SMYRNA - Redeveloping the dilapidated Belmont Hills shopping center in Smyrna will require a form of financing not used before in Cobb County.

Jack Halpern, whose Halpern Enterprises owns the 48-acre property, has asked the city and county to pay $23.5 million of the $250 million mixed-use project through tax-increment financing, or TIF.

"We've had discussion of TIFs before, but this was the first time a developer said this was the option I prefer," Cobb Chairman Sam Olens said.

Halpern plans to demolish the mostly vacant shopping center at the corner of Atlanta and Windy Hill Roads and replace it with a mixed-use project featuring 110,000 square feet of retail and office space and 730 residences, from luxury rentals to single-family houses to senior living.

A TIF is similar to a tax-allocation district subsidy, except that no bonds are issued, and the developer does not get any of the money in advance, Olens said. The government financing is an incentive for developers to build in blighted areas to increase property values, which results in more tax revenue.

"The developer is self-financing so that the increment every year is given to him instead of being used to pay a bond," Olens said.

For Belmont Hills, the county has agreed to repay Halpern up to $9.2 million for the project. The city of Smyrna has agreed to reimburse Halpern up to $14.3 million. The county TIF will expire in 25 years, on Dec. 31, 2033. The city TIF deadline is 30 years, to Dec. 31, 2038.

"Jack's taking the greater risk going with a TIF rather than a TAD," Olens said. "We clearly anticipate it will be paid off before that."

Smyrna city council members agreed to the TIF at their May 5 meeting. County Manager David Hankerson gave the county's consent in a letter dated April 29. Hankerson's letter says construction must start before Dec. 31.

Olens said Halpern has agreed to follow the county's guidelines on what the tax money can be used to pay for, such as infrastructure improvements and demolition.

"He's fully agreed that the dollars from the TIF have to 100 percent meet our revised guidelines," Olens said.

In 2003, the city of Smyrna, Cobb County and the Cobb school board agreed to create a 140-acre tax-allocation district along Atlanta Road in Smyrna, to fuel redevelopment of blighted areas. Belmont Hills sits inside that district.

In February 2007, Halpern presented a development plan and requested a $32.8 million TAD for a $252 million project.

Last summer, Cobb County Commissioners revised guidelines for TAD projects, including a 15-year deadline for bond repayment. Halpern then revised his project and lowered his TAD request to $23.5 million, which the city of Smyrna agreed to in January. About half of that would have come from school-tax revenue.

But on Feb. 11, the Georgia Supreme Court ruled that school-tax revenue cannot be used to finance redevelopment through TADs. Now, the city and county are filling that void.

"We're picking up a little of it and Smyrna's picking up the max," Olens said. "(Halpern) knew the max he could get from us, and he asked Smyrna to pay the balance."

Halpern now needs the property rezoned, and to pull building permits. The developer said he's "ready to start moving dirt as soon as possible." The first phase is scheduled for completion in 2011, and final project completion in 2016.

Olens said he now wishes the county had revised its TAD guidelines before approving the 2003 application.

"But having said that, we did approve it and we're making the best of those prior approvals," he said. "We're permitting the 2033 versus the 15-year date in the revised policy, and that's due to the fact that this pre-existed."

Olens praised Halpern's handling of the deal.

"Jack's been a perfect gentleman through this entire process," he said. "He has demonstrated far more desire to come to a win that everyone could live with, and that should be commended."

Olens said the county has yet to hear from A.G. Armstrong, the developer of Jonquil Village.

That $181 million mixed-used development in Smyrna had an approved $26.2 million TAD, but the bonds were not issued before the Supreme Court ruling.

Construction is under way at that site, across from Smyrna's Market Village. A Publix grocery store and 300 condominiums are planned there.

ahungerford@mdjonline.com

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