JEFFERSONVILLE — A project that could play a key role in downtown Jeffersonville's revival remains in limbo, as a prominent developer seeks answers and a non-profit board mulls litigation.
At the center of the debate is corner property at Market and Spring streets, where Alan Muncy, president of arc, has agreed to transform a longstanding parking lot into a $3.5 million mixed-use development of apartments and retail.
The sticking point is a May 20 vote by the Jeffersonville City Council that denied the issuance of an Urban Enterprise Zone tax credit for the project, which was part of a development agreement between arc and the Jeffersonville Urban Enterprise Association [JUEA], owners of the property.
Muncy, who waived the clause in the agreement about the tax credit, moved forward on closing on the property on May 23. Less than a week later, the JUEA board, at a special meeting, approved a resolution to begin the process of filing a lawsuit to "set aside" the closing, believing it violated the terms of the development agreement.
The JUEA action, and Mayor Mike Moore's comments last week about the project, have Muncy scratching his head about exactly what is happening with the development.
"To say that I'm surprised and confused by the whole situation would probably be the best way for me to describe where I'm at right now," said Muncy, who is converting the former Horner Novelty building into a showpiece headquarters for his company — part of $22 million in investments he's made in downtown Jeffersonville over the past several months. "I'm surprised because I have an agreement with the Urban Enterprise Association that I executed. The only thing I've done is exactly what we've agreed upon."
TAX CREDIT CONUNDRUM
It was Muncy, not the JUEA, who asked for the Urban Enterprise Zone tax credit to be part of the development agreement.
When an entity utilizes an Urban Enterprise Zone tax credit, it receives a 50-percent reduction in taxes over 10 years, and the remaining 50 percent is considered a donation to the Urban Enterprise Association, which is how the JUEA would collect an estimated $450,000 on the project.
The tax credit also would have benefited Muncy, who could pass down the savings to potential retail and residential tenants of the development.
"And it brings the cost down of the project," he said. "It benefits everyone."
According to the development agreement, the deal — Muncy offered to purchase the property for $1 with the understanding that the site requires about $200,000 in remediation work — would be "null and void" should the council deny the tax credit.
But since Muncy asked for the tax credit to be in the agreement, and a waiver clause in the agreement states Muncy has the right to terminate the agreement at closing should any condition not be met, he felt he had fulfilled all his obligations to move forward with closing after receiving approval from the required city boards and commissions.
Muncy also conferred with then-JUEA chairman Dustin White, who agreed with his assessment and signed the closing documents.
"I went and looked at the agreement and said, 'you know what, I'll go ahead and waive [the clause]," he told the News and Tribune in an interview this week. "I honestly didn't think it was an issue. I didn't even think twice about it ... I've done nothing but perform what the development agreement asked of me, and the intent of the development agreement was to redevelop the Urban Enterprise Association property."
Also in the agreement is a stipulation that the JUEA would be obligated to submit for the tax credit with the city council within 30 days of the agreement being executed. Muncy's agreement with the JUEA was approved in September 2018, but the JUEA did not submit for the tax credit with the council until May 20 — some seven months later.
Muncy said he contacted Les Merkley, attorney for the JUEA, via email a half-dozen times over a six-month span, seeking status updates on the tax credit going before the council, but never got a satisfactory answer.
"All the while it never was submitted," Muncy said. "The answers were, 'we are not going to submit it this month.'"
Nathan Pruitt, executive director of the JUEA and the city's planning director, and Merkley declined to answer questions about the tax credit and the development agreement for this article, citing the possible pending litigation.
While he waited for action on the tax credit, Muncy moved forward with the project. On April 8, the city's Historic Preservation Commission gave its stamp of approval on the development, and the city's Board of Zoning Appeals and Plan Commission approved the project April 30.
"So every requirement we had to meet, we met," Muncy said. "We turned over every drawing and document that was required of the development agreement for review and approval, and as such, all were approved. The city through the BZA and plan commission were in full support of the project, as everyone was."
All that was left was for the council to vote on the Urban Enterprise Zone tax credit.
ANATOMY OF A VOTE
On May 20, a resolution seeking approval of the tax credit for the project came before the city council. Since the project rests within a Tax Increment Finance [TIF] district, it required city council approval for the tax credit.
According to minutes from the meeting, councilman Scott Hawkins voiced concern about the JUEA being a non-profit organization and not subject to the Open Door Law. Hawkins also noted that the Redevelopment Commission has open meetings where residents can learn more about a project. The minutes reflect that when Hawkins received the resolution "he really didn't even look at the project because it is not a matter of the project," instead focusing solely on the tax credit.
Lisa Gill, vice president of the council, also voiced her opposition to the resolution at the meeting, agreeing with Hawkins about the perceived lack of transparency with the JUEA board, and that the Redevelopment Commission has a lot of investment in downtown Jeffersonville, which would be a benefit in developing additional property.
The council defeated the resolution by a 5-3 vote, with Nathan Samuel, Ron Ellis and Ed Zastawny joining Gill and Hawkins in voting no; Matt Owen, Callie Jahn Payne and Dustin White voted in favor.
The council's vote surprised Muncy, and sparked some revisionist thinking.
"I likely wouldn't have pursued the project, or would have pursed it in a different manner, because I was given information that led me down the path that I'm on today," Muncy said. "Just like anything else, if you're given information, you make your choices based on that information."
On Wednesday, Gill reiterated her position that she would rather see the project under the purview of the Redevelopment Commission, to take full advantage of TIF dollars.
"I wanted the money to go back into the TIF with redevelopment," she said. "It's their job to develop downtown. They're the ones that have been adding all the amenities and the projects to revitalize downtown ... Redevelopment's funding is what pays for all those projects."
Mayor Moore has also weighed in on the tax credit issue and the development agreement, criticizing White and Muncy for moving forward with the closing, saying in a May 31 story in the News and Tribune that he was "outraged, as is our board," and that the deal "stinks to high heaven."
Those comments, in addition to Moore saying "Jeff deserves better than this," didn't sit well with Jeffersonville native Muncy, who feels empty-handed — and hurt.
If he moves forward with the project, instead of the JUEA receiving the estimated $450,000 over 10 years from the tax credit, the city, using that figure, would receive $900,000 during that span, and much more after that, since there's no telling how long the development will occupy the space.
"What I don't understand is either way, Jeffersonville wins with my project," he said. "If I don't do the project, the property is a parking lot and provides no tax benefit or revenue to the city.
"I feel like I've been wronged, but the thing is, I don't feel I did anything wrong. All I did was execute the agreement that we had."
Soon after the council's vote, Muncy texted Moore, expressing his shock and wondering if the mayor was against his project. Moore responded that he was "Against UEZ credit."
"Needless to say I'm surprised, because I was given no indication from anyone that this was an issue," Muncy said.
Muncy claims he's spent upward of $70,000 to design and market the property, all of which has created a buzz.
"And now I feel like someone believes they want to take that property back," he said. "It certainly seems like now that I've done the work to create the value, they want it back. We don't have a renegotiation clause in the agreement."
Moore declined multiple opportunities to be included in this story.
SEEKNG A RESOLUTION
At a regular meeting Wednesday, the JUEA reaffirmed the May 29 resolution it approved to begin the litigation process against arc. It was the first meeting since its former chairman, White, who signed the closing documents with Muncy for the property, resigned from the board, citing it was time to step down after more than seven years.
Board member Stephanie Garner was the lone dissenter on the most recent vote. An email sent to Garner on Thursday seeking comment was not returned by press time.
Garner's vote coupled with White's resignation and past contentious meetings regarding Muncy's proposal may signal a rift on the JUEA board. Case in point is a meeting on April 4 in which the JUEA voted on new design renderings for the project, which had been a point of controversy. The board ultimately approved the design 4-2, with Kelley Curran and Peggy Hardaway the dissenting votes. Hardaway was named JUEA's new chairperson at Wednesday's meeting.
All signs point toward a judge ultimately deciding the project's fate — though Larry Wilder, attorney for the JUEA board in the matter, was open to a different outcome through negotiations.
"If your question is do I believe that people talking to one another is better than litigation, I'm going to sound like the antithesis of a lawyer, but yeah, that's always a good thing," he said Thursday, adding that a lawsuit has not been filed. "I think that in every aspect of life, conversations among people are a good thing."
Muncy still believes in the project, and just wants a resolution. After all, he was the only developer to respond to a request for proposals on ideas to develop the property issued by Pruitt on April 19, 2018.
But the circumstances behind the possible litigation and the ensuing controversy have him looking inward.
"If you're going to challenge my integrity, then I don't have a choice — I have to defend it, because it's my brand, it's my name," he said. "It makes me feel like I should take my money and invest it in someone else's city."