Taxing district proposed for east-side shopping center

Penny Terry: Southern Hills could use a facelift.

Amanda Ohlensehlen: TDD is just one of multiple economic development tools available.

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The owners of the Southern Hills Shopping Center are hoping to establish a local taxing district to pay for infrastructure improvements on the site.

A petition filed June 14 with the 31st Circuit Court in Greene County calls for the establishment of a Southern Hills Shopping Center transportation development district in the 2900 block of East Sunshine Street, a half mile west of U.S. Highway 65.

The petition was filed by David O’Reilly, representing Southern Hills Investment Trust LLC, and Curtis Jared, representing Southern Hills Plaza LLC. It was submitted by attorneys from Spencer Fane LLP.  

The Missouri State Highways and Transportation Commission and the city of Springfield were named as respondents. 

A TDD is a political subdivision with the power to issue bonds, levy taxes and apply special assessments or tolls to fund transportation-related improvements, according to an explanation on the city’s website.

Springfield has three TDDs on file with the state: College Station, the Heer’s building and the East-West Arterial covering Evans Road west of Highway 65.

Changes in the works
According to the filing, the Southern Hills project aims to construct new connections to public roads, provide stormwater improvements, construct sidewalks and build new driveways and parking lots. The filing also provides for grading, signing, lighting, traffic signals and related infrastructure.

Planned work carries a price tag of $2.9 million, to be funded through an eighth-cent retail sales tax applied by businesses in the district for a period not to exceed 40 years.

According to some tenants of the shopping center, the planned improvements are needed.

Penny Terry owns the Avon with Penny Store, which she said is the last Avon storefront operation in the state. Terry, who said she has been in the Southern Hills Shopping Center for six years, welcomes improvements to the parking lot, but she wonders if planned changes will be enough.

“Business is slow,” she said. “I don’t think that’s going to help much.”

But she said she’s heard of the planned changes from other tenants.

“We could use a big facelift,” she said. “They’re supposedly going to be doing that. I can only hope.”

Terry said she always carries sale prices on Avon goods in her store. Things have been slow since COVID-19 hit, though she said she believes Avon products have the staying power to recover.

“This year is 136 years we’ve been in business,” she said. “We’ve been through wars and everything else, and the company still thrives.”

Jesse Simmons is an employee at B&E Printing, owned by Lotta Werner. Simmons pointed toward broken pavement and unmarked spaces in the parking lot.

“It definitely looks like it could be updated,” he said.

But Simmons said he has heard from Werner that B&E’s landlords planned to raise the rent significantly after the renovations.

“That’s primarily why we’re moving from this location to East Republic,” he said. “We plan to move next week.”

Jared did not respond to multiple interview requests for this story, and O’Reilly was not available for comment by press time.

The Wooten Co. LLC, which serves as leasing agent for the shopping center, lists some other current tenants as Dollar General, Pet Warehouse, Salon East Suites, Hallmark, Red Door Dance Co., My Hot Yoga, Robbins Photography and City Mexican Cuisine.

TDDs explained
The city’s website says TDDs may be used to fund transportation-related projects and are created through a petition to the circuit court.

There is overlap between the projects permitted through a TDD and those eligible under a more commonly applied community improvement district, which is a legislative process instead of a judicial one.

Christopher Hoeman, chief litigator for the city, said the taxing districts are similar in nature, but TDDs have a narrower focus, covering transportation projects.

He said the city has not developed a position yet on the proposal, but he expects to file a response soon.

“We’re just looking at it pretty fresh as well,” he said. “We’re going to review this petition with city staff and develop our position on it, and we will respond appropriately in court.”

Amanda Ohlensehlen, the city’s director of economic vitality, said the TDD was at the request of the developer.

“There’s a whole myriad of tools and resources in the economic development realm authorized through the state of Missouri,” she said. “Developers themselves have the choice of which types of programs they would like to activate.”

One difference a TDD offers is that it can fund public improvements that fall outside the boundaries of the district as long as they are directly related to the activities in the district, Ohlensehlen said. Roadway improvements are an example, and the Southern Hills plan does call for construction of a new connection to a roadway, but does not specify which one.

Hoeman said a TDD project can be ongoing or fund a specific improvement.

“Once they build it and pay it off, you can dissolve the TDD, and that infrastructure becomes part of the city’s infrastructure at that point,” he said. 

The court filing specifies the Southern Hills TDD would be dissolved by petition to the circuit court from the property owners.

The filing shows projected sales tax revenues of $5.8 million for the 40-year period from 2023 to 2062.

In an April 2017 visit to Springfield, former Missouri Auditor Nicole Galloway called for an overhaul of transportation development district law. She noted an audit by her office found taxpayers are culpable for nearly $1 billion in outstanding project costs they did not vote on and for which there is little oversight or transparency – what she called an example of taxation without representation.

“As a citizen, the TDD laws are rigged against you,” she said at the time.

There are no registered voters living in the proposed Southern Hills TDD, which would be overseen by a five-member board of directors who represent the property owners. The city and state may each appoint an adviser to the board, per state law.

The Missouri legislature passed two laws designed to increase transparency in CIDs and TDDs in 2016. Even so, the next year, Galloway released a report that found districts across the state engaged in questionable practices with little oversight or transparency because of the weakness of existing laws, according to a news release from her office at the time.

“It appears as though the General Assembly has legalized self-dealing and conflicts of interest through the transportation development district laws,” she said. “I am calling for a total overhaul of the laws that allow and even encourage this type of activity.”

No such reforms have yet been reported by the auditor’s office.

Galloway said the majority of TDDs are created and maintained by the owners and developers that stand to gain the most from the districts’ tax collections, creating an inherent conflict of interest paired with little opportunity for citizen input and a lack of taxing transparency.

In a 2019 audit of more than 130 local taxing districts in the city of St. Louis, Galloway said the use of the districts has resulted in that city having the highest sales tax rates in the state. The city does not require anyone independent of the developer or property owner to serve on the boards that oversee the districts, the audit found, and 92% of TDD boards in the city were developer controlled, which is the model proposed by Southern Hills developers.