Kohl's Project Gets Help from Development Authority
SHARON, Pa. – The Mercer County Industrial Development Authority moved the Kohl's Project a step closer to breaking ground Friday by approving tax incremental financing, or TIF, for the first time in county history.
It will allow the Somerset Trust Co., Somerset, to issue tax-exempt 20-year bonds for $3.6 million through the industrial development authority, the proceeds of which will be spent on infrastructure to allow entrance to the 14-acre site at state Route 18 and U.S. 62 in Hermitage. The funds will also be used to build a storm water drainage system.
The $17 million shopping center, with Kohl’s as the anchor tenant and developed by Levy Development, Akron, Ohio, is scheduled to open next April.
Planned are two sit-down restaurants, a fast-food restaurant and a small number of stores, reports Doug Riley, chairman of the county industrial development authority.
Under TIF, which required the sign-offs of the Hermitage school district, the city of Hermitage and Mercer County, the property taxes the owner of the shopping center pays will be used for the infrastructure needed to make the center viable, to wit, road improvement including a turn lane, traffic signal and storm water drainage system.
The developer, Levy, will continue to pay the current real estate taxes plus the value of the improvements, Riley said. Thirty-one percent will go to the municipalities and school district, 69% to pay off the bonds
Initially, the taxes are projected at $15,000 annually, Riley says.
Afterward, once the center is built, all real estate taxes go to the city, county and schools.
Not only does the shopping center make the 14 acres more valuable, the IDA chairman says, it improves the value of the neighboring and nearby commercial properties. Over the next 20 years, the economic impact of the center is projected at $1 billion, he says.
While TIF has long been a mechanism available in Pennsylvania and in other states, this is the first time Mercer County has taken advantage of the tool, Riley says.
Levy first approved the city of Hermitage about the project a year ago, inquiring about the financial mechanisms available to improve the streets and drainage. After discussions with the city, Levy opened discussions with the IDA in March.
Copyright 2012 The Business Journal, Youngstown, Ohio.