try to defuse 'negative' rumors
Councilman John Cartier urged his Claymont constituents to
"please trade on the facts" when considering the varied aspects
related to the Renaissance Village project.
acknowledging that "we're doing bold and new things" in the
effort not only to replace the blighted Brookview apartments
complex but also to revitalize the broader community, he said
there are ample checks and balances in place to safeguard the
interests of current Claymont residents.
executive vice president of Commonwealth Group, lead partner in
the redevelopment venture, said there is no validity in
rumors questioning economic viability of the project. He pointed
out that the 68-acre site has been cleared and infrastructure
work is well along. "That wouldn't have happened if we didn't
have the proper financing," he said.
and Ruggio spoke at a meeting of the Claymont Design Review
Advisory Committee at which Timothy Fry, New Castle County
government's bond counsel, explained how incremental-tax and
special-development-district financing, which are proposed to
help the developer pay for providing sanitary and storm sewers and streets
for the site. Legislation sponsored by Cartier to
authorize such financing is pending before County Council and is
expected to be enacted when Council next meets on Sept. 16.
large extent, the speakers were engaged in proverbial 'preaching
to the choir' because committee members and other regular
attenders at the meetings are already supportive. Although
meetings of the committee, an arm of the county Department of
Land Use, are open to the public, virtually no one from the
general public showed up for the meeting on Aug. 27.
repeated information previously reported by Delaforum that a
builder has been selected to begin construction of the first
phase of the project -- townhouses in two blocks on the Darley
Road side of the tract. He said he is not yet at liberty to
disclose the identity of the builder pending signing of a
contract beyond saying that it is a "very well-known"
will be a public announcement soon and "that block will begin
coming out of the ground in November," Ruggio said. Commonwealth
will undertake the second phase -- retail establishments and
apartments at the main entrance to the community at Philadelphia
Pike and Manor Avenue -- in early 2009.
Commonwealth is in active discussions with three firms with
national reputations about construction of other phases of the
project. At one time or another, he said, seven or eight of the
country's 12 "top-rated" building firms have expressed serious
interest in being involved in the project.
he said "there is still a tough [real-estate] market out there,"
there are signs the housing situation is brightening. There is
demand for townhouses selling in the $190,000 to $200,000 range
-- the 'product' planned for the first phase, he said. "We feel
they are going to sell."
Fry and Ruggio after the meeting
confirmed a Delaforum calculation that the proposed
infrastructure financing indicates that Renaissance Village
property owners will pay something over $30,000 during the
30-year life of bonds sold to provide the money, compared to
something around $23,000 to $25,000 during the life of a 30-year
mortgage if the infrastructure costs were factored into the
selling prices of the residential units. Buyers of the
commercial properties would have slightly higher obligations.
that route would enable Commonwealth to reduce interim financing
costs and recoup all or a large part of its $17 million
infrastructure-related investment up front rather than piecemeal
as the properties are sold during a five-to-seven-year buildout.
different contexts, Cartier said at the meeting that providing
local government subsidies is a common method "used all over
the United States" to encourage redevelopment of blighted or
underused locales. "From the beginning, this has been a
public-private partnership [to] address the blighted Brookview
apartments complex," he said.
intended infrastructure financing is new to Delaware and only
two jurisdictions -- Millsboro and Bridgeville in Sussex County
-- have used it, there is comparable precedent in state
financing of the Christina Riverfront development in Wilmington.
"Over $300 million of direct state subsidy" has gone into that
project, Cartier said.
empowering New Castle County government to use incremental-tax
financing, the General Assembly specifically limited its use to
the area included in the Claymont 'hometown' zoning overlay,
which centers on Philadelphia Pike.
The subsidy will have no ill effect on county
government's gilt-edged bond rating or its current fiscal
situation, he said. Nor will county government or its taxpayers
"be held responsible in any default situation or bankruptcy,"
no way Councilman Cartier would put county finances at risk," he
another context, Ruggio said that, even with the initial
$1,000-a-year special tax and its 2% annual escalation,
Renaissance Village's residential property owners will not be
overburdened. Their tax obligation will still be "competitive"
with adjacent Pennsylvania and New Jersey, he said.
said that incremental tax on increased value of the site that
county coffers will 'lose' will be more than offset by an
estimated $30 million in increased revenue from the
property-transfer tax when units are sold and resold.
Brookview complex generated $32,500 in property-tax revenue a
year. "In policing alone, we were spending more than that on a
weekly basis," he said. "We have a lot to gain with very little
liability to New Castle County or Claymont."
for the proposed financing would be establishment of a special
development district which the proposed ordinance defines as
being the property covered by the approved Renaissance Village
development plan. Only property owners in the district would be
special development district is an entity separate from County Council, state legislative, school and other districts
which include Renaissance Village or the rest of Claymont.
government would then sell up to $20 million of special-purpose
bonds at an interest rate not to exceed 9%. Both are upper
limits, Fry explained. The actual amount, he said, would
probably be somewhere between $12 million and $15 million.
Because interest on the bonds would be tax-exempt for most
investors, the interest rate would be lower than a mortgage rate. But, because the
bonds would not be backed by the 'full faith and credit' of
county government -- an euphemism for its power to tax -- the
rate would be higher than what the county's general-purpose
bonds would command.
proposed ordinance specifies Bank of America as the underwriter.
Fry told Delaforum that a "negotiated arrangement", rather than
competitive bidding, would be employed because of the complexity
of the arrangement. He said that is not unusual with
special-purpose bond issues and would not likely be challenged
by any other bank or financial services firm.
Fry did not specify an expected interest rate, it would likely be somewhere
proposed ordinance gives County Executive Christopher Coons
authority to determine the details of the bond issue. That, too,
is normal practice with all bond issues and allows flexibility
and dealing with the underwriter, Fry said.
from the bond sale -- which likely would occur toward the end of
the year -- would be given to the joint-venture developer --
identified in the ordinance and other county records as
Brookview Townhomes Development L.L.C., although that name has
not been publicly associated with the project -- to reimburse
the cost of infrastructure it has provided. Fry limited that to
roads and sewer lines, but the proposed ordinance lists any kind
of infrastructure that serves the redeveloped area, whether
located there or not, as eligible for reimbursement.
said having replaced the deteriorated sewer system which served
Brookview apartments carries a bonus benefit in that it provides
the Claymont area with additional sewer capacity which, in turn,
will allow other development projects to proceed.
developer and builders would still be obligated to pay the
various impact fees that county government requires.
bonds, Fry said, would carry a 30-year maturity, but could be
called at face value for refinancing or other reason after 10
years. Interest would be paid semi-annually, but the principle
would not be paid until the bonds mature or are called earlier.
provide money to pay the principle while avoiding an huge
end-of-term payment balloon, a county-administered fund would
receive payments through the life of the bonds. Because the
set-aside amounts are scheduled to increase year-to-year, the proposed
ordinance provides for a 2% annual escalation of the special
development tax property owners will pay, Fry explained. The
bonds' interest rate will be fixed at their sale and will not change.
service the debt, including accumulating the eventual principle repayment,
would be generated from two sources. Eighty percent of it would
come from a special development tax which would be set
initially at up to $1,170 for residential units sold at market
value and $572 for the 10% of the units designated as
reduced-price 'workforce', or 'affordable' housing. The special
tax on commercial properties would amount to up to 81.2¢ per
20% would come from the amount of county property tax that would
be generated by the amount the assessment on the property
increases as the result of its having been redeveloped. The
difference between that figure and the amount generated from the
current assessment, which county government would continue to
receive, is the amount of the public subsidy involved.
to data included in the one of the exhibits attached to the
proposed ordinance, the Renaissance Village tract includes 25
tax parcels. Delaforum could not learn the current total
assessment nor confirm the reputed $32,500 county obligation as
this article was being prepared.
special tax would be collected each September as part of county government's
normal annual levy.
stressed that property owners outside of Renaissance Village
would be taxed at the same then-current rate as those in the
rest of the county. Renaissance Village owners would pay school
taxes at their full assessment at the same then-current rates as
other property owners. Brandywine and New Castle County Vocational-Technical
school districts would receive the full amounts of revenue due them.
now stand, Renaissance Village properties would be
assessed at 1983 market values, as is all real estate in the
county. Any general reassessment in the future would be applied to Renaissance
special tax would be treated as any other property tax. In
addition to interest and penalties, Renaissance Village property
owners also would have to pay what the proposed ordinance refers
to a 'backup special' tax. That would be up to $144 on
market-priced residential units, $71 on 'workforce' units and
10¢ per square foot on commercial property.
Properties with delinquent tax obligations would also have a tax
lien placed against them.
that the special tax, like other tax obligations, would have
priority over other debt in the event of bankruptcy affecting
any Renaissance Village property.
said the net effect of Council's approving the financing plan
will be "to help Claymont become a thriving community."