That comment more than two years ago from a site developer working for a business interested in locating in Hillsboro is the initial spark that has ignited the city’s newest economic-development venture, according to city leaders.
Hillsboro Business Park, the 21-acre city-owned property on the southeast corner of Ash Street and U.S. Highway 56, began taking shape within the past week or two with the start of initial dirt work.
The site developer was referring to the availability of developed lots along U.S. 56, which would give a business prime exposure to the largest number of people.
“That’s kind of when we got things started about this,” Dalke said of the proposed development that will create 11 lots, including three with highway frontage.
At the time, the lots of sufficient size along the highway in the city’s nearby Hillsboro Heights development to the west, were already taken, Dalke said.
Not long after that conversation, the property drew interest from two local car dealers. Albert Reimer considered it for his Reimer Classics business, then opted for a smaller lot with highway frontage in Hillsboro Heights.
When Midway Motors acquired the local General Motors dealership in July 2008, and showed interest in the property as its preferred site to relocate the business, the city’s work to develop the property began in earnest, according to Dalke.
Since then, other potential tenants have expressed interest in the park. It is zoned “highway commercial,” as is Hillsboro Heights.
Dalke said it’s important to get the property developed before those tentative inquiries turn serious.
“We have to be ready when people want to come,” she said. “If we’re not ready, we’ll lose them, just like that very first (site developer) who called me that day.”
The project is being developed by the city in two phases to make it more affordable.
The first phase will provide utilities to the two lots adjacent to Ash Street. One is the large lot purchased by Midway Motors; the second, smaller lot is located on the south side of East Orchard Drive, the main entry street off of Ash.
The city also will invest in the construction of East Orchard Drive. In the first phase, only enough of the street will be built to service Midway Motors in order to keep the city’s initial investment manageable.
The council is currently deciding whether to build about 175 linear feet at first—enough to service Midway—or about 310 feet to the east boundary of the Midway lot.
The initial cost to the city for the first phase of development has been estimated in the ballpark of $400,000, depending on the length of street.
Most or all of the cost of the first phase will be paid with property taxes generated by Midway Motors through a development strategy called tax-increment financing, or TIF.
With TIF, most of the property tax generated by tenants located within the specified taxing district is used to pay back the cost of developing the property.
A TIF district cannot extend beyond 20 years, Paine said. Once the arrangement expires, the tax revenue is disbursed in full to the usual taxing entities: city, county and school district.
Even during the life of the district, Paine added, the school district and the state will receive a fraction of the property-tax revenue.
“It’s a great plan,” Dalke said of the TIF approach. “Yes, it will be a little while before we (the city) start recognizing property taxes from the people who are going out there. But in the meantime we are getting their sales tax and we are able to expand what we have available in Hillsboro (for new businesses).”
Phase 2 will develop the remainder of the park, including the utilities needed to service the remaining nine lots and the construction of a north/south “Washington Street,” which will be a detached extension of the existing Washington Street.
Phase 2 will begin when a new business is committed to locating on one of the remaining nine lots.
Dalke said circumstances were different when the city chose to develop all 72 acres of Hillsboro Heights at one time.
“The difference is the economy,” she said. “We had access to money to (develop all of it). We also had about three companies that were ready to locate out there. Some of those first ones actually signed contracts before there were streets and before there were utilities. They had great faith in us and took the leap to go out there.”
Most of the initial dirt work in Hillsboro Business Park will be done by city staff, Paine said. Dale Dalke, street supervisor, has considerable experience with earth-moving equipment.
“The first thing that will be done is to do the grading so Midway Motors can begin construction,” Paine said. “The target for that is the middle of March, so we’ll turn over to them a piece of property suitable for their project.
“The interesting thing about this is that we’re having to act like a private developer and we don’t always think like a private developer,” he added. “So a professional developer would be doing the things we’re doing right now—getting the property pretty much laid out so that people could come out and buy lots.”
In preparation for the Midway project, the city also will be building a retention pond in the northwest corner of the property to catch storm water. The pond will be where the “Welcome to Hillsboro” garden has been located.
Another aspect of the project now under way is to rehabilitate the ground where the former AMPI lagoons were situated.
“We’re actually digging up the old lagoons that were on the east side (of the property),” Paine said. “When those (lagoons) were closed they were closed and managed through a permit process with KDHE (Kansas Department of Health and Environment).
“What wasn’t done (adequately) is that they just pushed dirt over the existing sludge; it is soft and not suitable for constructing a building on.”
The dirt over the former lagoon will be excavated, dried out, replaced and ultimately compacted to meet building specs.
“Part of the deal is there was no concept (then) of that property being used for what we’d like to use it for now,” Paine said. “Our goal is to get the dirt put down and compacted so that we can then get a geotechnical report that says the property has been replaced and rehabilitated.”
As for the timing of the project, Paine said he’s always paid attention to what happens in a down economy—and when it comes back.
“We’re basically putting ourselves in position to be able to take advantage of this recovery mentality,” he said. “The timing is that while people are going through the ‘woe is me’ stuff, we need to be exercising these decisions to get the property available so that when XYZ company comes in and says, ‘We love Hillsboro and we want to build here,’ we’re ready for them.
“If we sit and wait, we’ll miss a year’s worth of opportunity.”