The Atlantic City Council has approved an economic development agreement with Sonntag Development L.L.C., for a TIF (Tax Increment Financing) grant pertaining to the Southern Heights View development project. The agreement, which passed by unanimous vote Wednesday evening, stipulates the local developer will $360,000 in three incremental payments of $120,000 each, to be paid at the time each of three phases of the project are completed. The 28-unit condominium project includes 16 to be built along 19th Street, with 12 additional units along or near 22nd Street. The project is expected to cost anywhere from $3-to 4-million.

Prior to the Council’s vote, a public hearing was held on the bond purchase that amounts around to $405,000, when the cost of the bond is figured-in. Despite some comments from the public over whether the City should grant a TIF for the project, Bond Underwriter, Chip Schultz said the project would not happen without a commitment from the City.

He said “To be very clear, that debt service on this bond issue is more than supported by the minimum assessment valuations. I’m not speaking to the street project costs in that area and what the City might have to spend…but the debt service of this particular bond issue is more than supported by the three and a-half million this stages in over a number of three-years, of assessment valuations. In fact, there’s about $240,000 left over after the payment of debt, when you take into account the tax increment dollars. The City won’t need that to pay the debt, so then that gets dispersed back to other political sub-divisions..the County, the schools, and so forth.”

Those funds also can support the City’s General Fund, according to Schultz, who said “The City has a really modest use of TIF, less than 2% of [it’s] taxable valuation.” Some cities over-use TIF, but Schultz said Atlantic is “No where near” the 20-to 30% to as much as 40% use other cities have, which can cut into the General Fund and Employee benefits. The agreement guarantees the TIF will be paid back by the developer or whomever takes over the land, if the developer declares bankruptcy or has other financial issues.

Mayor Dave Jone says “We have yet to lose money on a TIF.” He said when Skyjack manufacturing closed, they still paid their TIF off. He said also, “We [The City will] have first rights to the property if anything happens.”