BERLIN — Having gotten legislation passed that allows the county to create a tax assessment district, Balsams Resort officials are now working with Coos County to get the process underway.
House Bill 540, signed into law last month, allows Coos County to create a tax increment finance district in an unincorporated place like Dixville and issue a bond. The TIF district allows assessments on the new construction to be used to pay off the bond. Once the bond is paid off, the new construction would be taxed the same as existing buildings.
Developer Les Otten and members of his team met with the Coos County Commission earlier this month to begin getting into what Commissioner Paul Grenier called the “nitty-gritty,” such as the terms of the bond, the amount of the assessment, treatment of future real estate and payment terms. Grenier said he did not see any insurmountable issues.
“I think once we nail down the details, this will go pretty quickly,” he said.
Under the terms of the legislation, the county has to find the project is in the public interest. Alex Richie of the Balsams team noted the commission had been provided copies of a March 2017 report on the demand and available supply of workers and a 2015 report on the economic and fiscal impacts of the project according to minutes of the June 3 meeting. Brian Gottlob of PolEcom Research did both studies. The 2017 study said the project would be the largest private sector development in Coos County in recent memory. It predicted the redeveloped Balsams would employ more than 400 people in its first year of operation with an average wage of over $17 per hour.
Grenier asked if PolEcon Research could meet with the commission and update the economic and fiscal impact figures. Richie said she would ask if the figures are still current. She also told the commission the Balsams will finalize contractual service agreements for fire, police, 911 and ambulance services before the county is asked to establish what she called the Resort Redevelopment District. The Balsams would cover the cost of those services. Otten said he would like to set up an arrangement to have providers on location on high volume days. County Treasurer Sue Collins said in the past the Balsams also handled its own solid waste.
Richie said the next step in the process is for the Balsams to assemble the documentation, including designating the boundaries of the redevelopment district to align with the PUD, or planned unit development, already approved by the Coos planning board. Ed Brisson, another member of the Balsams team, said the PUD includes all the Balsams property in Dixville. Grenier asked about future land holdings. Otten said the current PUD covers about 8.500 acres and he would not include any additional land, pointing out the concept of a tax increment finance district is to concentrate development on a parcel of land.
Richie said the Balsams must also draft a financing plan, including terms of the bonds, amount of the assessment, payment terms, method of collection, treatment of future real estate assets and compensation to Coos County.
In a follow-up interview, Grenier noted the bill does not specify the size of the bond but said the discussions are in the range of $28 million to $30 million. Otten said bond counsel for both parties will need to discuss the language necessary to make sure the county has no liability.
Richie said the Balsams expects the county will collect the assessments and property taxes with the developer paying an annual fee for the service. She said the Balsams is willing to cover the cost of an additional person if needed. Brady asked how many tax bills the developer is anticipating and Richie said between 600 to 1,000.
Otten suggested the Balsams make an annual payment of 0.5 percent of the principal amount of the bonds, payable quarterly to cover the added burden for added tax bills. In addition, he proposed a one-time issuance fee equal to 1 percent of the principal amount of the bond. Grenier countered with an issuance fee of $275,000 to be placed in an escrow account.
The price tag for Phase I of the redevelopment proposal is $173 million. Otten said he expects anything built after Stage I would be assessed at the same rate and the assessment applied to repaying the bond. Once the bond is retired, all property in the district will be subject to standard property taxes.
Commissioner Rick Samson asked for an update on the current financial status. Otten cautioned it is a “moving entity” but said the project currently has a $20 million equity commitment. Located in a federal opportunity zone, he said the team has hoping to secure $40 million in zone financing, contingent on the bond. Otten said they are looking at construction loans in the $85 million range, based on the ability to sell real estate. He said they have deposits on $23 million worth of real estate and the sales team expects to sell an equal amount once the start of construction is announced.
Richie said she will need about a month to get the financial information together and present it to the commission. Otten said a feasibility study will also be provided to the board but said some of the information will be confidential. He asked if a meeting could be scheduled to discuss financials, and Grenier agreed that it would need to be non-public.
Delegation Chair Rep. Wayne Moynihan said the delegation will have to review the proposal because that body will also have to vote on it. Grenier proposed the meeting to go over the financials by a joint commission and delegation meeting. The commission agreed. Once an agreement is in place, there will have to be a public hearing. If the commission approved the agreement, then it would go to the delegation for its approval.
While the Balsams team hopes to start construction this year, Grenier said he feels that may be too aggressive. But he stressed that he is very optimistic the project will go forward.