For developers interested in taking on older properties, a recent move by Springfield City Council could have them looking across the city for new opportunities.
Council approved a resolution May 12 that removes the “urban core” restriction listed in the city’s 3-year-old Springfield Economic Development Incentives Policy Manual. That means those looking to bring new life to blighted areas are eligible to have their plans approved for property tax abatements on new improvements, regardless of where the property is located in town.
Three days after the meeting, the city released a heat map that reveals where developers have been building recently, and the results put the hot spot squarely in downtown.
The city’s economic development department created the map based on data on the concentration of private commercial and multifamily residential development from January 2013 to March 31.
151 worth $180 millionSpringfield Economic Development Director Mary Lilly Smith said staff knew there had been a lot of plans submitted for downtown projects, but they didn’t know objectively what the big picture looked like.
“It started as a casual conversation on staff about all the things that were happening downtown and all the investment, and then, ‘Where else is development occurring?’” Smith said, noting staff members ran building permit numbers and then mapped the activity with hot spots representing the estimated costs of construction. “It bore out what our theory was – that the greatest concentration of private development is occurring downtown.”
The projects mapped include those receiving building permits, projects with estimated permit fees – a preliminary step to the issuance of a building permit – and projects with an inferred cost of at least $100,000. Public projects such as schools were not included.
The review found that downtown has $125 million in development plans in the pipeline from projects such as the redevelopment of the Vandivort, Heer’s and the Frisco buildings, as well as roughly a dozen student-housing projects, in various stages of development. That represents more than half of the $230 million in private investments downtown has secured in the last 15 years.
According to the data, there were 151 private projects worth $180.1 million in the city during the 15-month period.
Now, with the restriction lifted, the question is will student-housing developers or others look for new opportunities across the city in blighted areas?
“I think it could,” Smith said. “They can approach the city about incentives, whereas before they might have felt that if it wasn’t consistent with the city’s policies that they shouldn’t pursue it.”
The policy change didn’t come without its share of opposition.
Both Councilman Craig Hosmer and Councilwoman Cindy Rushefsky opposed the plan to change the policy restriction. Hosmer has several times over the past year voiced concerns that abatements are posing a threat to schools and taxing districts only to benefit wealthy developers. He has called the expansion of blight terms “bad public policy.”
Last month, council supported what amounts to a test case for what blight might look like in other areas of the city when it approved a redevelopment plan for a 74-acre area in Galloway Village. Through that proposal, which includes plans for a $10 million apartment complex dubbed Township 28, more than 40 property owners can secure abatements for 10 years on new improvements valued at more than $100,000.
Short-term vs. long-termTim Rosenbury, a partner at Butler, Rosenbury & Partners Inc., sits at a unique crossroads in the debate about property tax abatements. His architecture company is in the final two years of a 10-year abatement on new improvements for its Springfield headquarters on Main Street; his firm designs for clients who could receive incentives under the new policy; and he serves on the Springfield Public Schools’ board.
“Without the property-tax freeze, we wouldn’t have been able to make the move that we did,” Rosenbury said of the firm’s move from the MSU Alumni Center on Jefferson Avenue after investing $3.25 million in the old Universal Paint building at 319 N. Main St.
Rosenbury said he supports the move to offer abatements on new improvements across the city, so long as the target remains focused on the goal of redevelopment.
“These need to be redevelopment areas where there is infrastructure or structures that have outlasted their useful lives,” he said.
Smith said developers seeking incentives beyond the urban core likely would have to submit blight studies to the city. Before council can approve tax abatements, developers need to prove conditions such as obsolete platting, unsafe or unsanitary structures exist.
“The thing we’re all most interested in is what do you really plan to do with the property and how do you plan to remediate the blight?” Smith said of the submitted developer’s plans.
Wearing his school board hat, Rosenbury is concerned the new policy could negatively impact school funding, but he doesn’t think developers with tax abatements are intentionally competing with the goals of the school district.
“It really could be looked at as the short-term dime versus the long-term dollar,” he said.
Sheri Sommer, an operations assistant and new development manager for Bryan Properties, said the company supports abatements for qualified properties across the city.
“There are subdivisions all over Springfield where there has been flood damage or the houses are in disrepair, and it is really not worth it even for individuals to [make improvements] without an incentive if their taxes are going to go up right away,” Sommer said.
Bryan Properties, which is in the second phase of the $30 million student-housing project Bear Village near MSU, owns and manages residential houses and multifamily properties across town. The policy change, she said, opens the door to consider future projects in a new light.
Acknowledging the argument that more abatements mean less money for schools, she said those opposed aren’t considering the impact of redevelopment on the neighborhoods.
“In the end, every time an area gets cleaned up with a bright, new shiny building or refurbished homes or whatever … the reassessments of the other properties in the area go up, and they are not abated,” she said. “That’s something you don’t hear people talk about. But if you are increasing the value of the properties around you, then you are increasing the tax base.”
Development activity in Springfield between January 2013 and March shows more than half of private commercial projects have occurred downtown.Graphic provided by CITY OF SPRINGFIELD
