Fourteen years after it began, the city’s Lynnhaven Mall Tax Increment Financing (TIF) District is over – having achieved everything it was created to accomplish.
Today, the city made its last payment under the TIF plan -- $1.7 million – and city leaders declared the district an unqualified success.
Citizens will benefit for years to come. Now that the Lynnhaven TIF district has ended, about $1.65 million a year in extra real estate taxes generated within the district will go to the general fund, to pay for everyday city services such as police officers, firefighters, schools, parks and libraries. Meanwhile, businesses in the district generate $3.9 million a year in sales taxes, $3.5 million a year in meal, admission and hotel taxes, $1.6 million a year in business license taxes and $1.1 million a year in business property taxes. All this pays for everyday city services.
The city raised money for its share of improvements by using the increase in real estate revenue generated by the private investment in the mall – tax-increment financing. No debt was issued. By paying off the TIF obligation two years early, the city saved $365,000.
“Our goal when we created this district in 1998 was to encourage private expansion of Lynnhaven Mall and to help maintain it as the No. 1 retail destination in Hampton Roads,” said Mayor William D. Sessoms, Jr. “And we’ve done that. Today, Lynnhaven Mall and the surrounding shops and restaurants generate $10 million a year in business taxes alone for city residents, not including real estate taxes. That money pays for vital city services and helps keep real estate taxes low for homeowners.”
The City Council created the tax district in June 1998 to stimulate private investment in Lynnhaven Mall. At the time, the mall, which had opened in 1981, was threatened by newer shopping centers across the region, including Norfolk’s MacArthur Center. The city invested $11.5 million for a new parking garage, improved drainage and public transit, and the ring road around the mall.
In return, the mall’s owner agreed to spend $100 million to expand and improve the shopping center. Lynnhaven Mall re-invented itself. New stores moved in or expanded. A parking deck opened in 2000. An 18-screen movie theater opened in 2003, along with two new restaurants and an outdoor plaza.
The return on investment was nearly 9-to-1.
It was Virginia Beach’s first TIF district, but not the last. Later, the city created two more successful TIF districts – one at Sandbridge to expand the beach and protect homes and businesses there, and one at Pembroke to create the wildly popular Town Center. All three TIF districts have quietly accomplished what they were created to do, helping Virginia Beach become a financially sustainable city.
“This is a perfect example of what a TIF district can accomplish,” Mayor Sessoms said. “Lynnhaven Mall is one of the crown jewels of Virginia Beach – and it will stay that way for many years, thanks in part to this creative partnership.”
# # #
191fin