Approved Heer's term sheet opens negotiating process

Springfield City Council on July 2 approved a term sheet between the city and St. Louis developer McGowan|Walsh for general sale terms on the Heer’s building. The two sides now can finalize terms of the development agreement, including potential tax incentives.

The city owns the building after former owner Vaughn Prost transfered ownership just days before the city was set to foreclose on his loan. Prost had planned to convert the building into class A office space and condominiums but was unable to meet a series of financing deadlines.

Developer Kevin McGowan plans to have a Mike Shannon’s Steak and Seafood restaurant on the first floor of the building with banquet space above, and the city will lease 20,000 square feet for its cable TV studio and traffic management center. The remaining floors will either be a boutique hotel or residential condominiums.

Under the term sheet, the developer will pay $3 million to the city to purchase the building, while the city agrees to make $1 million in improvements to Park Central Square.

Also in the term sheet is a list of potential tax incentives that McGowan can request during upcoming negotiations, including community improvement and transportation development districts, tax increment financing, property tax abatement and partial abatement of hotel-motel room taxes.

The city and McGowan plan to close the building sale by Oct. 1, and McGowan expects to begin construction by the end of the year.

The room tax issue was a point of contention at the meeting – representatives of the Springfield Hotel Motel Association said the group was uneasy with the idea of permitting McGowan to keep part of the room tax, as it would create an uneven playing field compared to other hotels in town.

“Our members are concerned because the incentive does not represent the intended use of the room tax,” said SHMA President Missy Handyside. “We also believe that this will give the developer a competitive edge over other hotel facilities by giving him extra revenues.”

Representatives of the Springfield Convention & Visitors Bureau also spoke in opposition to that potential tax break; money collected from that tax goes to the CVB.

Mayor Tom Carlson, however, said the city was not guaranteeing any tax breaks by approving the term sheet; the agreement only made those incentives available during negotiations – he also noted that the city would defer to the CVB for approval of any hotel-motel tax breaks.

“We’ve heard a lot about promoting Springfield,” Carlson said. “I’d think it would be a lot easier to promote a Springfield with a refurbished Heer’s. All (the term sheet) says is that (McGowan) has a shot to make his case, and to me that’s the American way – we don’t say we’ve made up our mind until everyone has had a chance to state their case.”

Also on the agenda:

• Council considered an amendment to Planned Development District No. 299, which comprises Weaver Elementary School. Scott Wendt, director of capital construction for Springfield R-XII School District, told SBJ in May that the district plans to make $4.9 million of additions and improvements to the school, with work set to begin in late summer.

The PD amendment would allow the district more room for parking, as well as add 8-foot fences around the building.[[In-content Ad]]