Developer Ben Carter has made no secret of his plans to improve Broughton Street or his desire to have the city of Savannah pitch in for streetscape upgrades, even placing box planters and temporary metal sculptures around his newly acquired properties on his own dime.
Now, the developer and his team are preparing to formally ask the City Council and the Chatham County Commission to approve a special eight-block Tax Allocation District (TAD) along Broughton, from Martin Luther King Jr. Boulevard to Lincoln Street, to fund a host of streetscape improvements outlined by the developer in a new report.
Carter also is proposing a Community Improvement District (CID) that would require the consent of a majority of property owners on the street to voluntarily raise taxes to maintain the streetscape.
In total, the developer’s consultants estimate they could get $6.5 million in financing — $5 million from a 25-year TAD bond, based on current and future property taxes, and an additional $1.5 million from the CID.
The projections are included in a proposal prepared by consultants Whitley & Associates and Coastal Capital Advisors, a copy of which was provided to the Savannah Morning News.
Carter, in an interview Friday, said the streetscape is a necessary component to bring Broughton Street back to its heyday.
“As a newcomer to town, I have been like a sponge trying to absorb ‘what is Savannah’ into my system,” said Carter. “One of the things I’m disappointed in is the infrastructure, particularly on Broughton Street. The sidewalks, streetlights and ambiance are not as good as they could be in my opinion.”
Karen Guinn, a spokeswoman for Ben Carter Enterprises, said they’ve discussed the proposal with community stakeholders, including members of the Savannah Downtown Business Association, the Tourism Leadership Council and the Savannah Chamber of Commerce’s executive committee.
Bill Hubbard, president and CEO of the Chamber, said the organization’s board unanimously approved a motion of support for the proposal on Thursday.
“For this to be a successful and attractive place for residents, as well as for visitors, it’s necessary to do more than just put in new and different stores,” said Hubbard. “We think TAD is a very good and smart way to finance this.”
Ruel Joyner, president of the Savannah Downtown Business Association and owner of 24e Design Co. on Broughton, said he also supported a TAD.
“It’s a really unique opportunity for Savannah to have somebody that owns that many properties, and with that much vested interest in it, that is interested in doing this and wanting to do it,” said Joyner. “It’s going to be a real game changer.”
Carter would like the City Council to approve the TAD by the end of October and the CID to be in place by next summer in advance of 2015 tax bills. The developer’s consultants said the county commission could vote on the TAD at the same time this fall.
“It’s a moment in time we have because I’ve acquired most of these building in the last few months, all of them starting in 2014,” said Carter. “The property taxes currently on the properties will most likely be reassessed because of the money I’ve invested. … We’re trying to investigate and collaborate with people on the ability to take those increases in taxes and have that revenue stream pay for bonds that could be issued by the city to pay for streetscape improvements.”
“There is urgency to get the city to hopefully agree that this is a worthwhile project with minimal, if any, risk,” he said.
Other property owners
Not all property owners along Broughton Street are thrilled about the prospect of increased taxes as a result of the reassessment of property values or under a voluntary arrangement such as a CID.
The creation of a CID would require a majority vote among property owners, which Carter may already have with his 37 or so properties. Once created, revenue from the district would go toward maintaining any improvements initially paid for by the TAD, as well as for ongoing marketing, management and operations.
The consultants estimate a 10-mill tax increase could raise $420,000, which could be leveraged with other sources such as grants or bonds to create a spending power closer to $1.5 million each year.
Michael Brown, a developer with a significant stakehold on the street, said he doesn’t think a TAD or CID is necessary given the additional money the city will get from increased occupancy.
“I don’t know if anyone’s going to fight it, but if the city is going to get a substantial increase in real estate and sales tax, that money ought to be allocated to improvements instead of asking the property owners to pay for it,” he said. “If a CID goes through, the big guys can absorb it, the little guys probably can’t.”
Several other building owners along Broughton Street agreed. Many are not members of the Chamber or Savannah Downtown Business Association and said they felt out of the loop on Carter’s proposals.
Joseph Dabit owns the buildings at 26 and 28 W. Broughton St. and has turned down Carter’s offers to buy him out.
He said he appreciates what Carter is doing to improve the building facades along the street but says the additional taxes for streetscape improvements will hurt smaller tenants.
“Whatever the tax on the building is, all he’s going to do is hand it to the tenant because everything is rented under triple net,” said Dabit. “The tenant is responsible for taxes, insurance and all repairs.”
He said triple net leases don’t hurt big stores like J. Crew as much as they do smaller mom and pops.
“It’s not going to matter to him what the taxes are because he’s bringing in big companies,” said Dabit. “But to stores like Copper Penny or us, yeah, it’s going to matter to pay $300-$400 more a month.”
Michael Rhee, who owns Gina’s Beauty Supply, said the city shouldn’t rush its decision making for one person.
“I’m surprised,” he said. “I didn’t know he was going to ask the other property owners to share his improvements.”
“What if he walks out? He can pack up anytime,” said Rhee.
“It would be great if it didn’t come from my pocket,” said Shaun Mirch, owner of the New York Boutique at 19 W. Broughton. “He wants us to pay, but he doesn’t want our feedback.”
Brown said a bigger concern is recent city decisions that have disregarded or overturned the Historic District Board of Review and said any streetscape improvements should have the input of historic preservation professionals.
“The street doesn’t belong to him; the street belongs to the city,” said Brown. “To impose a financial burden on other people for his benefit is something that ought to be considered by the city.”
Carter said he had not had a chance to meet with the other property owners but looks forward to doing so. He said the CID can be a proven model of success for stakeholders who want to have a more powerful voice for setting standards for the street.
“There are many, many examples around the state of Georgia and United States where CIDs had significant impact on the values of property,” he said. “No single owner can maintain the streets.”
Joyner said after he took the time to research CIDs in other cities, the decision to support one for Savannah was simple.
“I did my homework on it, I looked at Georgetown and a few other improvement districts that have been highly successful with it,” said Joyner. “The proof is there.”
Esthetics
The question of what streetscape improvements should be made may prove more complicated for the city, which has periodically batted around ideas for the Broughton corridor over the last few decades.
The current streetscape is a patchwork of mismatched elements — randomly planted trees, bikes tethered to lamp posts, empty tree wells littered with cigarette butts, patched asphalt in front of Panera and those planters purchased by Carter.
Conceptual sketches included in the developer’s proposals show a grand arched entryway, corner planters, bike racks, trolley stops, yellow-brick and “Abbey Road” painted crosswalks, among other specs.
Strands of twinkle lights crisscross the section of Broughton with Trustees Theater and Leopold’s Ice Cream, a throwback to historical photos of Broughton Street favored by Carter.
“Part of what I like to do is enhance places to the extent that I can. We’re about trying to make places enjoyable and experiential,” he said. “So the sidewalks, planters, newspaper dispensers, trash cans, sculpture gardens and places for outdoor seating are all important elements to making a unique spot.”
The drawings and maps are mostly meant to initiate a dialogue, according to Guinn.
Dabit said he likes some of the proposals in the copy he was shown, like the palm trees, but other elements seemed out of character for Broughton.
“It’s already historic,” said Dabit. “You shouldn’t have to add things to it to make it look more historic.”
Hubbard said it’s important not to get too caught up on design details.
“Nobody decorates a house before they decide to build it,” he said. “The biggest risk is if we start some debate on what color a wrought iron post should be — that’s where everybody gets divided.”
Once the TAD is in place, he said, the community and city can hammer out the finer details.
“This is an opportunity for people to get behind something and say ‘yes’ instead of doing what comes natural and complain and second guess,” said Hubbard. “This is an opportunity to get behind something and shape it in a way that has a lasting, long-term positive effect for the community.”
Political climate
Before the recession that began in 2008, the city agreed to a TAD for Savannah River Landing, the 40-acre site envisioned by developers as an eastern extension of the Historic District.
After the economy tanked, the city ended up holding the bill for some of the bonds that were issued and recently won a lawsuit to reclaim some money owed to it for infrastructure improvements on the property.
“This is not at all like the TAD for Savannah River Landing,” said Hubbard. “There, we still have no new tax base. Here, we already have a new tax base that’s going to pay for virtually the entire $5 million bond for a 25-year period.”
Questioned this week, city and county officials said they have not seen the proposals.
City Manager Stephanie Cutter said Thursday she did not see the need for a tax allocation district because they are meant to serve undeveloped properties and Broughton is already developed.
“A TAD wouldn’t be of any benefit to the area,” Cutter said.
Ultimately, she said, the decision would be with the City Council.
Mayor Edna Jackson said in a statement Friday that she looked forward to studying the idea further.
“Our staff has been meeting with his team to coordinate restoration timelines, minimize the impact on nearby properties and discuss a shared vision for improvements to the public rights of way,” said Jackson. “We have been made aware of his idea to create a tax allocation district on Broughton but have yet to discuss the concept in any detail. We look forward to evaluating his proposal after receiving it.”
County manager Lee Smith also said he had heard about it briefly but had not seen specifics. He said his understanding is it likely would not impact the schools or county.
“I was told if it does happen, it would not impact us,” he said.
Commission chairman Al Scott said he could not respond to a question before Friday’s county commission meeting.
Carter said he still hasn’t met with a number of people but will start in earnest over the next few weeks.
“We want to try to spread the word and build a broad base of support, and I would hope that includes the city and staff,” he said.
“This is a community improvement project,” said Carter. “I just felt like we needed to show the initial stages so people can start to focus on whether they want it, how they want it and when we can get it done.”
Eric Curl contributed to this report
WHAT IS A TAX ALLOCATION DISTRICT?
A Tax Allocation District, or TAD, is a form of financing for infrastructure or redevelopment projects within a specifically defined area. Local governments may sell or issue these bonds to finance improvements. The bonds are secured by incremental increases in future tax revenues, usually a result of the redevelopment activities taking place within the TAD. This sort of financing employs public-private partnerships to charge the costs of constructing public facilities and infrastructures directly to businesses that use them.
WHAT IS A COMMUNITY IMPROVEMENT DISTRICT?
A CID is a mechanism for funding and maintaining certain governmental services, such as street and road construction, parks and recreational programming and public transportation systems. A majority of property owners must consent to form the CID, which is governed by a board. The CID board may levy taxes and fees not to exceed 2.5 percent of the assessed value of the real property.
The idea is similar to a homeowner’s association, which collects fees for the maintenance and care of the properties and neighborhood in a defined area.
(Source: Georgia Municipal Association and Georgia Cities Foundation)