The first major private development planned near Westfield’s Grand Junction Plaza may be paid for, in part, by a $6 million tax increment finance bond.
The Westfield City Council created a special allocation area Monday for Carmel-based Old Town Cos.’s planned Union Square at Grand Junction.
Estimates for the proposed residential and retail development started at $25 million when the project was announced in April, but those construction costs have risen as Old Town upgraded the plan.
“The quality of project that Westfield residents want to see in Union Square demands investment beyond market-rate construction costs,” Justin Moffett, a partner with Old Town, said
Anticipating a gap between the investment costs and the revenue from rent Union Square will generate, Moffett said Old Town Cos. now plans to issue as much as $6 million in bonds to help kickstart a project with a new estimated total construction cost of around $32 million.
City documents show the economic development revenue bonds will help pay for a portion of Union Square’s plan for about 180 apartment units and up to 30,000 square feet of commercial space without adding to the city’s debt load or a tax hike.
Instead, if the city council approves the bond issuance at its Dec. 19 meeting, Westfield stands to collect 25% of the new property taxes generated by Union Square for the next 25 years. Old Town Cos. will collect the other 75% to pay off the remainder of the bond.
Councilor Joe Edwards said the estimated $150,000 in new property taxes generated by the project is a vast improvement over the $10,000 currently collected on those properties.
“If there ever was a redevelopment project in Westfield, this is it,” Edwards said. “This developer has a pretty good track record doing this sort of thing. I think we’re hitched up in the right way.”
Old Town Cos. has already negotiated the purchase of those properties occupying the Union Square’s proposed footprint south of State Road 32, between South Union and Mills streets, and construction should start in 2020.
Ground has already been broken on the $35 million Grand Junction Plaza development immediately to the south of Union Square. The six-acre public plaza is designed to bring green space, trails, an amphitheater and ice-skating rink to the area.