Council abates taxes on Heer's, Franciscan Villa

Public hearing for City Utilities' $343 million 2005 budget also held at Aug. 30 meeting

by Eric Olson

SBJ Reporter

eolson@sbj.net

Springfield City Council declared two historic Springfield properties blighted at its Aug. 30 meeting, opening the door to tax abatement plans that further development.

One project, Franciscan Villa's $9.38 million rehabilitation, is nearing completion, while Heer's Tower's $20 million redevelopment will begin in the fall. Both projects hinge on tax abatements, as well as tax credits and other financing mechanisms, the developers have said.

Missouri law allows Chapter 353 redevelopment plans that freeze property taxes for developers and produce economic development in distressed areas. Chapter 353 plans require blighted buildings, which in Missouri are defined as "an economic or social liability," according to Nancy Yendes, Springfield's assistant city attorney.

To further redevelopment plans, Council voted 7-1 to declare Franciscan Villa blighted and 8-0 to declare Heer's Tower blighted.

"It's been a blighted area for 10 years now," City Manager Tom Finnie said of the vacant Heer's building, which Jefferson City developer Vaughn Prost bought for $2.2 million and plans to redevelop using tax abatements, tax credits, and other public and private financing. Prost said demolition and electrical work would begin in 60 days.

For Franciscan Villa, the senior living complex at 620 W. Scott in the original St. John's Hospital building, council approval freezes property taxes for a decade. After 10 years, the property owner pays 50 percent of the taxes on the new improvements, Yendes said.

Councilwoman Shelia Wright said blighting the property is a good thing in this case, considering that under the Chapter 353 redevelopment plan ownership transfers from a tax-exempt nonprofit, The Kitchen Inc., to a taxed for-profit entity, Villa Redevelopment Corp.

"Calling this area blighted will actually give our community more money in taxes as well as allow the senior citizens who meet certain criteria (to) qualify for a safe place to live," Wright said.

Franciscan Villa representatives at the meeting said The Kitchen will continue to manage day-to-day operations. The redevelopment corporation was necessary to obtain tax credits, they said.

The $9.38 million rehabilitation project increases the number of habitable low-income housing units from 70 to more than 104.

These are the first Chapter 353 redevelopment plans in Springfield since University Plaza in the 1980s, Yendes said. The complex plans are more common in Kansas City and St. Louis.

CU 2005 budget

A public hearing of City Utilities' 2005 budget proposal brought out requests for further studies of renewable energies and expanded marketing of energy efficiencies.

Linda Chipperfield of Southwest Missouri Citizens for Clean Energy asked City Council and CU for a feasibility study of energy efficiency programs, pointing to CU's failed $515 million bond issue for a new coal-fired power plant.

"The council speaks for the people of Springfield. Springfield could be a leader in the state turning away from dirty fossil fuels," she told council.

The 2005 budget has $225,000 allocated for studies of alternatives. "That's, of course, not very much money," said CU General Manager John Twitty, adding that if the public wants further studies, CU will oblige.

CU is conducting a public survey to determine why CU's bond proposal failed Aug. 3. Twitty said results also may indicate a public desire for additional studies of alternative energies. If so, the budget would need amended, Twitty added.

Council members Mary Collette and John Wylie spoke highly of energy efficiency methods, such as re-insulating, weather stripping and replacing old heating and cooling equipment. Wylie said since he purchased a new furnace and air conditioning unit for his home, his level pay utility bills went from $180 a month to $85 a month.

"It's going to take us four years to recover, but still, I understand how that can work," Wylie said. "The (challenge) is to get other people to understand that it can work for them. There is some education to be done."

Chipperfield said it would take "a pretty good-sized budget to get that word out. We don't have a budget."

The Board of Public Utilities unanimously approved the $343 million budget Aug. 26. The proposed budget includes $158 million in non-capital expenditures $14.9 million less than 2004 and $36 million in capital expenditures $16.8 million less than 2004.

Receipts are projected to top $345 million.