City Beat: Council hears Heer's incentives plan

For the fourth time in 19 years, a proposal to redevelop the Heer’s building is in place.

Springfield City Council heard the formal redevelopment proposal at its Aug. 12 meeting. The plan calls for 25 years of property tax abatement on improvements to the eight-story building and allows the Springfield Police Department 10 years of free rent in a roughly 1,000-square-foot ground floor office.

Developer Heer’s Luxury Living LLC is co-owned by Jim Nichols of Lee’s Summit-based Dalmark Development Group and Ernie Straub of Shawnee, Kan.-based general contractor Straub Construction. To qualify for the Chapter 353 tax abatement, the owners must redevelop a blighted property. Springfield Economic Development Director Mary Lilly Smith said at the public hearing Heer’s was first declared blighted in 2004, a status the city’s Land Clearance Redevelopment Authority reaffirmed at its Aug. 6 meeting.

The developers – who are calling for council to approve 100 percent tax abatement for 15 years and 50 percent abatement in years 16–25 – propose to turn the building into a mixed-used property featuring 87 apartments, first-floor commercial space and luxury lofts.

In all, abatement would save the developers a projected $2.29 million, which they say makes the $15.7 million project viable. With improvements partially adding to the taxable value of the property beginning in year 16, property taxes would increase by $525,000 through year 25 – a 94 percent increase compared to the taxes it would generate if no improvements were made, according to the plan.

The developers are seeking a $750,000 Small Business Development Loan from the city for new windows and doors. Smith said while the developers have the option to seek a $142,000 brownfields loan for the removal of lead paint, she said they don’t plan to at this time for fear the loan process would delay the project.

The redevelopment plan includes a one-time payment to the city of $40,000 and a 10-year free lease to SPD to help pay off a roughly $100,000 city lien on the property for costs incurred to board up the building’s windows. In addition, 80 parking spaces in the parking garage across Patton Alley would be reserved for the Heer’s tenants at a price of $20 per space per month.  

Rusty Worley, executive director of Urban Districts Alliance, was one of five public speakers to throw his support behind the project. Worley said when he talks with people about center city development, they invariably ask about the latest Heer’s news.

“People care about this building, this project, and they also lament the status that it has deteriorated to in the last 18 years,” Worley said. “We’ve had over $400 million in investment in center city over the last 10 years and still the barometer that a lot of people use to gauge center city’s progress is the vacant Heer’s building.”

Springfield resident Mike Schilling, the only member of the public to speak out against the plans, said property tax breaks shouldn’t be a crutch for developers.

“I would certainly like to see something positive happen there, but what really disturbs me is that we are using the tax base to guarantee that this thing goes through, and I think that is really twisted,” Schilling said. “We’re tapping the keg of corporate welfare again.”

Heer’s Luxury Living purchased the Heer’s building out of a foreclosure sale this spring through property buyers E and J HIDC LLC, becoming the fourth developer attempting to breath life into the property since the former department store closed in 1995.

That year, Warren Davis Properties bought the building before becoming embroiled in a six-year insurance battle after water and vandalism damage occurred at the property. In 2004, Davis walked away, selling the 156,000-square-foot property to Columbia-based historic renovation specialist Vaughn Prost for $2.2 million. In 2006, ahead of a looming foreclosure, the city purchased Prost’s loan on the Heer’s for $3.1 million before selling the property a year later to St. Louis developer Kevin McGowan. Under the weight of the credit crisis in late 2010, McGowan walked away from his $29 million redevelopment plans saying the risks outweighed the reward.  

Council is scheduled to vote on the Heer’s Luxury Living proposal during its Aug. 24 meeting.  

Kum & Go rezoning
Council unanimously approved a zoning change on 1.44 acres at 777 E. Battlefield Road to a general retail district from an office district – a move that will allow West Des Moines, Iowa-based Kum & Go LC to build a new store on the site.

During a first reading of the proposal at the July 29 council meeting, Kum & Go representative Josh House said the company had planned to renovate its nearby location at 3030 S. Jefferson Ave. when the office property on Battlefield became available. He said the store construction is part of Kum & Go’s plans to invest $24 million through 2015 on store renovations across the company’s 46 stores in Greene County.

The nearly 15,000-square-foot 777 Office Building, owned by Griswold Enterprises LLC, has a taxable appraised value of $1.47 million, according to Greene County assessor records. Brad Thessing of Thessing Commercial Properties LLC, who represented the property owner at the July 11 Planning & Zoning Commission meeting, said at the time the office building was 50 percent leased.

Moon City Creative District
Council also approved a bill allowing neighborhood districts in the city to create their own live/work overlay districts in residential areas.

The proposal was prompted by a desire among artists living in the Woodland Heights neighborhood north of Commercial Street to create signage and sell their wares out of their homes. The overlay district is designed for small businesses that operate out of residences. Parameters include structures no larger than 5,000 square feet, with less than half devoted to work space, and businesses that employ up to five.

With council approval in place, Woodland Heights residents can now write a formal plan for the 16-block Moon City Creative District.