The Kentucky 54 corridor has become prime annexation ground for the Owensboro City Commission as it seeks new revenue even if it's not immediate gratification.
Within less than a month, the Owensboro City Commission has approved the annexation of one 7-acre commercial property and is likely going to take in another 4.5-acre commercial property after hearing a first reading on Tuesday.
The latest annexation ordinance would incorporate the new strip center at 2065 E. Parrish Ave., which is home to Moe's Southwest Grill and McAlister's Deli, into the city limits.
For agreeing to the annexation, the owners, SYF Properties, will receive tax incentives in the form of rebates that will run from Jan. 1, 2020 to Dec. 31, 2024.
Since 2011, this would make the fifth such major commercial development taken in by the city in its ongoing annexation of properties along the Kentucky 54 corridor, which has become a hub for retail, restaurants and medical offices.
Properties -- commercial and residential -- also have to be contiguous or touching the city's boundary before they can be annexed.
Assistant City Manager Lelan Hancock has been the one negotiating with the Kentucky 54 developers.
"Some are not very receptive at all, some are very skeptical and some are pretty open," Hancock said. "... It's a diversity of personalities you're meeting with and trying to come to terms with. It's understanding what's important to them in this process and what they've got at stake."
Hancock said it's common for him to be met with, "Why would I want to pay more taxes?"
Hancock said that's when he presents the tax incentives along with added services such as police, fire and sanitation.
"It's getting them to a point to understanding what we have to offer," Hancock said. "You've got the county raising their (occupational tax) rates and that also makes us more competitive."
Along with the new strip center at 4.5 acres, the city has annexed the commercial properties of Heartland Crossing at 64.1 acres, Highland Pointe at 75.6 acres, Gateway Commons at 200 acres and Cedarhurst of Owensboro Real Estate, LLC at 7 acres over the past eight years, for a total of 351.2 acres.
City Manager Nate Pagan said the tax incentives are delayed gratification but it's extra revenue the city would not have ever had otherwise.
"I wouldn't necessarily say it's a gold mine but obviously to the extent that it does provide additional revenues for services," said City Manager Nate Pagan. "... It is in the city's best interest to continue to grow and develop and annex additional areas."
The city provides tax incentives usually between five to eight years for developers who agree to annex. Those tax incentives usually include rebates on city property taxes, net profit taxes and occupational taxes.
Gateway Commons, the multi-million dollar retail development off Hayden Road, will, however, receive city tax incentives for 20 years. The agreement runs from April 8, 2020 to April 7, 2040.
"Typically, it's the amount of the investment," said Pagan about what determines the number of years. "So if they're spending a certain dollar amount or more then they're eligible to get additional years."
So far, Highland Pointe, which contains Academy Sports among its commercial outlets, is the only one of the five annexations from which the city has started collecting revenue. It's under a four-phase agreement. Its first phase started on Jan. 1, 2011 and ended Dec. 31, 2018.
The city is anticipating $349,602 in tax revenue this year from the Highland Pointe development. Its 2-4 phases won't end until Dec. 31, 2021.
Heartland Crossing, which contains Menards among its commercial outlets, also has a four-phase, eight-year tax incentive. Its first phase started April 1, 2014, and ends March 31, 2022. The 2-4 phases started on April 1, 2019, and ends on March 31, 2027.
At its Oct. 15 meeting, the City Commission approved the annexation of Cedarhurst Senior Living, an $18 million complex under construction at 1900 Pleasant Valley Road and Kentucky 603, near Owensboro Health Regional Hospital and Gateway Commons. Its eight-year term won't start until Jan. 1, 2021. It's scheduled to end Dec. 31, 2028.
Don Wilkins, firstname.lastname@example.org, 270-691-7299