City Beat: Council receives three new abatement plans

Springfield City Hall was thick with questions for Springfield Economic Development Director Mary Lilly Smith, City Attorney Dan Wichmer and developer representative Shawn Whitney at the Jan. 12 City Council meeting. The pointed queries were connected to a trio of redevelopment proposals by two construction veterans seeking property tax abatements.

Councilman Craig Hosmer asked for the value of the abatements and if tax recipients, such as Springfield Public Schools, had been contacted for comment. Councilwoman Cindy Rushefsky wanted to know how blighted districts could be “unblighted.” Councilman Doug Burlison was curious why council needed to vote at all since the projects were located within established blighted areas.

The inquiries reveal concern from the administrative body – a group that has demonstrated support for development incentives 10 times over the past two years – about the preponderance of blight within the city. The blight designation, which requires conditions such as obsolete platting and unsafe or unsanitary structures, has been around since the 1960s, but it has gained traction with developers in recent years largely focused on student-housing projects.

According to city data provided to Springfield Business Journal, blighted areas, including tax-increment-finance districts, covered 2.42 square miles in the city, or nearly 3 percent of Springfield, as of February 2014. Including TIFs, more than 1,500 acres of blight have been established in the city. As of 11 months ago, that activity has resulted in over $51 million in estimated tax abatements for developers, or 2.23 percent of all assessed property values in the city.

Matt E. Miller of Miller Commerce and Larry Snyder & Co. President Dusty Emmert are the developers behind the three project proposals. Miller’s two proposals are near Missouri State University, and Emmert’s is near Ozarks Technical Community College.

Collectively, the projects could be in line to save up to $900,000 in property taxes over 10 years, according to estimates provided by attorney Whitney of Spencer Fane Britt & Browne LLP, who represented the developers at the public hearing.

Emmert, who runs one of the largest general contracting firms in the area in terms of annual billings, is developing Greenway Studios in midtown, west of Silver Springs Park. In February, project plans divided the neighborhood during a rezoning hearing with many residents wanting to save Timmons Temple Church of God in Christ, 934 E. Webster St. In November, the Springfield-Greene County Park Board approved a plan to raise and move the stone church to the park across the railroad tracks.

Emmert’s plans call for two- to three-story apartments with 84 microefficiency units. The construction budget is around $3.9 million, according to Whitney, and an abatement on improvements would save the developer $350,000 to $400,000 over 10 years.

Miller – the man behind recently built student apartments Deep Elm, The Jefferson, The Monroe and Q Place with the help of Chapter 99 tax abatements – wants to develop So-El District Lofts along the south side of Elm Street between Jefferson and Kimbrough avenues. Miller plans to build up to 50 units targeting MSU students to replace three existing residential structures at 430, 438 and 444 E. Elm St. The abatement is estimated to save $250,000 to $300,000 in property taxes over 10 years.

Miller’s other proposal, dubbed One House apartments, would replace two vacant residential structures at 405 and 415 E. Madison St., northeast of Madison Street and Jefferson Avenue. Those plans, which are seeking roughly $150,000 to $200,000 in tax abatements, call for two, four-story buildings. Each building would hold six units and accommodate up to 36 residents.

Wichmer told council members, under state law, the developers are eligible to receive tax abatements on improvements in areas that have been declared blighted.

“Once you make the determination that the area is blighted, then the incentive follows,” Wichmer said, answering Burlison.

The Land Clearance and Redevelopment Authority, the Planning & Zoning Commission and city staff recommend approval of the projects.

Whitney, the only public speaker, said when he reached out to SPS, he learned the district hasn’t decided whether to support or oppose the tax abatement plans.

Smith said her staff would prepare a bill by the end of March to allow council to remove redeveloped areas from blighted districts. Rushefsky had expressed concern that owners of redeveloped properties in blighted areas could receive future abatements for upgrades if those properties weren’t removed from their districts.

Hosmer, who approaches tax abatements conservatively, said the problem with blighted districts is that anyone who redevelops within them is in line for a tax break, which pushes the tax burden onto those who don’t seek abatements.

“It seems like that’s going to be the norm. If any developer wants to do anything in blighted areas, they’re going to come to City Council to get a tax abatement and not pay property tax on new improvements for 10 years. Our schools need more and more money, and that money is going to come from homeowners instead of [developers],” Hosmer said. “It seems like we are incentivizing people to do what they would do anyway.”

According to Whitney, redeveloping in areas where conditions of blight exist is costly, but it improves the housing inventory and reduces stress on city services by promoting infill.

“The reason we have Chapter 99 and other incentives is because of the expense,” Whitney said. “It is a lot easier to develop in a green field, which is why there are no incentives for developing in a green field.”

Council is slated to vote on the measures at the Jan. 26 meeting.