Could Springfield face a blight backlash?

Springfield’s center city construction has been easily visible in recent years as the city slowly climbs out of the economic hole dug by the Great Recession. From student housing projects around Missouri State University, to multimillion-dollar renovations of iconic downtown structures, workers in hard hats erecting steel have become part of the landscape.

The reality is a big part of that landscape has been supported by a series of government bets designed to entice development. The concept is simple: when developers invest in rundown areas, they can, under state statutes, receive a tax break for a period of years. They still pay property taxes, but they can pay the property taxes at pre-development rates, which can save millions of dollars in taxes. One project near MSU – the East Cherry Flats, which now appears to be gaining traction – has shined a spotlight on the issue of tax abatements and community support.

Problem spots
At City Hall, opponents have called the abatements “corporate welfare,” saying such incentives rob the public services funded by property taxes. Supporters say, look around: Construction is spurring economic growth now, and those property taxes will eventually go up.

Since early 2013, Springfield City Council has approved 10 requests for tax abatements on improvements for properties declared blighted. The blight designation, which requires conditions such as obsolete platting and unsafe or unsanitary structures, is what developers need – and only council can approve – to secure tax abatements. The incentives trend became pronounced in 2011 when the city approved its Economic Development Policy Manual.

At the end of 2013, when the city issued its most recent blight report, there were 49 properties receiving or cleared to receive partial tax abatements.

Despite objections from Councilman Craig Hosmer, who joined council in 2013 and has been vocal about his concerns around blight, the economic incentives have received strong support from city leaders.

But declaring properties blighted isn’t always popular, and the East Cherry Flats project could represent a turning of the tide in local opinion.

The tide has turned for another Missouri city. In Columbia – the Show-Me State’s fourth largest city next behind Springfield – the word blight is loaded with negative connotations.

The abatement table
Columbia Deputy City Manager Tony St. Romaine said a city push in 2012 that declared a large swath of properties blighted was met with stiff resistance from residents. The move for blight was designed to attract manufacturers through the creation of a sprawling Enhanced Enterprise Zone, where developers could receive tax incentives for redeveloping in distressed areas. But residents thought declaring over half of the city blighted posed a threat to property values and rights.

St. Romaine, a 31-year city employee, said Columbia leaders learned a valuable lesson: too liberal blight declarations quickly create negative perceptions.

He said the push for blight and EEZ expansion followed a decade or more of losing manufacturers, and city officials were striving to remain competitive.

“The fact is you have to be able to bring something to the table these days,” St. Romaine said. “You’re competing not only with surrounding communities, but also nationwide and even globally.”

There are 127 EEZs statewide, up from 104 in 2011, according to the state Department of Economic Development. Collectively, the zones cover about a third of Missouri.

But their popularity with city and county officials did not mean the move to entice manufacturers was welcome in Columbia, where the City Council passed its blight plan in early 2012. Residents largely found out after the fact, St. Romaine said, and they weren’t happy.

“Just the word blight by itself had a connotation with a lot of folks,” he said. “Unfortunately, we had a very organized effort in Columbia by a group of people who managed to convince our city council that EEZs were a bad idea, and council eventually rescinded the ordinance that would have allowed us to move forward with that program.”

The city has a Tax Increment Financing program that three downtown developers have taken advantage of in recent years, but because of the blight fight, city staff has shied away from declaring the area blighted.

“If you are using blight without any major uproar in the community, then obviously, you are doing something right,” St. Romaine said, adding city leaders could have done more to educate people about the benefits of incentives. “As with most public projects, having that public conversation until you’re blue in the face is pretty important.

“Hopefully, we’ll learn from our mistakes and do better the next time.”

Rountree resistance
In Springfield, recent resistance to Russell Meck’s redevelopment plan at the northern edge of the Rountree Neighborhood – its neighborhood association collected signatures from some 400 residents opposing the $385,000 tax break – shows backlash is possible.

Meck of RKJ Properties LLC told Springfield Business Journal in November his $6 million project was on hold, despite his earned tax abatements, due to high construction costs. Now, it appears the development of East Cherry Flats is moving forward again.

Private bidding website GradeBeam.com lists a bid request from contractor Larry Snyder & Co. for the East Cherry Flats project, according to information provided by the Rountree Neighborhood Association. The request is for a bid on window treatments for the complex, and the bid due date is listed as Dec. 31, 2014.

Larry Snyder President Dusty Emmert declined a request for an interview, citing Meck’s desire to not speak publicly about the project’s status.

The Rountree Neighborhood Association has opposed the plans, saying the four-story building wasn’t a good fit for abatements because, in part, Meck had owned the rundown property for 10 years before seeking incentives for improvements. The neighborhood mobilized, but council approved the plan with a 5-2 vote.

Association Board Secretary Diana Day said the association is working to find a way to ensure that future projects fit with the neighborhood’s character. Rountree residents also have expressed parking and privacy concerns with Meck’s apartment plan.

Brian Ash, a former Columbia City Councilman and past president of the RNA, said by email he’s not opposed to development incentives, provided they are used appropriately.

“I just think that any new development should conform with the character of the existing neighborhood,” he said.[[In-content Ad]]