Chief Development Officer Tim Sheehan proposes a District Improvement Financing plan for the Springfield Crossing project. The proposal was ultimately voted in by the City Council.
Photo credit: Focus Springfield
SPRINGFIELD — The long-awaited Springfield Crossing project at the former Eastfield Mall will be bolstered by a financing plan to help support some of the extraordinary development costs incurred by the project.
On June 2, the City Council voted unanimously for the city to establish a 34-acre development district on the project’s land and commit $8 million to the district to help pay costs for demolition, abatement, site prep, earthwork and paving.
“Ultimately, the utilization of the DIF [District Improvement Financing] allows the city to assist in providing funding for those public improvements that advance the project,” said Chief Development Officer Tim Sheehan.
The DIF, under Massachusetts General Law, allows Springfield to establish funding for economic development from the Springfield Crossing project itself, according to Sheehan. He said the funding stream is achieved by identifying and capturing tax revenues that result from the new private development in the DIF area.
“The tax revenues are generated by the increases in the assessed value, that’s the increment,” Sheehan said. “The increment is above and beyond what is currently being collected by the municipality on the site and that a percentage of that funding becomes part of the proposed DIF.”
According to Sheehan, the vacant Eastfield Mall lot currently generates around $600,000 a year in property tax revenue. When the current phase of the Springfield Crossing project is complete, which developers say will likely happen by the end of 2025, revenues are expected to climb to $2.7 million a year.
Under the DIF agreement, $1 million of that $2.7 million would go the city while another $1 million would pay off bonds issued by MassDevelopment. Sheehan said the bondholders would front the money to help pay for the aforementioned improvements.
According to Sheehan, the DIF would have a 10-year life, and the city would pay off the project’s proposed improvements within the DIF district in seven to eight years.
If the expected yearly tax revenue of $2.7 million is not met, the city is not obligated to come up with that difference.
“Our obligation is only to provide back to the bondholders that which is available in the DIF revenue account to pay back,” Sheehan said.
The Springfield Crossing project on 1655 Boston Rd. is being developed in phases by Onyx Partners Ltd. The first phase, which includes the DIF, is valued at $77 million and includes the opening of seven stores this fall and a Target in the first quarter of 2026.
Although developers have not officially divulged which stores are coming to the former Eastfield Mall location, Reminder Publishing received comments in the past from stores that confirmed their future presence at the parcel, as seen here: tinyurl.com/y4vtf2m8.
Onyx told the council that a second phase of the project will include 50 housing units and then a third phase will feature some type of commercial development, according to Onyx Founder Anton Melchionda, who added that the total project cost is around $146 million.
Sheehan said the two additional phases of the project are not part of the DIF at this point.
Aside from those plans, Onyx said that the city will be able to utilize the new development’s parking lot in the future for staging, coordination and incident response activities during significant local, state and national emergencies.
The developers are also prioritizing the hiring of Springfield residents and dedicating an entire section of the project to local businesses.
Speaking to the project during the June 2 council meeting, former Springfield Mayor Mary Hurley called the project a home run and said Onyx is not making any profit from the DIF.
She added that, when done, the development will benefit every taxpayer in the city of Springfield.
“It’s all money that’s going to be invested in a project that’s going to yield significant tax income, not just for 10 years, 20 years, or 30 years, but for the foreseeable future,” Hurley said, of the DIF.
According to Melchionda, without the DIF, the project would essentially halt.
“The conditions for the bank to continue financing the project are that we have approval for this collaborative public-private partnership with the city,” Melchionda said.
After much questioning, almost all the councilors expressed excitement for the development, arguing that it would bring more people into the city and provide a closer outlet for residents to patronize so they do not have to drive all the way to the Holyoke Mall.
At-Large City Councilor Jose Delgado recalled his younger days when he used to visit the Eastfield Mall and conveyed enthusiasm for the thought of recapturing that spirit.
“This is an opportunity to bring this back to life, capture those revenues that we’ve lost, also have traffic that is not going there right now,” Delgado said.
Ward 8 City Councilor Zaida Govan said she wants this to be a “go-to place” for Springfield residents and expects the development to be “popular” when it first opens.
Govan resides in the ward where the new development is happening.
“This is a great opportunity for the city as far as bringing in revenue with the taxes that will be brought in,” Govan said. “I want to make sure that we are able to do what we can do for our residents.”
According to Sheehan, $3.2 million of the $8 million commitment under the DIF will go toward demolition and abatement; $2.1 million will be for site preparation and artwork; and $2.6 million will be allocated for paving.
In closing remarks, Sheehan commended his team on the city side for thinking “outside the box” when choosing the DIF route.
“This required, in terms of being able to monetize the tax benefit, our whole team to think outside of the box as to how we can get this done,” Sheehan said. “It’s really been a collaborative effort of all the city entities from finance to assessors to planning and economic development.”
