School directors in Derry Township could take action this month on a tax-increment financing proposal to support construction of a three-story public parking garage tied to a major redevelopment project in downtown Hershey.
School directors in Derry Township voted 6-3 to reject the tax-increment financing package proposed by Wormleysburg-based RVG Management & Development Co. for the project. There were board concerns that the district lacked a policy related to TIF proposals and that the developer had set a deadline to act. Read more here.
Wormleysburg-based RVG Management & Development Co. is the developer behind the proposed Hershey Towne Square. The $28 million, 130,000-square-foot complex on West Chocolate Avenue promises to bring about a dozen new retailers and restaurants, as well as dozens of apartments and new office spaces to a former post office site.
A parking garage is needed in order to maximize density on the site and provide more community parking downtown, the developer said. But the cost would drive up commercial lease rates and the project would not be economically feasible, so RVG is seeking a TIF to offset some of the costs.
Ed Fetter, a senior vice president of real estate for RVG, said the developer is seeking $2.3 million from the TIF, which is about 38 percent of the parking garage’s cost. The project will add about 500 parking spaces in the downtown, most of those in the garage. They will be free to the public.
The school board will hold a special meeting on Monday night to go over the TIF proposal. Board action is expected at the March 27 meeting.
Under the TIF, the taxing entities — the school district, the township and the county — would forward a portion of future tax revenue to make payments on any debt incurred to improve the condition of the property.
The property is currently assessed at about $2.3 million with current taxes to the school district of $40,745 per year. The proposed project would increase the assessed value to about $15.5 million, which would generate $274,485 in school real estate taxes. The difference between the current taxes and the proposed increase is $233,740, or the tax increment.
A TIF proposal prepared by PFM Financial Advisors calls for diverting 89 percent of the tax increment for at least 16 years, and up to 20 years. For the school district, that means forgoing $208,028 per year of the increment. The district would retain the other $25,711 as well as the base taxes currently paid on the property.
Derry Township and Dauphin County also would need to approve the TIF structure and decide how much of the increment they want to divert to financing the garage.
The redevelopment project itself is expected to result in more than 500 jobs, which would generate more local income and sales tax revenue on top of the long-term property tax bump. The new owners also believe the project will “raise everybody’s game” and attract new investments along Chocolate Avenue.
RVG is hoping to get all local approvals and start construction this summer. If that happens, buildings could be delivered by the beginning of 2018 and tenant fit-out work would follow.