City Beat: Council expands blight, approves $48M in projects

The last thing Springfield City Councilman Craig Hosmer wanted to do was expand “bad public policy,” but his call to examine the city’s position on awarding tax abatements opened the door for supporters of the incentives to remove geographical limitations.

After months of broad debate and review by a city committee, council members voted 7-2 on May 12 in favor of a resolution allowing the declaration of blight in any area of the city should the property meet state definitions. By the time the meeting was over, City Council had approved a resolution allowing 10-year and 25-year abatements across the city, as well as abatement plans for two major apartment complexes that combined represent nearly $50 million in investments.

‘Urban core’  
The blight designation – which requires conditions such as obsolete platting and unsafe or unsanitary structures – is needed for developers to secure tax abatements on improvements.

Since 2011, when council approved its Economic Development Incentives Policy Manual, the city has limited blight approvals to the “urban core.” But when commercial property developer and manager Sam M. Coryell began working with the city last year to receive a tax break on his apartment plans on the southeast edge of town, the definition of that area was examined.

Coryell, the executive director of TLC Properties who was seeking a 10-year abatement on a $10 million complex in Galloway Village called Township 28, has said talks with the city about blighted conditions in the area led to the creation of a broader redevelopment plan.

Springfield Economic Development Director Mary Lilly Smith said the blight designation was justified because Galloway Village was established as a separate community in the 1880s before being absorbed by the city about 50 years ago. She has argued the village was within the city and had its own “urban core” issues that would qualify it for abatements.

Hosmer, a Springfield attorney and former state representative, has made it clear to his City Hall peers that he is against expanding opportunities for developers to receive property tax abatements.

First, he said awarding abatements, in general, amounts to bad public policy. Second, if the city is going to offer tax incentives for redevelopment projects, the scope of those incentives should be limited to center city.

A vocal critic of the incentives since he joined council last year, Hosmer said abatement plans draw money away from taxing jurisdictions, and incentives for student housing, in particular, siphon tenants away from property owners who are paying their full share.

In the case of Coryell’s Township 28, Hosmer said the property didn’t fall within the urban core, and on April 28, he successfully called for the issue to be reviewed by the city’s Plans and Policies Committee before a vote on the Galloway plan. The committee voted 3-1 to remove the “urban core” restriction from the manual.    

“I think this is basically expanding a bad public policy,” Hosmer said before council’s vote on the resolution. “I think that limitation was good in 2011, and I think it should have been maintained.”

Councilman Jeff Seifried was among those on council who felt the move to expand the blight footprint would encourage development that might not occur otherwise. The resolution expands potential areas for blight, which is permitted under both Chapter 99 and Chapter 353 of state statutes. Hosmer had hoped to at least amend the resolution to keep 25-year abatements under Chapter 353 from being extended citywide, but the amendment push failed by one vote.

“These are common sense changes to the economic development policy,” Seifried said.

Councilwoman Cindy Rushefsky joined Hosmer in opposing the resolution and the redevelopment plan for Galloway Village. It passed 7-2.

“I think private development should pay for private development,” she said before casting her vote.

Turning dirt
With the resolution out of the way, it was smooth sailing for the votes on the Galloway redevelopment area and the proposed $38 million student-housing complex planned on 4.4 acres that includes the former Colonial Bread building on St. Louis Street.

The Galloway plan allows property owners within a 74-acre area north and south of Sequoita Park to receive 10 years of abatements on improvements to their property that exceed $100,000 and are consistent with the plan. It also allows Coryell to move forward with his apartment project, which he said should be complete by summer 2016.

“My goal is to start turning dirt there before the Fourth of July,” Coryell said of the 18- to 24-month project.

Coryell said the legwork has been more difficult than expected. He purchased the property in 2008 and has worked to make it a financially feasible project.

“This is not an easy process at all,” Coryell said. “I got the legal team together. I got the surveyors together. I got the property owners together, and I got everyone on the same page. That takes a lot of time, money and commitment that not every developer would want to take on.”

He’s estimated the abatement would save him around $670,000 in property taxes over 10 years.

Though Hosmer had Rushefsky’s support to deny a blight designation in Galloway Village, he was alone in his opposition to approving an estimated $7 million in abatements on improvements to the vacant bread factory property. That project calls for four five-story buildings with 166 units and beds for 564 college students.

Husch Blackwell LLP attorney Shawn Whitney, who worked with both Coryell and Austin, Texas-based student-housing developer Aspen Heights on drafting their separate plans, said the votes represent a victory for developers.

“I think the city of Springfield and council took progressive action realizing that other areas of the city need help as well,” Whitney said. “This will open the door for those opportunities.”

The Aspen Heights plan gives the owners 100 percent property tax abatement on new improvements for the first 10 years and 50 percent abatement on new improvements for years 11-25. Whitney noted property taxes would still be paid at current levels and the taxes on improvements during the last 15 years would amount to an estimated $3.2 million in new taxes for the city.

“It’s an investment in the future. It is not a loss at all,” Whitney said.[[In-content Ad]]