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Meridian approves state’s second Opportunity Zone project

The Meridian City Council and the Meridian Development Corp., the city’s urban renewal agency, have agreed to accept a proposal for downtown Meridian that would result in the state’s second Opportunity Zone project, in response to a request for proposal (RFP) the city issued earlier this year.

The first, in Twin Falls, was announced in August.

Opportunity Zones, a community development program established by Congress in the 2017 Tax Cuts and Jobs Act, are intended to encourage long-term investment in low-income urban and rural communities through tax breaks.

photo of bill truax

Bill Truax

“The short story is that without the Opportunity Zone, we would not have entered an application under this RFP,” said Bill Truax, president of the Boise-based Galena Opportunity Fund, the only Opportunity Zone fund based in Idaho, which is also funding the Twin Falls project.

Background

This summer, Meridian asked developers to submit proposals for a new community center, park and parking garage on a city-owned site downtown. Meridian offered $4 million to pay for development and construction on the parcel, bordered by 2nd, 3rd and Idaho streets and Broadway Avenue.

Galena, the only developer to submit a proposal, proposed tearing down the current community center building and Centennial Park and rebuilding them as part of a combined community center and potential charter school for $13 million. The charter school portion of the project is a concept only and may change, said Tom Sheldon, an architect with GGLO Design of Seattle, which is working on the project with Galena.

New urban renewal district

The project would be funded by Meridian. Of the total cost, $4 million would come from the city directly, with the rest through creating an urban renewal district. The developers would fund the project up front and be reimbursed by urban renewal funds over time.

Galena said it needed the urban renewal district to fund the project, and the city agreed that without the urban renewal district, the community center will not be built. The proposed district would encompass six acres of land adjacent to the community center where Galena plans to build the Meridian Station project, which would include apartments, office and retail space.

Urban renewal districts make money through tax increment financing or revenue allocation. The district doesn’t raise taxes, but the tax yield on any growth in the defined district would go to the urban renewal agency to pay for projects developed in that area. Critics say that means other citizens and businesses have to pick up the slack to provide services such as police and fire protection for the district.

Aaron Elton, chief financial officer of the Galena Opportunity Fund, told the council he expects Meridian Station to generate $18 to $19 million in tax-increment revenue if the new district is created, part of which would go to pay back the costs of the community center.

But what about the old urban renewal district?

Galena’s community center project and Meridian Station project already fall within the existing downtown urban renewal district, set to expire in December 2026. Galena argues that the district expires too soon for it to accumulate enough tax-financing to support the community center.

To create a new district for the Galena parcels, the city would need to de-annex, or remove, the parcels from the current downtown urban renewal district. Next, it would need to vote to create a new, separate urban renewal district, which would require a study to demonstrate that the area is eligible to be an urban renewal district, as well as multiple rounds of public involvement ahead of any final vote.

Meridian did not commit to creating an urban renewal district ahead of that process and added a condition that Galena would have to pay the costs associated with de-annexation and creation of the new urban renewal district. Galena also has to give Meridian enough time for this process, the city added.

The Twin Falls Opportunity Zone project Galena is financing also leverages an urban renewal district.

Idaho Business Review reporter Sharon Fisher contributed to this report. 

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