Developer proposes $38M project at former bread factory

A student-housing developer from Austin, Texas, is proposing a $38 million apartment project near National Avenue and St. Louis Street, but its request for an estimated $7 million in property tax abatement fueled an already intense debate at City Hall last night.

Developer Aspen Heights, which has 21 student-housing complexes around the country comprising more than 8,000 beds, is proposing to construct four five-story buildings totaling over 160 units on 4.4 acres in an area generally located at 1028 E. St. Louis St.

The project would develop land in and around the former Colonial Bakery, which has been vacant for 11 years, according to Springfield Economic Development Director Mary Lilly Smith.

Smith introduced the redevelopment proposal at last night’s Springfield City Council meeting. The plans call for council to approve a Chapter 353 tax abatement, 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 evening 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 in Springfield. 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 understanding the value of the abatement. “We need to know the value of the abatement.”

Following a heated exchange, Whitney estimated the rough value was $7 million over 25 years.

But Whitney argued for context. He pointed out the property has sat vacant for more than a decade. Under the plan, with partial tax increases beginning in 11 years, the apartments would generate $3.2 million in new property taxes compared to the current taxes collected.

“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. He added the project would help provide affordable housing options for college students and would be a boost not only to property tax collections, but also to the economy. “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.

The redevelopment proposal is up for a second reading and vote at the May 12 City Council meeting.