2022 Projection: The building and development market is going to stay strong despite the rising interest rates. A lot of projects are already in the pipeline or are getting financing in place before rates go up. We’ll continue to see inflation, and the worker shortage and supply chain issues. Maybe beyond 2022, the rising interest rates will slow things down.
You recently received city approval for tax incentives to develop Beverly Lofts, Phase II, comprising 18 apartment units on East Cherry Street. How would you characterize the city process and policies around the property tax abatement program?
We renovated the main building into the Beverly Lofts, back in 2017 and 2018. We didn’t have architectural drawings for the rest of the property. When we finally had the plans, we had to do an amendment to those plans. It’s almost like staring over. The city process is very thorough and they look at every project, that it makes sense for the city – as they should. That includes doing appraisals, income and expense analysis, and the but-for analysis. It has to qualify under certain parameters that the project needs for tax abatement to move forward. Then it goes through City Council. They have a good process. At the end of the day, the city and county make a lot more in property taxes over the course of the abatement period on a property redeveloped versus just a blighted building or an undeveloped piece of land. It’s a win-win for the city/county and the developer. Of course, you need to hire attorneys to help you. The city’s been good to work with, and the process is sound. As a developer, you always wish things can move faster.
You have a knack for converting old schools, warehouses and other vacant buildings into loft apartments. Can you speak to the current state of historic preservation tax credits in Missouri? Have recent program changes helped or hindered redevelopment?
The state and federal historic tax credit programs have made the redevelopment of Springfield’s downtown a reality. Without it, our downtown wouldn’t be the thriving area we enjoy today ... with residents and small businesses. One of my favorite projects was the Bailey School Lofts. There was no way we’d be able to move forward with that project without the state historic preservation tax credit program and the Chapter 353 property tax abatement. After the Bailey School, and Beverly Lofts, were approved and finishing, there were changes made to the state historic tax credit program that made it much harder for residential projects to qualify. Those changes really skewed all the historic tax credit allocations to bigger cities, where they have more mixed-use development and a bigger pool of buildings to renovate. It really put a damper on residential redevelopment across the state. Fortunately, the Department of Economic Development recently revamped the program back to closer to what it was before, so it’s not as biased against the housing projects. 444
What specifically changed, and were local projects impacted?
The scoring system for the state, it became a lot higher scoring for job creation. If you were going to renovate a building into 100 offices, it’s a lot easier to qualify than putting 50 apartments in. Also, 30% of the scoring was up to the DED’s discretion. Now, it’s back to 10%. That’s a big deal. A couple years ago, there was a building on Route 66 I was looking at converting to residential in the back part of it and retail or office use in the front. Under the rules that had changed, it didn’t qualify. I’ve had to let that building sit there. We’re going to revisit it and see if it will qualify with these new rules. Now, it probably will again.
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.