SPRINGFIELD — In a push to save the Springfield Crossing retail development, the City Council approved a financing agreement that will give owners an upfront infusion of cash to help complete construction.
The City Council voted 12-0 Monday to turn 34 acres on Boston Road — the location of the now-demolished Eastfield Mall — into a designated development district and accept an $8 million district improvement financing plan.
"The utilization of the DIF allows the city to assist with funding for the public improvements to advance the project," said Timothy Sheehan, chief development officer for the city.
With the city's pledge to put $8 million toward the project, bonds will be issued and MassDevelopment, the state's development finance agency, will shop them around to provide additional financing for the retail project, Sheehan said.
The bonds will then be paid off through the additional tax revenue the city receives from the Springfield Crossing development. Currently the city takes in roughly $600,000 in tax money from the vacant property. Those revenues are expected to climb to an estimated $2.7 million when the project is completed at the end of 2025, he said.
Half of the new tax money, or roughly $1 million, will be used to pay off the bonds. The other half, also $1 million, will be considered regular revenue and deposited in the city's general fund, he said.
Sheehan said the city's financial team and outside advisors have spent months working on the agreement and estimate it will take seven to eight years to pay off the bonds. After that the city will receive all the tax money, which will be an additional $2.1 million more annually.
The financing agreement is designed so the city is protected. If the project is never completed the city will not be on the hook to pay the money back, Sheehan said.
"It takes money to make money. This $8 million is not a gift, it is an investment," said Mary Hurley, a former city mayor and retired judge who is working as a lawyer representing Onyx Partners Limited of Needham, which is the principal developer of Springfield Crossing.
She argued the Boston Road corridor has needed a boost for some time and this project will be paying taxes for decades to come.
Without the money, Anton Melchionda, founder of Onyx, said the project will run out of financing in mid-August.
"The project shuts down …. that is the bottom line," he said.
Melchionda said he and his partners take full responsibility for starting the project "at risk" without all the financing pieces in place, but added it ran into unexpected expenses especially with demolition and site work.
"The cost investment exceeded the current value and that is a risk you have to take and sometimes you win and sometimes you lose." he said. "We have lost significantly on the investment, but I can assure you … it is a meaningful improvement to the community."
The first phase of the project off Boston Road is a $77 million investment. There are eight buildings in the process of being built with seven slated to open by Thanksgiving. The last, a Target, is expected to open in early 2026, said Paul Connolly, executive vice president of Onyx.
The company has not officially released any names of the businesses that may be going into Springfield Crossing, except for the Target, but Hobby Lobby and PetSmart have leases on file with the Hampden County Registry of Deeds. Promotional materials also show others such as Sketchers and there is a sign erected for a BJ's Wholesale Club.
The company also has a second and third phase in the works that will bring in about 50 units of housing and some commercial projects. The full plan should total $147 million, Melchionda said.
One of the problems the company ran into was environmental cleanup far exceeded the expected cost as the company ran into $11 million in "surprises" including finding unexpected hazardous waste behind the walls of a building they were demolishing.
Sheehan said the company estimated the cost of demolition and cleanup far more conservatively than he thought was necessary but it turned out the expenses exceeded even that budget.
The $8 million that will be borrowed through the development district investment financing is divided so $2.6 million will be used for paving, $2.1 will finance site work and $3.2 is allocated for demolition and hazardous materials removal, he said.
City councilors said they were anxious to see the project completed since it will create jobs, provide convenient shopping for residents and attract other development to the Boston Road corridor.
The agreement also ties the company to including a 16,000-square-foot building earmarked for local businesses which want to move there and gives residents hiring preference.
"I'm excited about this project it is in my ward and the Eastfield Mall (property) is not making any money," City Councilor Zaida Govan said. "This is a great opportunity for the city in terms of bringing in revenue."
While the city typically uses tax increment financing agreements that reduces tax payments for businesses in their first years after moving to the city, City Council Vice President Tracye Whitfield said she likes the idea of trying a new way of promoting development.
"I don't want us to be left behind on trying to do new things," she said.
Read the original article on MassLive .
