Council approves Heer's development agreement

Springfield City Council Monday night approved an agreement for the city to sell the downtown landmark to St. Louis developer McGowan|Walsh for $3 million. The sale must close within 60 days.

Under the agreement, lead developer Kevin McGowan has until Sept. 1, 2008, to begin redeveloping the building into either a boutique hotel or condominiums, or else he must pay $1,400 per day in fines up to $250,000.

McGowan also agrees to provide a letter of intent from St. Louis-based Mike Shannon’s Steak and Seafood Restaurant, which plans to open a location on the building’s ground floor.

In return, the city will invest $1 million in renovations to Park Central Square. That work must start by Aug. 1, 2008.

McGowan also has the option to request a wide range of incentives for the development project, including community improvement, transportation development and tax increment financing districts, and property tax abatement.

The potential incentive causing the most controversy, however, is McGowan’s opportunity to request half of the 2 percent transient guest tax, proceeds from which usually go to the Springfield Convention and Visitors Bureau. The city has agreed to not actively oppose the request.

While several hotel owners have expressed concern over allowing McGowan to recoup some of the hotel tax, CVB Executive Director Tracy Kimberlin told council that the CVB supports the redevelopment agreement as it stands.

“Should McGowan|Walsh decide to build a boutique hotel and request the hotel tax credits, the CVB board will consider the request carefully,” Kimberlin said at the meeting. “However, our support of the development agreement should not be interpreted as support for the use of lodging tax incentives in general.”

See SBJ’s Sept. 3 issue for more from the Aug. 27 council meeting.