THE VIRGINIAN-PILOT
Copyright (c) 1997, Landmark Communications, Inc.
DATE: Sunday, February 23, 1997 TAG: 9702230168
SECTION: LOCAL PAGE: B1 EDITION: FINAL
SOURCE: BY JON GLASS, STAFF WRITER
DATELINE: NORFOLK LENGTH: 83 lines
Nearly a decade after hatching plans to revive East Ocean View, a prime Bayfront community that had slipped into urban blight, the city is poised to approve the financing needed to finish the job.
On Tuesday, the City Council will hold a public hearing on the city's proposal to issue $24 million in municipal redevelopment bonds to complete the ambitious renewal project.
Money raised from selling the bonds would allow the Norfolk Redevelopment and Housing Authority to purchase the remaining property and demolish buildings within the approximately 100-acre, 10-block project area. The area is bordered by 30th and 21st Bay streets and includes choice Bayfront sites.
``This is definitely a milestone,'' Ward 5 City Councilman W. Randy Wright, who represents East Ocean View, said Friday. ``It's a final commitment that the project is going to be a reality.''
The bonds would be issued periodically during the next six years, and NRHA's timetable calls for completing acquisition and demolition by the year 2002.
But construction of the first two new homes on the tract could begin as early as October, officials said. As many as 700 privately built homes, ranging in price from $100,000 to $350,000 and geared toward single families, are expected to be built on the tract.
The NRHA began efforts to rehabilitate East Ocean View in the late 1980s, after residents agreed to turn the area into a conservation district, qualifying property owners for low-interest loans to improve existing buildings. By 1993, the NRHA declared the area blighted and began a campaign to buy up property and redevelop it.
The effort has created resentment among some property owners, sparking legal challenges to the city's process of condemning property. However, for some, the pace of redevelopment has not been fast enough.
Pat Gomez, NRHA's director of community development, said the City Council's expected approval Tuesday of the final leg of financing will be significant.
``The key thing is that, with the financial support from the city, we are now moving ahead in a very serious way,'' Gomez said Friday. ``It's very important from the standpoint of eliminating blight and also of creating a new community that we think will be well designed and constructed and award-winning.''
The city hopes to issue Qualified Redevelopment Bonds. Norfolk is thought to be the first city in Virginia to consider using these bonds, said Arthur E. Anderson, a partner in the Norfolk law firm of McGuire, Woods, Battle & Boothe, the city's bond counsel.
Even so, urban localities nationwide, including Baltimore and Los Angeles, have sold the bonds to redevelop blighted inner-city neighborhoods, Anderson said.
Since the NRHA plans to resell the property to private developers, the city, under federal law, cannot finance the project with tax-exempt general obligation bonds, typically how cities pay for capital projects.
The Qualified Redevelopment Bonds, however, are compatible with federal tax laws and are an ideal fit, Anderson said.
``They work with the type of aggressive, progressive redevelopment the Norfolk housing authority has taken on,'' he said.
The Virginia Small Business Financing Authority must clear the city's plan to issue the bonds, a step that Anderson described as a formality that shouldn't cause delay.
Norfolk's full faith and credit will back up the bonds, meaning that taxpayers will be liable for paying off the debt. But city officials said they don't anticipate having to raise taxes.
``When the city decided to undertake this project, a tax increase, specifically for this project, was not contemplated,'' said Norfolk Finance Director Nancy Tracy.
As part of the bond package, the council must also approve a ``tax-increment financing'' plan. Under this plan, any additional tax revenue pumped into the city's coffers as a result of expected increases in property values in the project area would go toward the bond debt.
Tracy said this tax revenue, in addition to existing local revenue sources, should be adequate to pay off the debt.
Additionally, the NRHA will raise money through the sale of property to private developers.
The investors who purchase the bonds will be repaid over a 20-year period. The city is expected to break even on the project after about 30 years, Tracy said, a result of the project's contribution to the expansion of Norfolk's tax base, plus other spinoff revenue.
KEYWORDS: BONDS EAST OCEAN VIEW REDEVELOPMENT NORFOLK
CITY COUNCIL