A tax break for a new speculative building narrowly got a preliminary OK from the Greenwood City Council after the developer said he could take his plan to another community.
VanTrust Real Estate, a Missouri-based real estate development company, has proposed building a 500,000-square-foot, $16.8 million distribution center on 37 acres in the 800 block of North Graham Road, south of County Line Road.
The building is being constructed on a speculative basis and does not have any tenants committed yet, a company representative said.
And that was an issue for members of the city council, who raised concerns about the quantity and quality of jobs that would end up in the building and whether the city was acting too quickly after approving a tax break for another speculative building in October.
The response from the developer: he was confident in a strong demand in the market for speculative buildings, and if Greenwood doesn’t give the project a tax break, another community will.
The city council approved 5-4 a $2.1 million property tax break over a 10-year period. The tax break would still need a second approval from the council following a public hearing in January. Council members Ron Bates, Brent Corey, Dave Lekse and Bruce Armstrong voted against the tax break.
“I’d like to see the first speculative building get occupied fully before I would venture out and vote to approve another one,” Bates said.
More speculative buildings are needed in Greenwood, Mayor Mark Myers said.
Myers said he has received multiple calls from businesses looking to move into speculative buildings, and none are available in Johnson County right now.
The Greenwood Redevelopment Commission has been asked by developers to fund a speculative building, city council member Mike Campbell said.
The VanTrust project is the third speculative building proposed in Greenwood in a little more than a year. Franklin is also working on a plan to help construct a second shell building in the city.
VanTrust Real Estate Vice President of Development Bill Baumgardner cited Plainfield and Jeffersonville as two communities where companies constructing shell buildings have received tax breaks and said the break is needed to do the project.
“Unfortunately in this market, a tax abatement is necessary to compete,” Baumgardner said. “If we don’t get the tax abatement, we don’t make the investment.”
In 2015, Greenwood approved a tax break for The Peterson Co. to construct a 132,000-square-foot shell building near Main Street and Interstate 65. In October, the city approved a tax break for a $12.5 million speculative distribution center to be located across the street from the proposed VanTrust site.
Minneapolis-based Opus Development Co. provided projections of 50 to 200 employees for its spec building on its application to the city for a tax break.
On its application, VanTrust listed the number of projected employees as zero with a salary of $0 and said employment numbers aren’t available since it is a speculative project. Baumgardner told the council that other similar sized buildings constructed by VanTrust have ranged from 350 to 800 jobs, he said.
Lekse wanted more information about the number and quality of the jobs that will be created.
Baumgardner said he will give the council a projection of the number jobs and average wages for the project, but he emphasized that with a speculative building, those numbers are just an estimate and could widely vary based on the tenant.
Information about projected jobs and salaries is necessary for evaluating whether to give a tax break and for determining if the conditions of the tax break have been met in the future, Lekse said.
Without those projections, there is nothing to stop the building from being filled with low-paying, $8-an-hour, jobs, Lekse said.
Low-paying jobs are unlikely since there is a high demand for labor in the distribution industry, Baumgardner said.
Baumgardner said they would like to begin construction in the spring but added that it would be too soon to commit to a start time.
Construction for these types of projects typically lasts six to eight months, with leases signed six to nine months after the building is completed, he said.
