JEFFERSONVILLE — The Jeffersonville City Council — for the second time — has voted to deny an urban enterprise zone tax credit for a downtown development that has been a hotbed for controversy in recent weeks.
The 5-4 decision all but solidifies the likelihood of "full-blown adversarial litigation" between the Jeffersonville Urban Enterprise Association and developer arc, headed by Alan Muncy.
After Muncy made his presentation at Tuesday's city council meeting, "no" votes were given by council members Joe Paris, Lisa Gill, Scott Hawkins, Nathan Samuel and Ron Ellis — who also sits on the JUEA board.
The ongoing dispute revolves around a parking lot at the corner of Spring and Market streets, where Muncy plans to build a $3.5 million multi-use development that would include apartments and retail. The crux of the JUEA's argument is that without the tax credit, the deal should be considered "null and void," as its absence would prevent the organization from receiving $450,000 over a 10-year period.
Muncy sees it differently.
"It's an investment credit," Muncy said. "The purpose of it is to incentivize people to come and spend money in downtown. They've identified that property as an Urban Enterprise Zone. The goal is to incentivize someone like us to come and spend our money there versus somewhere else."
During his comments to the council, Muncy showed a promotional video produced by the city, which features Muncy's other downtown developments, including arc's new headquarters on Spring Street.
"They're using the properties downtown to market the city, one of which I was given an investment credit on — the Marriott TownePlace Suites — which helped me invest $12.7 million in downtown," Muncy said. "I would love to understand how they think it's viable to use my buildings to market their city then deny my project."
In May the council voted to deny the tax credit for the first time, but Muncy moved forward with closing and waived the tax credit clause from his agreement with the JUEA — a move that has landed both parties in court, with the project's fate in the balance.
Council member Dustin White said he believes Tuesday's vote was "unfortunate." When the property was transferred from the redevelopment commission to the JUEA, it came with a stipulation that it be developed by 2022. The decision to deny the credit will make that deadline harder to reach, thus putting the property at risk of being split in two again.
"You'd have two different organizations with two parcels that are unable to be developed if they're not together," White said. "You're back at square one. You've walked back five years, because that's how long we've been working on this."
White also brought up Ellis's position on the JUEA board, arguing that he had a fiduciary responsibility to vote in favor of the credit.
"I was very disappointed with the vote tonight, especially with someone on the council who sits on the JUEA board who has a fiduciary responsibility to vote in the best interest of the JUEA," White said. "[That] would've been to vote for the tax credit which would've given the association $450,000. It's a clear violation of the board member's fiduciary duty to vote a negative on this tax credit."
Ellis, however, argued that he has no such responsibility. From his perspective, he was appointed to the board due to White's completion of the deal with arc despite not having the tax credit — something Ellis characterized as illegal.
"He didn’t do what he was supposed to," Ellis said of White. "If he had went to the members of the JUEA and gotten their consent to sign that, we wouldn’t be doing this right now. I’m doing what I feel was right. As far as being a member of the JUEA, I had been there and approved that initially. But I wasn’t one of those that initially approved. I don’t feel I have the same responsibility that other members would have. My real responsibility as an elected official is to represent the city of Jeffersonville, and that’s exactly what I did with my vote tonight."
When a new council takes over next year, White said he is confident that a new vote can be taken with different results.
"I'm confident if and when this thing goes into a trial that arc will be successful in the litigation," White said. "Hopefully, next year after that's done, we can revisit this with a new council."