The Franklin Development Corp. has been told by residents and business owners that it should focus on cleaning up rundown properties.
So the taxpayer-funded agency is looking at renovating two buildings on North Main Street.
One of the buildings was damaged in a fire, and the owner is willing to donate it to the city for renovation. The owner also would sell the one next door to the city.
The city might need to spend as much as $570,000 in tax dollars to repair the buildings, according to one construction estimate.
That money would come from the city’s tax-increment financing, or TIF, districts, which collect property taxes from certain businesses for economic development. Once the renovations are done, the buildings could potentially sell for $605,000 to $710,000 combined, according to the estimate.
The organization has never done this type of project before, so board members aren’t sure how much work would be needed to design the projects, hire a contractor, oversee construction and then sell the buildings.
Board members don’t want to become a new landlord in the city. The city could have thousands of tax dollars invested in a building if it doesn’t sell once the renovation is complete.
Fixing up deteriorating properties and selling them could accomplish dual goals of cleaning up problem properties downtown and providing the organization with operating funds, redevelopment corporation board president John Ditmars said.
The agency relies on the city council to provide money each year for operating costs such as legal fees, advertising and Web hosting, but those expenses could be paid from profit made on selling renovated homes. If the properties sold for more than the renovation costs, the city would be be able to recoup all of the tax dollars used to rebuild them.
The organization was given $5 million in TIF money when it was created in 2008, and one goal was to renovate housing around downtown.
The group gave out low-interest loans to several homeowners and landlords to help pay for building repairs but never purchased and paid directly to renovate and resell a house.
State law bars redevelopment commissions from owning residential properties, so renovation work would need to be handled by the development corporation.
Mayor Joe McGuinness said he would prefer the group waited until other projects were complete before starting a new effort.
We agree with the mayor that redeveloping private properties should wait but not just until other projects are completed. Rather, there needs to be a serious discussion of what role a tax-funded agency should play in restoration efforts.
Does the city have an advantage over private developers in such an endeavor? Should the city be putting its money at risk in the project? After all, if there’s money to be made in this kind of enterprise, wouldn’t a savvy investor be pursuing it?
The city should move extremely slowly because the endeavor is fraught with risk and impinges on areas that might more properly be left to private developers.