and the length of the TIF, the school board did not feel it was prudent to take on that financial risk," she said.

The school board's decision puts the city in a tough spot. Without the TIF extension, Newman said, it's unlikely the developer will be able to secure the funding required to build the project.

That would give the city two options: seek plans for a smaller-scale project, or eliminate the existing TIF district and create a new one, which would start the clock over.

"Both of those are far less salable for Batavia," Newman said, noting the city has already invested $2 million into acquiring the property and preparing it for construction.

The redevelopment area generated about $6,600 in annual property tax revenue in 2018. If One Washington Place is built, she said, that number is expected to increase to $1.5 million.

If the TIF term were extended, the city has pledged its intent to eliminate the taxing district as soon as its eligible project costs have been recouped, Newman said.

Shodeen also has agreed to cover the cost of every school-age child who lives in the development to ease the burden on the school district, according to its agreement with the city.

Newman said she plans to reach out to school district officials to discuss their opposition to the TIF extension.

"If those are concerns the city is able to overcome, it'd be my hope that the board might reconsider their decision," she said.