Brownfield agreement means DDA would forego future tax revenue

By Cory Smith • Last Updated 11:03 am on Tuesday, May 17, 2016

The owners of Flo’s Ristorante and Pizzeria are working with the Greenville Downtown Development Authority on a Brownfield redevelopment project that will allow future tax revenue to be collected on behalf of the business. — Daily News/Cory Smith

GREENVILLE — Davide and Dan Uccello have poured nearly $1.5 million in improvements into this community’s newest restaurant, and now the city is taking a step to help recoup some of those costs.

As Flo’s Ristorante & Pizzeria prepares to open on May 30, an arrangement between the Uccellos, the Greenville Downtown Development Authority (DDA) and Montcalm County Brownfield Redevelopment Authority aims to establish a redevelopment project at the restaurant.

In doing so, the Uccellos would recoup funds in the form of Tax Increment Financing (TIF) that the DDA currently collects.

Under the Brownfield agreement, future tax revenue expected to be generated in excess of the base tax rate that the DDA would have received based on improvements made by the Uccellos, will now be split 50-50 between the owners and the DDA.

During the May 10 DDA meeting, City Manager George Bosanic brought forth a draft of the Brownfield plan, and described the situation as a glass half full or half empty.

Flo’s Ristorante and Pizzeria will be opening on May 30, but behind-the-scenes owners Davide and Dan Uccello are working with the Greenville Downtown Development Authority on a Brownfield redevelopment project that will allow future tax revenue to be collected on behalf of the business.

“The DDA, essentially, it is its own tax district, and what they (Uccellos) are asking for is the revenues to be diverted over time back to them to pay for some of the improvements made internally,” he said. “If the city and the Brownfield Authority agree to that, that triggers more funds from the state to offset some additional costs that they have.”

The DDA supported the idea of establishing a Brownfield redevelopment project, but not without concerns.

“I get it, it is a new development and they are investing in our downtown; however, I’d like to know what the amount is that we are not going to be receiving as the DDA?” member Wendy Gladding asked.

According to Bosanic, the revenue that would be diverted to the Uccellos amounts to approximately $140,000 over a period of 18-20 years.

“The question is, is it worth it, in terms of the investment?” Bosanic asked. “This is the first time in my 25 years here that there’s been an investment of over $1 million into a (downtown) project.”

That amount in future tax revenue is expected to cover costs of several elements that are eligible under a Brownfield arrangement.

Since construction began, Uccellos have performed several of those items, including an environmental assessment at $20,000, demolition at $80,000, lead and asbestos abatements at $20,000, and the Brownfield Plan Development at $20,000, totaling $140,000.

In their proposal to the city, the Uccellos described the new restaurant as a new business that would “increase the density of the area by bringing a new commercial business to this underutilized site.”

The draft of the Brownfield agreement also stated that the project “promotes a walkable community as it will revitalize downtown Greenville and reactive a site that has experienced long-term vacancy. The project will bring a new business into the city that will help promote additional spending and property taxes with the city limits.”

Bosanic said the agreement is a matter of faith on the part of the DDA, in anticipating that property values and tax revenues throughout the downtown district will increase as a result of the new restaurant.

“If they don’t get this, and they go out of business and all the investment goes away, you end up asking yourself, should we have done this?” he said.

Mayor John Hoppough believes the agreement was in the best interest of both parties.

“There’s no downside to doing this, it’s an improvement for the downtown,” he said.

An additional concern brought out in discussion was that of possible bankruptcy in the Flo’s business, and what effects it would have on the Brownfield project.

“If they went bankrupt, why wouldn’t that rescind this whole deal?” DA member Tim Mulcahy asked.

Bosanic didn’t have a clear answer on the subject of potential bankruptcy, but said he would have attorneys look in to the matter.

“I can see if it (brownfield project) can be rescinded, or at least reduced to the new (tax) values put in place,” he said.

DDA Chairman David Ralph said his only negative observation was that the same benefits could not be offered to other downtown business owners who make investments on a smaller scale.

“The only thing that I see as unfortunate, and it’s not an objection to this, is that there are plenty of smaller projects that have lead or asbestos issues that just don’t rise to that scale of project to qualify to do something like this,” he said. “In order to get this kind of extra benefit somebody has to come in and spend this kind of money. That’s great, but on the other hand, people who are spending $100,000 or $200,000, they are going to be the engine for downtown going forward. It’s just unfortunate that smaller projects can’t qualify.”

According to Bosanic, the draft of the agreement will be reviewed by city attorneys before being approved by the DDA.

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