State, local officials eye Jordan Valley TIF

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State legislators are not alone in questioning the tax increment financing plan for Jordan Valley Park. |ret||ret||tab|

Tax increment financing legislation was created initially to deal with housing issues in center city to increase downtown populations, according to Greene County Commissioner Darrell Decker.|ret||ret||tab|

He said he believes the city of Springfield's use of the TIF concept to build a parking garage as part of John Q. Hammons' Trade Center expansion "is dishonest," and has said so on more than one occasion. |ret||ret||tab|

Missouri's House of Representative is now considering a bill to allow the city to obtain its share of state money close to $23 million according to the Department of Economic Development from the "super TIF" the city created for Jordan Valley Park. The trade center expansion is just a part of the park concept which includes an ice rink, baseball park, arena, expanded exposition space, and park areas and trails in the downtown area.|ret||ret||tab|

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TIF versus sales tax|ret||ret||tab|

Decker said he strongly supports development of Jordan Valley "it's an excellent idea" he just doesn't like the way it has been done. He suggests that a 1-cent sales tax in three years could raise $160 million and pay for the whole project.|ret||ret||tab|

Also, "You can't use (a TIF) to build buildings, only infrastructure," Decker said, whereas sales tax income can be used for whatever voters choose. |ret||ret||tab|

The proposed parking garage attached to the Trade Center is considered "infrastructure," he added, and has been estimated by the city to cost between $12 million and $14 million. Normally infrastructure is sidewalks, roads, sewers, water, electricity and parking lots.|ret||ret||tab|

Sufficient parking is essential to the developer agreement signed by John Q. and Juanita K. Hammons with the city earlier this year. If parking isn't assured by May 11, according to the agreement, the whole deal put forth by the Hammonses could be off.|ret||ret||tab|

The city has made a determined effort to get the state to allow it to retrieve state funds from the super TIF it created, which would be half the increase in sales tax revenues in the TIF area. The TIF would also get half the increase in property taxes in the area, which is what primarily perturbs Decker. There is already a smaller "local TIF" in place to fund other projects.|ret||ret||tab|

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Defining blight|ret||ret||tab|

To establish a TIF district, an area must be determined to be blighted by a local taxing authority, in this case, the city. |ret||ret||tab|

"Blighted" is defined by state law as "an area which by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements ... or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use ..."|ret||ret||tab|

At first, the blighted area only included one of the Hammonses properties. |ret||ret||tab|

But, Decker said, revenues wouldn't be enough to pay for the debt, so City Council expanded the blighted area to include the Dillon's Store at St. Louis and National, the brand new Walgreens, Southwest Missouri State University's Kent-wood Hall, the University Plaza Hotel and Convention Center, John Q. Hammons Tower, the One Parkway Place condominiums, John Q. Hammons Building, the John Q. Hammons Enterprise Center which houses the Springfield Area Chamber of Commerce, the United States Courthouse, the entire west portion of the Walnut Street Historic District, the Southwestern Bell Telephone building, the Shrine Mosque, the Woodruff Building, the Landmark Building, the United Way building, Burger King, Hardee's, Taco Bell, St. Louis Bread Company-Brown Derby, and many other buildings.|ret||ret||tab|

"How are these defined to be blighted?" Decker said. Some of the area is blighted, to be sure, he added, but many of the owners of the buildings in the newly blighted area have been contributing real estate taxes, the increase of which will now be diverted to the super TIF.|ret||ret||tab|

TIFs are created in the Real Property Tax Increment Allocation Redevelopment Act of the Missouri Revised Statutes, Sections 99.800 through 99.865. According to the city's redevelopment plan for Jordan Valley Park of Sept. 8, 2000, the law "enables municipalities to finance redevelopment project costs with revenue generated from payments in lieu of taxes and, subject to annual appropriation, economic activity taxes resulting from increased economic activities within the redevelopment project areas."|ret||ret||tab|

Payments in lieu of taxes are the increase in taxes on real property in the area selected for a project. They are determined by freezing the property assessment at the level it was when the TIF was created. |ret||ret||tab|

Any increase in taxes as property values go up and property is reassessed will go to the TIF, not the taxing authorities which normally would get them. Funds in the TIF account are used to pay for project costs or bond retirement, according to the law.|ret||ret||tab|

Economic activity taxes are sales taxes collected from the super TIF area, which are expected to increase with development of an ice rink, a baseball park, an expanded exposition center and an arena.|ret||ret||tab|

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The impact on the schools|ret||ret||tab|

Decker said he believes the TIF takes money from schools, the library, the county and law enforcement. So does Springfield Superintendent of Schools Jack Ernst. |ret||ret||tab|

"The Springfield Public Schools is very concerned about anything that has the potential negative impact for property taxes because that is the primary source of revenue for the schools ... in general TIFs are problems for school districts because they attach to the monies that are the primary source of funding for schools."|ret||ret||tab|

Springfield schools have recently been determined to be deficient in certain areas by the state's accrediting agency. |ret||ret||tab|

"It's very expensive to educate children, especially children in high-risk areas, and we'd like to be able to provide more services to children, if possible," Ernst said.|ret||ret||tab|

Anything that has the potential to take money from the schools concerns Ernst, he said, because even with the greatly appreciated volunteerism and donations from citizens, the budget is "very, very tight."|ret||ret||tab|

Both Ernst and Decker were vocal nearly seven months ago at a Sept. 21, 2000 meeting of the advisory commission in which the super TIF was discussed.|ret||ret||tab|

The commission, as required by law, was appointed to consider the effect that tax increment financing would have on the political entities that could be affected by the implementation of the district. It then made a recommendation to city council.|ret||ret||tab|

Greene County is one of the political entities, as is the Springfield R-XII School District.|ret||ret||tab|

Potential loss of money to the school district concerned Ernst then. Today he considers it a "done deal" and has moved on. He hopes the "greater good" will be served by the park development. But at the time, both he and Debbie Tolliver, school board president, both commission members, voted against recommending the super TIF to the city, as did Decker. They were the only ones to do so.|ret||ret||tab|

A technical report presented at the meeting and prepared at the request of the school board indicated that during the life of the super TIF 23 years the school district could lose as much as $6.5 million. City Manager Tom Finnie has said the TIF would cost the school district no more than $200,000.|ret||ret||tab|

At the advisory commission meeting, Lyle D. Hensley, EdD, presented the report on the effect the super TIF would have on the school district. Hensley, now retired, has served as a consultant on education finance for state legislators, as well as to the districts of Springfield and St. Louis County. |ret||ret||tab|

Hensley indicated at the hearing that he was there to present the information for the benefit of the commission, but was stopped by Chairman Conrad Griggs after only a few minutes. Ernst stepped in and requested that, since the city had been given an hour and a half to state its case, the school district should be allowed an equal amount of time to show how its expert determined the effect of the super TIF on the school district. |ret||ret||tab|

Hensley spoke for about 25 minutes, then left his report with the commission for review.|ret||ret||tab|

A former superintendent of schools in four districts in Missouri, and holder of an education doctorate from the University of Missouri, Hensley helped write the initial state aid formula for schools for the Missouri State Department of Education in 1977.|ret||ret||tab|

In a written statement he didn't have time to deliver along with his report, but which has been obtained exclusively by SBJ, Hensley accused the city of misleading taxpayers. |ret||ret||tab|

"They suggest that the school district would lose little revenue; that the major portion of the school district loss would be offset by increased state aid ..." He said state aid is never guaranteed, and the complicated funding formula could be changed as well as the school district's designation, which determines whether it receives any state funding. It was entirely possible that the school would get no monies to offset the property tax loss.|ret||ret||tab|

He pointed out that the Hammonses have several properties including the hotel, the condo, and the office buildings that only pay half the property taxes assessed to them and that these same properties were going to come off abatement status in a few years and those tax dollars should have then be returned to the school system but for the super TIF. |ret||ret||tab|

Last year those properties now in the super TIF area owned by the Hammonses were appraised at more than $35.2 million. They paid $310,415 in real estate taxes on those properties instead of $620,830. |ret||ret||tab|

Before the 50 percent tax abatement went into effect, the property was assessed for a period of time in its unimproved state without the hotel and convention center, condo, office buildings, parking lots included in the evaluation for tax purposes. |ret||ret||tab|

The freezing of the tax increases and later the 50 percent abatements were inducements to the Hammonses by the city to develop the area in the mid-'80s. |ret||ret||tab|

But now that the city includes these properties in the blighted super TIF area for another 23 years, Hensley calculated the loss of just those properties to the tax base could take another $1.5 million from the school system.|ret||ret||tab|

In addition, Hensley wrote, the city will own much of the property in the Jordan Valley Park area and, of course, will pay no real estate taxes at all, even with the improvements. These properties will include the land for the parking garage/expo expansion, the baseball park land, the ice rink and all the other land that will create the park. |ret||ret||tab|

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