Springfield City Council faces two big tests to its 3-year-old economic development policies manual.
At its next meeting May 12, the fate of incentives tied to two multimillion-dollar apartment projects should become known, and developers looking to invest in Springfield should have a clearer understanding of whether the city considers property tax abatements a viable economic development tool.
Meanwhile, two multifamily housing projects hang in the balance.
Aspen HeightsAn Austin, Texas-based student-housing developer is proposing a $38 million apartment project on St. Louis Street across from Hammons Field, but its request for an estimated $7 million in property tax abatement fueled an already intense debate at City Hall on April 28.
Developer Aspen Heights, which has 21 student-housing complexes around the country comprising more than 8,000 beds, has plans to construct four five-story buildings totaling 166 units on 4.4 acres in an area generally located at 1028 St. Louis St. In Aspen Heights’ portfolio is a 900-bed complex in Columbia.
The Springfield apartments could be home to 564 college students, making it the largest such project since a student-housing boom began in center city around three years ago. Post-recession, around a dozen student-focused properties have been built or are currently being constructed, most with tax abatements. Urban Districts Alliance Executive Director Rusty Worley has estimated some 700 new apartment units will come on line in the next 18 months.
The Aspen Heights project would develop land in and around the former Colonial Bakery, which has been vacant for nearly 11 years, according to Springfield Economic Development Director Mary Lilly Smith.
Smith introduced the proposal that calls for council to approve a Chapter 353 tax abatement plan, which would give the owners 100 percent abatement on new improvements for the first 10 years and a 50 percent abatement on new improvements for years 11-25.
Councilman Craig Hosmer – who already had expressed his concerns about the state-approved incentives earlier in the April 28 meeting when he successfully moved to table consideration of a tax abatement plan at Galloway Village – had several pointed questions for developer representative Shawn Whitney of Husch Blackwell LLP. Namely, Hosmer pressed Whitney for the estimated value of the abatement.
“For us to approve this, this project has to meet the ‘but for’ test,” Hosmer said, adding that couldn’t be determined without knowing the value of the abatement.
Whitney estimated the value was $7 million during the 25-year period.
But Whitney argued for context. Citing the vacant conditions for more than a decade, he said the apartments would generate $3.2 million in new property taxes compared to the current taxes collected, once partial tax increases begin in 11 years.
“This development is not going to happen without this abatement, but here’s what we’re going to get if council approves this: We’re going to get the largest student-housing project in downtown Springfield,” Whitney said, pointing to the development’s upsides of affordable student-housing options and an economic boon. “The sales tax generated from $38 million is tremendous.”
One speaker opposed to the plans, Mike Schilling, said the proliferation of abatements in Springfield amounted to corporate welfare. However, Craig Edwards, a representative of Springfield-based student-housing developer Bryan Properties, said the competitor supported the plans saying the abatement was a critical component to securing the investment in the community.
City Manager Greg Burris said while he was working as a vice president at Missouri State University, the school considered buying the property three times, but he could never justify the expense of redeveloping the former bread factory. Burris said he doesn’t expect the land would be developed without the support of tax incentives.
The redevelopment proposal is scheduled for a second reading and vote at the May 12 council meeting.
Austin, Texas, student-housing developer Aspen Heights is proposing a $38 million apartment project in center city that would add 564 beds to the market.
Township 28Sam M. Coryell will have to wait to find out whether City Council approves his redevelopment proposal seeking tax abatements for 10 years on a $10 million apartment project. Council was scheduled to vote on the plan April 28, but Hosmer appeared to sway votes to table the issue.
Coryell, executive director of TLC Properties, said at the April 14 public hearing he’s been looking to move forward on the project since 2008, but financing has been an obstacle. Because much of the surrounding area in Galloway Village has unsafe and unsanitary conditions, Coryell said he turned to the city for help. Together with Husch Blackwell attorney Whitney and city staff, they created a plan that would give 41 property owners in the area tax abatements on improvements valued at more than $100,000 apiece.
To receive the Chapter 99 tax abatements, however, council members would need to declare blight on 74 acres north and south of Sequiota Park, and Hosmer has an issue with that.
The city’s 2011-adopted Economic Development Incentives Policy Manual states that abatements should pertain to the city’s urban core. Galloway Village is in the southeast corner of town.
“This is not in the urban core,” said Hosmer, who’s been cautious of trading taxes for development.
“I think it’s important that council at least follow its own manual.”
Economic Development Director Smith said the blight designation – a necessary step to secure the abatements – is justified because Galloway Village was established as a separate community in the 1880s and grew alongside Springfield for decades before being absorbed by the city around 50 years ago. The area, she argued, has its own urban core and suffers some of the same conditions common to older center city properties.
Council members Cindy Rushefsky and Craig Fishel, who represents the southeast Springfield zone, agreed the proposal didn’t seem to jibe with the incentives manual, and Hosmer proposed tabling the measure until council could review its policy.
Councilman Jeff Seifried said tabling the bill would stand in the way of progress and was unfair to developers ready to invest.
“We have a situation where the developers have followed the rules and where the developers have spent time and real hard cash to get to this point, and I don’t know that they deserve a delay,” Seifried said.
The proposal to table was amended and approved by a 5-4 vote.
