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Tax money may help fund downtown project
Firm hired by city to analyze deal made bid for developer
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A sign advertising the new mixed-use development, which will be built on the parking lot by Gainesville Square, in Gainesville, on Friday, Dec. 29, 2017. - photo by David Barnes

A multimillion-dollar mixed-use retail and residential development planned for downtown Gainesville is on the verge of collecting nearly $2.5 million in reimbursements for construction costs from local government, yet the firm reviewing the project for the city also submitted the bid for the developer.

The city is paying the Bleakly Advisory Group, based in Atlanta, to provide an independent analysis of projects seeking tax subsidies to ensure the requests meet established guidelines.

That same firm prepared and submitted the proposal for Parkside on the Square, which seeks public investment to offset the $20 million construction cost of the five-story retail and condominium development set to break ground this spring.

“We simply cannot (build) without the TAD,” said Tim Knight, developer of Parkside on the Square, during a meeting of the Tax Allocation District Advisory Committee on Thursday morning.

The project would not be feasible without it for several reasons, according to Knight, including “the high cost of the land, the limited number of units that can be constructed due to parking limitations and the untested nature of the condominium market in Gainesville.”

“We actually worked with them (Parkside) to put the application package together,” said Ken Bleakly, founder of the firm.

City planners and management also reviewed the application before it was presented to the TAD committee.

Bleakly said he would only receive compensation for his review of funding for three other projects the committee OK’d on Thursday.

But an invoice shared with The Times shows that Bleakly’s firm charged the city $1,140 in August for “analysis and preparation of revised memo in support of (Parkside’s) TAD funding application.”

Gainesville City Manager Bryan Lackey said the invoice was paid. He said he didn’t expect to take any of Bleakly’s work for the TAD committee and the city without providing payment.

“We’re going to pay him for any work he’s done on that project,” he said. “He’s done work for us in relation to that project. It’s a niche industry. ... (Bleakly is) the best option available to us.”

Bleakly acknowledged his work with Knight before providing the committee with his analysis of whether the application met TAD criteria.

“I don’t think we have a conflict,” he said.

Hall County Commissioner Jeff Stowe, who serves on the TAD committee, said he was unaware of Bleakly’s full involvement until the meeting.

“He probably should have recused himself one way or another, but there wasn’t anything that I saw that was out of the ordinary that would make me say we need to double check their numbers or anything like that,” Stowe said.

Gainesville City School System Superintendent Jeremy Williams, who also serves on the TAD committee, said because this was his first meeting as a member he was unaware of some of the protocols.

“Our involvement was strictly getting to know the application itself and not the process of who was involved in doing the analysis,” Williams said.

City officials reviewed four proposals for two undeveloped lots downtown before selecting Knight Commercial Real Estate and Carroll Daniel Construction last year to build their mixed-use projects.

While city leaders acknowledged that they expected each developer to request TAD funding when they sold the vacant properties for $745,000 last year, officials denied that the tax subsidy was predetermined, saying they were unaware of just how much the developer would request.

When the project is completed, it would pay a combined $239,728 in city, county and school taxes annually, meaning it would take about 10 years for the subsidy to be recouped.

Knight said he has about $6 million in private equity for the Parkside project while the rest will be financed through debt. TAD funding accounts for 12 percent of the total project cost.

Gainesville has two tax allocation districts — the midtown area and Lakeshore Mall — wherein increments in property taxes resulting from new growth are reinvested in properties.

After establishing a baseline of property taxes owed, any increments resulting from an increase in property value is pumped into the TAD account and reinvested in improvements.

According to the city’s website, “In simple terms, the increased property taxes that would be generated by a development’s improvements are temporarily used to fund those improvements. Once the improvements are paid for, a development’s taxes are then distributed traditionally.”

The TAD funding is seen as a way to incentivize local business and industry to help redevelop midtown.

Proponents say the project will have a “halo effect” on the downtown area, spurring additional development and renovations, while also generating sales tax revenue for the city and school district.

The TAD committee is made up of city management, the mayor, city planners, school officials, Hall County commissioners and administrators, a representative from the Greater Hall Chamber of Commerce and two at-large members.

According to Bleakly’s analysis, retail sales from the Parkside development would bring in an estimated $12 million annually, while providing 120 to 150 jobs, generating $360,000 in sales tax revenue for Gainesville, Hall County and the city school system each year.

It is unclear, however, how estimated retail sales might simply shift where people are spending their money rather than generating an additional revenue source.

City Council will have to sign off on the proposed TAD funding at its Feb. 6 meeting.

Other projects given the OK include about $500,000 for Carroll Daniel to develop its new headquarters and office space for lease downtown; about $42,000 for renovations to the Troy Millikan law office off Academy Street to turn it into a restaurant; and $74,000 for JOMCO Contractors to renovate a building off Main Street.