South Market PILOT Approved
- Aug 27, 2012
South Market District, one of the most ambitious private-sector projects since Hurricane Katrina, took a major step forward last week. The Industrial Development Board (IDB) of New Orleans gave its unanimous, albeit preliminary, approval for a payment in lieu of taxes financing package for the first development phase of the mixed-use project on Girod Street along the Loyola Avenue streetcar expansion, The Times-Picayune reported.
As previously reported, developer Domain Cos. petitioned the New Orleans IDB for a 15-year PILOT worth $114,000 per year, an amount that is just above taxes due on undeveloped land. However, Domain was able to hammer out a new agreement during further talks with the city economic development adviser, the New Orleans Business Alliance and the IDB. Among the changes is reducing the PILOT from 15 to 10 years. Taxes will be completely frozen for two years while South Market is under construction, with the 10-year PILOT commencing after completion, in 2015. Between 2015 and 2021, property taxes will increase 5 percent annually. In 2022, the developers will pay 25 percent of the estimated tax bill; it will pay 50 percent the next year and 75 percent the following year, with 2025 becoming the first year of full-value tax billing, amounting to $859,451 per year, according to The Times-Picayune.
South Market’s biggest impact on the city won’t be through the property taxes it pays, though. In an area currently dominated by parking lots, Domain Cos. will attract 15 national and local retailers ranging from home decorating and furnishing shops to apparel and accessories stores. Some of the tenants lined up or being wooed will be new to the Crescent City’s market. Domain has yet to release a tenant roster, as it is waiting to finalize all negotiations so it can release all the names at once. Cafes, bars and restaurants will all be native to the Big Easy.
Groundbreaking is set for early 2013. Woodward Design Build is the project’s general contractor.
South Market’s phase one will include 195 apartment units, 67,200 square feet of retail space and 435 garage spaces, and is expected to take 18 months to complete. The 10-month phase two will result in 364 apartment units, 111,000 square feet of retail space and an additional garage.
Financing is not yet complete, but the PILOT reportedly will round out financing consisting of a $55 million Goldman Sachs loan, $8.4 million in owner equity and $4.9 million in federal equity, as well Louisiana Enterprise Zone rebates.
Rendering credit: South Market District’s Facebook page