Kevin McGowan: Heer's project has taken "two years too many."
Council OKs major cog in Heer's plan
Springfield City Council focused on the fate of one of the city’s best-known landmarks at its Aug. 23 meeting. After discussing alternatives – including the city’s expense if the Heer’s building were condemned and torn down -– council members decided to give the go-ahead to a financing package many speakers were calling Heer’s last best shot at redevelopment.
Council members unanimously approved an ordinance to issue a letter of commitment to the U.S. Department of Housing and Urban Development for a $2 million small-business development loan to Heer’s Building LLC and its owners Kevin and Erin McGowan and Mike Shannon, of St. Louis. Also, the ordinance approves the city’s request of a $1 million loan from the Missouri Development Finance Board for the project, which will be funneled through the city.
The $3 million is expected to fill the final gap of an elaborate financing package before McGowan applies for an $11.8 million HUD-backed loan, the largest single method of financing the $29.3 million redevelopment project.
The state’s finance board is expected to consider its $1 million loan at a Sept. 21 meeting, and McGowan feels the 9-0 vote sends a strong message to Jefferson City.
“Had it been a 5-4 vote … it would be a whole different discussion,” McGowan said.
Council approval came after more than two hours discussing key points, including the use of city money and the creation of a tax increment financing district, which would recover property tax due to improvements of the property to repay the city and state loans. The bottom line:
The redevelopment of Heer’s by way of a $2 million city loan – through an existing loan program with funds available, according to Springfield Economic Development Director Mary Lilly Smith – is the best chance to see the project move forward.
“My personal feeling is that this building is going to sit there maybe 10 more years. Who knows when the market will improve enough to where we can get a commercial loan on it and completely redo it?” Smith said.
Springfield businesspeople, including Ann Marie Baker, southwest region president at UMB Bank and Richard Ollis, president of Ollis and Co., spoke in favor of the project.
“Look at the economic impact from just spending $2 million on a loan for a $30 million project” said Ryan MacDonald, co-owner of Trolley’s on the other side of the square. “I’ve been looking at that building for seven years. I just want to see this project move forward.”
McGowan’s next step is to submit an application and related paperwork to HUD by Oct. 6. McGowan said after Oct. 6, HUD’s underwriting requirements change. However, according to HUD spokeswoman Dale Gray, all new applications after Sept. 6 will be subject to the new underwriting.
The tightened standards, Gray said, are economy driven. For the Heer’s project, McGowan said that would mean a debt service coverage ratio increase to 1.2 from 1.15. “This would create another shortfall in excess of $300,000,” he said.
Once the HUD application is filed, Smith said concurrent closings on financing should be complete by March 1, which is when construction can begin. That would put Heer’s on schedule to open in spring 2012, she said.
St. John’s Orthopedic Hospital At a Sept. 7 council meeting, members will vote on two ordinances related to the proposed site of a St. John’s orthopedic hospital at Evans Road and U.S. Highway 65. The ordinances would annex 30 acres into the city and rezone 40 acres to a government and institutional use district.
St. John’s currently owns about 12 acres and is in the process of purchasing the remaining land, said spokeswoman Cora Scott. The hospital system plans to build a $104 million, 149,000-square-foot orthopedic center at the site, she said, noting it would employ 150 workers.
The 48-bed building would take about two years to complete. The goal is to begin construction by the end of the year, Scott said.
Airport Plaza CID Three council members ----– Cindy Rushefsky, Nicholas Ibarra and Scott Bailes -– voted against an ordinance that would double the 25-year term of the Airport Plaza community improvement district.
Developers said revenues from the CID’s sales tax were not meeting expectations because they envisioned more retail space when they built the 65-acre development. Instead, about 30 acres are occupied by a T-Mobile call center and the Orchard Park Apartments, which don’t generate sales tax. Airport Plaza developers requested the extension after refinancing its loan, which increased its monthly payments to $15,000 from $9,800.
The bill passed 6-3, with Mayor Jim O’Neal citing the encouragement of economic development as the reason for his “yes” vote.
“We don’t live in a vacuum,” he said. “People are watching, and we’re trying our best to get jobs here.”[[In-content Ad]]