Warren County weighs tax break on planned community apartment building

Warren County officials are weighing whether for the first time to subsidize development of multi-family housing lacking a commercial component.

Through its port authority and in other ways, the county government has provided millions of dollars in incentives, including sales tax exemptions on construction materials, to dozens of developments, including the former Peters Cartridge Factory, which is to be redeveloped as 130 apartments and 15,000 square feet of commercial space along the Little Miami River in South Lebanon.

MORE: Bridge replacement also planned near historic factory redevelopment

But for the first time, the authority, an economic development agency of the county government, is debating whether to save developers of a $28 million, 242-unit apartment building - the first of 12 proposed at the District at Deerfield - roughly $750,000.

“I don’t see how that’s economic development,” authority board member David Bolton said during a meeting last Monday. “I don’t understand why this money is being spent by the public.”

The authority’s chairman, Greg Sample, and director, Martin Russell, explained that it would serve workforce development by providing a place to live for people working at or around it and boost the developer’s balance sheet by launching the project on firmer financial footing.

“There’s more to come on this site,” added Caleb Bell, a lawyer working for the authority.

The 28-acre District at Deerfield would join a handful of walkable, planned communities in the area, including The Greene, Austin Landing, Liberty Center and the proposed Austin South Springboro.

West of the Fields-Ertel-Mason-Montgomery Interstate 71 interchange, the District at Deerfield is to include $140 million in development, including a two-acre public square and an entertainment district, brewpubs, retail and restaurants.

Ultimately Sample urged staff to provide the authority board more information on why it made sense to subsidize housing for such a project, already being marketed with ground-breaking and opening dates.

“What we need is that kind of information from the host community,” Sample said.

Deerfield Twp., Warren County’s most populous political subdivision, is the unincorporated area around the City of Mason.

Township Administrator Eric Reiners said plans for a Mercy Health office building, as well as the apartment building, had been approved by the trustees.

“Both of those phases are expected to begin ASAP, weather permitting,” Reiners said in an email.

In addition, the township is seeking bids from contractors to build Parkway Drive, a public road connecting Mason-Montgomery Road on the east to Wilkens Boulevard on the west, the two main north-south roads framing the proposed project site.

“I don’t know the details of the sales tax exemption portion being considered by Warren County,” Reiners added in response to questions after the meeting.

RELATED: Warren County Port Authority takes ownership to allow tax break

Russell said the tax break would work this way:

The developer, the Silverman Group, valued the apartment building at $28 million. Building materials are expected to represent about half of this amount, or $14 million.

Through a series of leases and contracts, ownership of the building would be taken by the authority and leased back, avoiding about $1 million in sales tax due to the authority’s exempt status.

In exchange, Silverman would pay about $150,000 to the authority and cover legal fees, leaving something like $750,000 in savings.

The leasing agent has already been announced and pre-leasing begun for the apartment building that was the subject of last Monday’s discussion.

County planners are reviewing plans for the overall development.

MORE: Another retailer leaves The Greene

The public square is to go under construction early next year.

“It’s going to be built,” Bolton said. “Do they need this tax incentive?”

Russell said the same question could have been asked of other projects subsidized by the authority and emphasized staff was seeking direction from the board on this potentially new direction.

Russell also explained that while losing sales tax, the county would receive the $150,000 fee, about the amount it was projected to have collected if no exemption was provided. Rather than the county’s general fund, the fee would go to one of the authority’s accounts or into a new bond fund established at the meeting.

MORE: What’s happening at Liberty Center

The deals also anticipate the materials being bought in Ohio, resulting in local businesses profiting from the development.

“It’s got to have some economic impact,” Zindel said.

After the meeting, Russell said staff would be meeting with Silverman on the “phasing” of the project to better gauge the eventual economic impact.

While negotiations continue, Russell said the incentive contracts could be set up to “ensure” the parts of the project expected to create jobs and stimulate the economy - including 95,000 square feet of retail or office space and a 150-to-200-room hotel (depending on which description you read) - are actually built.

About the Author