What’s next for Liberty Center? Officials look to build finances after shortfalls

Credit: DaytonDailyNews

Caption
See Liberty Center from the air

Credit: DaytonDailyNews

The Liberty Community Authority has been working to improve the financial outlook for the $350 million Liberty Center development, which has been hit by shortfalls for debt payments that required using funds from a county financing district.

LCA finance committee member John Kirsch told the rest of the board recently that they have developed some options “that are beyond throwing spaghetti at the wall, a little more concrete than that” but there is nothing definitive yet.

In December the board hired a municipal advisor to help come up with some financial solutions.

“The county (financing district for the project) is designed, and they knew this from the get-go, that if there were shortages they would fill in,” LCA President Phil Morrical said. “What we’re looking at is are there ways that we can look at our debt that we have and see if we can restructure it, there’s different options ... Can we re-issue bonds at a better rate?”

At issue is the fact that the board has had to borrow money, about $600,000 over the past three years, from the county’s financing district account to partially cover debt payments. The shortfall is due in part to the COVID-19 sales slump and other factors, according to Brad Ruwe, the board’s bond counsel.

The county Tax Increment Financing district was always supposed to be used to cover some of the debt payments. Principle and interest for the main bonds is around $1.4 million annually — backed by the center — and there is an $800,000 Ohio Water Development Authority (OWDA) loan, which is the county’s responsibility.

ExploreLiberty Center businesses: Which are open, and which are still closed?

The LCA is responsible for maintaining garages and storm water systems at the center and paying off the debt incurred to build those. To do so, it uses a facilities charge of one-half of one percent, which the public pays during each transaction at a Liberty Center business. It also uses a 10-mill assessed value charge levied against the properties on the site.

After the first shortfall was discovered in 2019, the board also levied an additional Core Retail Charge, but since those are collected in arears, there have been gaps due to the timing of the debt obligations.

“The bonds are always going to have enough coverage, they’re safe, they’re secure,” Ruwe said. “The issue is one of timing, so just recently it’s been necessary to draw from the county’s TIF fund in order to cover the shortfall. That shortfall is being collected it’s just being done in arears.”

Ruwe said the board will be asked this month to renew the Core Retail Charge, which should bring in almost $400,000, eliminating the need to dip into the county TIF. The county’s obligation to the center ends in 2032, and there will still be about $2 million left on the OWDA loan, so Ruwe said the restructuring must address that fact.

Andy Brossart with Bradley Payne LLC, the municipal advisor hired to help come up with a new financial plan, was one of architects of the initial funding stack. He said he hopes to have something to present to the LCA, the county and Liberty Twp. in the next few weeks.

“That’s the goal to look at every option we can right now, to make it viable in the future,” Brossart said. “Hopefully, my goal is that the county gets their money back on that TIF portion, because that was the original intent of the deal. Whatever we come up with and present to the board and right along side with the county and the township, that there’s a solution and everyone wins on this.”

Part of the problem has been changes in management since the center opened in 2016. There was a disconnect when management of the center switched from the original developer Steiner + Associates, to Chicago-based Jones Lang LaSalle (JLL) in 2018. Some of the charges went uncollected among other issues.

Now the center is run by Bayer Properties, that company took over in 2019. General Manager John Taylor said the center weathered 2020 challenges and this year is starting strong. Under construction are McK’s BBQ, Cinnabon and AKT Fitness, all will open this spring or sooner. A new “shared office concept” tenant for the second floor of the Foundry will be announced soon.

“The leasing is getting better with the interest that it’s drawing,” Taylor said. “Tenants currently under construction like McK’s BBQ, AKT Fitness and Cinnabon right now, that’s all huge because we didn’t have anyone under construction and that work happening on the property that people can see, that’s a big momentum driver.”

There are still some issues with collection of facilities charges. Total collections for last year were $438,204 which is a $186,269 or 30% reduction from 2019, but the last six months picked up and were 79% of the previous year.

“It will eventually be a real positive investment for the county,” Butler County Commissioner Don Dixon said. “It’s not something that’s going to continue forever, and ever and ever be that way. It’s just an unfortunate time to be in that kind of a business world in country. It will work its way out in the next year or so.”

Liberty Center by the numbers:

  • $350 million development cost for construction, land acquisition, tenant finishes and other expenses;
  • Taxpayer dollars fund $49 million in bonds including a $12 million including a Ohio Water Development Authority (OWDA) loan Butler County is repaying with TIF dollars;
  • Shoppers pay a one-half of one percent facilities charge during each transaction at a Liberty Center business;
  • There is a 10-mill property assessment on retail properties to help repay debt.