City: Studio developer must prove need for financial assistance

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CHARLOTTE – City officials last week got a little clarity on what a film studio developer has in mind for the redevelopment of the 80-acre site of the former Eastland Mall.

In a presentation in front of the city’s Economic Development Committee, the developer, a partnership between Studio Charlotte Development and Pacifica Ventures, gave preliminary numbers on cost and scope of the nearly $300 million project.

The proposal also called for around $38 million in public investment in order for the project to start rolling.

But Brad Richardson, Charlotte’s economic development manager who is working with the developer throughout the process, said the city likely won’t be able to contribute the full amount, and that Studio Charlotte must provide more specific construction and infrastructure costs before any more progress can be made.

“The onus is on the development team to show us a development plan that shows a public need or a need for public participation,” Richardson said. “We’re looking for a full financing plan (that’s) drilled down on infrastructure costs to see if there is a financing gap and to see if there’s a need for public assistance.”

Based on the presentation to the city committee, Studio Charlotte wants the city to donate the mall site – for which the city paid $13.2 million in August 2012– and wants more than $24 million in tax incentives via the city’s tax increment grants program.

The city is in its third month of a six-month negotiation process with Studio Charlotte, and Richardson said “a lot of work remains to be done.”

The city expected Bert Hesse, the CEO of Studio Charlotte, to ask for the land, Richardson said, adding that officials weren’t sure about his other requests. But based on the infrastructure costs presented last week, Richardson said the city may not be able to pay the full amount requested.

“No, the increment isn’t lining up and that’s the challenge,” he said. “The infrastructure cost needs to be reduced. The numbers that we showed was a framework and these numbers. . .have to be reduced over the next four weeks.”

Any tax increment grants for Eastland will come in the way of tax reimbursement on infrastructure investment, which is defined by the city as “new public infrastructure such as roads, streetscapes, and parking decks that entice development that would not otherwise occur.”

Studio Charlotte has a five-phase plan for infrastructure on the site. The first phase, which will be the major investment in utilities and streets, will cost $12.4 million; the second will cost $3.5 million; the third will cost $1.9 million; the fourth will cost $5.7 million; and the fifth will cost $1.2 million.

The city wouldn’t pay anything at the start of the project, but would reimburse the developer for infrastructure investment over a 10-year period.

“It’s not cash up front; it’s not funds we’ll be able to use (for construction),” Hesse said. “It’s a reimbursement of what we spend. The proprietor is putting the cash up front and it’s the public that will repay some of that.”

Hesse said his company is asking for the city’s investment to be about 10 percent of the total project cost.

“We’ve always said this has to be public-private partnership,” he said. “We’re putting in 90 percent of the funding and we’re asking them to put in 10 percent. They’re going to get the majority of the benefits from this project.”

In order for the city to meet Hesse’s expectations, however, Richardson said the infrastructure costs must drop before the Economic Development Committee reconvenes in January. The meeting will likely be held either on Jan. 16 or Jan. 23. With a new City Council taking over next month, the committee must be reassigned before it can meet again.

“The council is pretty clear in that what we need to deliver is real numbers,” Richardson said. “Our expectation is we’ve heard a land grant, we’ve heard a $24 million number. Show me the reality of the actual construction cost and delivery schedule.

“A lot hinges on the numbers we show the committee in January. That’s going to be the crucial meeting.”