Carson City supervisors are considering a plan that would convert the incentive grant to auto dealer Michael Hohl into a loan to the Redevelopment Authority.
Instead of granting the $4.8 million to the Redevelopment Authority to help subsidize construction of Hohl's new dealership center, the city would loan the incentive money to the authority.
Finance Director Nick Providenti said Hohl would still get the cash as a grant. The difference is that the authority would pay the city treasury back.
The redevelopment authority is funded from a portion of the property taxes collected in the city's two redevelopment districts " downtown and on the south side of the city.
Redevelopment got about $1.5 million this fiscal year from property taxes to help attract and retain business.
Hohl's new $10 million car dealership center on South Carson Street would probably generate about $100,000 a year in property taxes. Providenti said the redevelopment authority would pay back the money to the city General Fund over 10 to 15 years.
The incentive keeps Hohl's three dealerships and RV center in Carson City at least 20 years and helps build the new car center.
In return, the city gets higher property taxes from the property as well as the sales and use taxes and other fees and levies the business generates.
City supervisors will look at the plan at their meeting Thursday.
Providenti said the loan payments would also help keep the general fund stable in the next few years.
"It's like lending a family member money," he said.
The redevelopment authority, which is made up of city supervisors, needs flexibility paying back the loan, said Supervisor Robin Williamson, head of the authority. She said payments may need to be spread out over 15 years or stopped for a few years. The redevelopment authority needs to be able to act quickly if opportunities to fill empty department stores come up, she said.
City Manager Larry Werner said the city looked at issuing bonds to pay for the incentive, but could not get a tax-exempt status for the bonds, so it would have difficulty selling them. Providenti added that the authority would probably have to pay 7-8 percent interest on those bonds, about double the 4 percent the city will charge under the plan.
He said if the authority pays the money back over 10 years, payments would be about $600,000 a year. Extending that to 15 years would drop the annual payment to $430,000.