$25 million warehouse project gets tax break after all

ALEXANDRIA — A $25 million warehouse project in southwest Alexandria will receive a tax break after all.

On April 25, the Alexandria Economic Development Authority, which includes the five Alexandria City Council members and the mayor, were split 3-3 on whether to approve a tax increment financing request from the developer, GoodNeighbors Properties.

The request failed since it did not receive a majority of the votes.

On Monday night, May 23, the EDA voted 5-0 to rescind that decision and recommend the council approve the TIF. The council reconvened and approved the tax assistance.

The warehouse site is northeast of Interstate-94 and south of County Road 46.

Under the plan, SunOpta, an Alexandria company focused on plant-based foods and beverages, will lease the 252,000-square-foot warehouse from GoodNeighbors. The base rent is $5.60 per square foot and the lease is for 15 years.

The warehouse project calls for a new public road, and extensions of sewer, water, natural gas and fiber-optic infrastructure, all at the developer's expense. The total cost of the improvements is estmated at between $4 to $5 million.

A key factor in the decision to approve TIF was explained in a letter sent to the council by Art Nourot with SunOpta. He told the council that he did not fully understand a question that the council asked him at the April 25 meeting about what would happen if TIF was not approved.

In order to receive TIF, the applicant must acknowledge that the project would not happen solely through private investment in the reasonably foreseeable future. Also, the development must yield a net increase in market value for the site compared to the likely development that would occur without TIF.

In his letter, Nourot clarified his response, saying that without TIF, the cost of bringing water, sewer and roads to the site would add $388,000 to the cost of the annual lease. As a result, the project would not be economically feasible without TIF, he said.

Nourot added, “If ultimately, the TIF is not approved and SunOpta is unable to build an appropriate warehouse to support the needs of our Alexandria operations, we would likely need to reconsider the current and planned growth for our Alexandria plants.”

The TIF application notes that the cost of placing city infrastructure and to bring services to this site has prohibited development of the site for 17 years.

With TIF, property taxes are frozen at the existing amount for a certain period of time, in this case it would have been nine years. The difference between the existing tax and the tax after the development is used to help pay for some of the project.

The annual property taxes on the property are now $8,983 and once the project is completed, taxes are projected to increase to $407,558. It will add $13.26 million to the city’s tax base, according to the TIF application. The market value of the property is $423,745 right now and will increase to $13.69 million after the warehouse is built.

The estimated annual TIF payment to the developer is $277,249.

The total site includes more than 100 acres and additional buildings taking up 350,000-square-feet may be added later, providing a potential new tax base of more than $1 million, according to the TIF application.

The project is expected to create five full-time jobs two years after it’s completed.

The council approved all three of GoodNeighbors’ TIF requests – a TIF plan, a contract for private redevelopment and a resolution to create the TIF district.