The Marysville School Board has approved an agreement related to a highly anticipated proposed, multi-use project in the city’s Uptown.
At its recent meeting the school board approved the agreement with the city and Connect Real Estate for The Silos at Marysville.
The Silos project will redevelop about 16.6 acres at the city’s former water treatment plant, the Heritage silo site and several other commercial properties on North Main Street. The developer, Connect Real Estate LLC, says it will invest about $100 million into the project that is expected to include about 220 total apartments and various businesses creating about 260 permanent jobs.
The agreement, approved unanimously by the school board has several parts, including:
-A 50% income tax share with the city for residents, employees and businesses in the district.
-An annual $70,000 Payment In Lieu of Taxes (PILOT) to the school district.
-A 15-year property tax abatement on the properties in the project.
-A 30-year, 100% tax increment financing (TIF) agreement for the properties.
City Manager Terry Emery said the city, schools and Connect have been working on the agreement for about a year.
“This was an unusual project and one we felt was very, very important to the city and our future and at the same time, we didn’t want the schools to be negatively impacted.”
School Board member Dick Smith agreed saying the agreement was the result of hard-nosed negotiation involving “give and take.”
“We know this project, over time, is a game changer for the northern part of the city,” Emery said. “Both sides understand how special this project is.”
City officials said the agreement is different from those it has created with the schools and developers in the past.
“There is a new philosophy,” Finance Director Brad Lutz said. “We recognize the school district has gone through some changes in how their revenue is collected.”
The finance director acknowledged, “some things have changed to where we need to look at those agreements differently.”
He added that council has stressed that discussions need to “reflect how we want to have a better relationship with the schools and how we come to agreements on projects.”
Emery said the city is “bringing the schools in very early on projects and talking to them about impacts to them and to us.”
He said that agreements that do not consider the impact to schools may have been used in the past but “are not happening now.”
“That can’t happen. We need our schools to be successful. We understand that,” Emery said. “But at the same time, we need our city to be successful so when a project comes to us, we get the school involved early.”
Officials said that in the past the city has returned about 34% of TIFed property tax to the school district. Lutz said the infrastructure improvements connected to the project — Jim Simmons trail extension, pedestrian bridge across Mill Creek, repainting the heritage silos and North Main streetscape improvements — will require the full TIF amount.
“It was that reality that led the City to propose the 50/50 income tax share for residents and employees in the project area,” Lutz said.
Emery explained, “when we started looking at the numbers, it became clear that maybe an income tax share was appropriate.”
Lutz said the income tax sharing agreement is “pretty simple.” He said each year the city will calculate the total amount of income tax received from residents living in the project apartments or working in the project businesses.
“That total will be split down the middle and I will write a check for that amount and send it to the schools,” Lutz said.
Lutz said he believes 2028 will be the first year the Silo project is fully operational. He said he is estimating that in 2029 the school will receive about $142,000 from the project – $54,500 in income tax from residents living in the project area, $7,500 in income tax from employees working in the project businesses, $10,000 in property tax and the $70,000 pilot payment.
He said he is being “really conservative” in calculating wages for the occupants and the number of occupants.
“That number, I consider the rock bottom,” Lutz said. “I believe something would have to have gone terribly wrong to go below that number.”
In 2024, the properties included in the agreement collected $5,220 in total property taxes with more than $3,500 of it going to the school district and an estimated $2,340 in income tax.
He said the project income tax revenue sharing will begin immediately meaning income tax from construction crews working on the project will be split with the school even before the homes or businesses are open.
Lutz said the PILOT will stay the same and property tax increment should increase slightly the life of the agreement, but the other numbers should increase more significantly.
The agreement currently includes five parcels but could be expanded to include nine additional properties, depending on the developer’s future plans.
Officials said each parcel will have its own TIF agreement and the 30-year clock on the TIF will start once work on a parcel is substantially complete. The TIF will divert tax money voted on for schools, libraries and other public uses to pay for infrastructure improvements needed to accommodate the project and associated growth.
Because of the construction schedule, some portions of the project could begin several years after others. Even so, the agreement calls for the $70,000 annual PILOT payments to continue until the very last of the TIFs expire.
Lutz said that with the abatement, the TIF fund would have no money for the first 15 years. He said any projects financed with debt based on the expected TIF revenue will be structured to reflect that timing. He said that the first 15 years the city would pay “interest only or very little principal.” He explained that financing for the city’s wastewater treatment plant was structured similarly.
The project proposal includes the construction of several multi-family buildings with about 220 total apartments and a fitness center; corporate housing; restoration of the former Marysville Water Treatment Plant into 12,000 square feet of new office and hospitality space; public parking; a community arts area; construction of a 26,000 square foot mixed-use building with a restaurant, event space, bar-arcade and outdoor gathering areas; and “repurposing” the Heritage Grain Silos into 112,000 square feet of “inviting hospitality venues, outdoor gathering spaces and a versatile event destination.”