City Beat: Council split on tax abatement program

Abe McGull: Council should let the sunset on the workable program expire.

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Months before the two-year sunset, Springfield City Council heard a proposed amendment on Feb. 10 to the city’s workable program for property tax abatements. It was a discussion that left council members split on the future of the program.

Economic Development Director Sarah Kerner recommended amending the city code for the workable program to continue proportional distribution of payments in lieu of taxes, or PILOTs. Kerner suggested council remove the sunset provision from the bill language and continue to distribute the PILOTs to the taxing jurisdictions, ahead of the sunset scheduled to take effect on March 25.

The program, which was approved in 2018, established a plan to deal with blighted areas in Springfield and created a framework for evaluating redevelopment proposals for those sites submitted through the Land Clearance Redevelopment Authority. It requires a but-for test, which means it’s a project that would not be developed but for certain incentives, and an analysis of a scorecard that determines the level of tax abatement, according to the city’s website.

Kerner said in an interview the two-year time frame wasn’t enough to get the program off the ground. She said the taxing jurisdictions currently are not receiving money from the program because of a lack of development activity in the last two years, as well as the length of time between the approval of a redevelopment plan and a completed project going onto the tax rolls.

“We told them when they adopted this, two years sounds like enough time to do a pilot program, but it’s not,” she said.

If no action is taken by March 25, the sunset expires and future developers’ tax abatement goes to 100%, she said. That means neither the taxing jurisdictions nor the city would receive money from the developments, she said.

At the meeting, Councilman Abe McGull moved to table the bill until the sunset clause expired to allow time to reconsider how the program operates. His motion failed by a 4-4 vote, with Councilman Richard Ollis absent.

“We only have one participant who really took advantage of this program, and I don’t see the merit of it as it exists right now,” McGull said.

Four development plans have gone through the program to date, Kerner said, but only one project has been qualified to benefit the taxing districts and it has yet to incur taxes. The other three plans comprise one development that was grandfathered into the 100% tax abatement and two multiproject redevelopment areas where the level of abatement is based on 100% of the assessed value, she said.

The qualifying development is the Cherry Street Cottages, which currently is under construction at East Cherry Street and South Kickapoo Avenue, according to past Springfield Business Journal reporting. Developer Hake Holdings GP LLC – an Austin, Texas-based real estate development company – will receive 65% tax abatement. That means once the project is taxable, 35% will be collected and distributed to the taxing districts, Kerner said.

The grandfathered development plan is at 600-610 E. Harrison St., where developer Harrison 610 LLC built the Bear’s Tower apartment complex that opened in 2019, according to past SBJ reporting. The multiproject redevelopment areas are a 3.5-mile section of Kearney Street from North Albertha Avenue to North Barnes Avenue and 46.6 acres near West Talmage Street, according to city documents.

Dan Scott, a member of the LCRA who spoke as a resident, asked council to table the issue and let the program sunset.

“I’m not sure why we’re arguing about this anyway. The impact on Springfield as a taxing entity is almost nil,” Scott said.

Because the Cherry Street Cottages project was granted 65% abatement, it will create a roughly $780 impact to the city’s $380 million annual budget, Scott said in an email following the council meeting.

Councilmen Craig Hosmer and Andrew Lear, who voted against the motion to table the bill, voiced concern for the taxing districts.

“The effect is really on our partners, which is the school system, (Ozarks Technical Community College), the library ... I think we have to keep them in mind as well,” Lear said.

Regina Greer Cooper, executive director of the Springfield-Greene County Library District, spoke in support of the amendment.

“Eighty-seven percent of our money comes from property tax levies, and we need to continue to receive the money,” Cooper said.

Megan Short, executive director of the Springfield Contractors Association, asked council to consider a framework that won’t deter development.

“These incentives encourage developers to develop in these areas,” Short said. “The market for developers is very competitive, and they ultimately get to work where it makes the most sense.”

Council will revisit the matter Feb. 24.

Rezoning cases
Council heard public input on two rezoning proposals. Both bills will be voted on Feb. 24.

Geoffrey Butler, founding partner of BRP Architects, spoke as project representative for a rezoning of 0.69 acres at 3750 S. Campbell Ave. to general retail. It’s adjacent to the At Home store in Kickapoo Corners and was previously owned by Willard Motor Co.

Butler said his client, property owner TRB Kickapoo LLC, is considering a retail center on the lot but waiting to develop plans until it’s rezoned. Terrell Barkett of TRB Kickapoo LLC did not return requests for comment.

Council also heard a request for a conditional-use permit to allow a Firestone Complete Auto Care store to operate within a general retail district at 216 W. Weaver Road.

Bob Gage, of Brentwood, Tennessee, represented the applicant, McKeen Trust LLC, at the council meeting. Gage said the facility would be roughly 6,200 square feet. The 2.9-acre site is next to the planned The Ridge at Ward Branch development, according to bill documents.

The planned Magers Crossroads at 65 development got first reading consent agenda approval for the city to accept the dedication of public streets and easements at the preliminary plat of East Battlefield Road and U.S. Highway 65. Council voted unanimously to rezone the 17 acres to general retail during the Jan 27 meeting.

Shannon Handwerker, vice president of operations for developer Magers Management Co. I LP, declined to comment.

Other actions
Council approved 8-0 a $154,000 grant from the Missouri Department of Higher Education and Workforce Development with funding allocated by the U.S. Department of Labor. The grant will allow the city to create a registered apprenticeship training model that is expected to help 35 dislocated workers.

Council also passed 8-0 the authorization of $19 million of special obligation improvement bonds to fund improvements to the city’s stormwater system, fire stations and Public Works buildings.

Members of council also heard the first reading of a proposal for the city manager to enter into a cost share agreement between the city of Springfield, the Missouri State University Board of Governors and The Vecino Group LLC. The agreement would allow the groups to divide costs toward stormwater improvements through the IDEA Commons development area, according to bill documents. Vecino Group plans to build a 100,000-square-foot office on the MSU property downtown.