COLUMBIA — Projects applying for public financing came under scrutiny at Tuesday's Tax Increment Financing Commission meeting.
The developers — one group proposing to restore the Tiger Hotel to its former status as a boutique hotel and the other proposing a mixed-use development at Tenth and Locust streets — applied for the tax break in late January. Tuesday's meeting marked commissioners' first public critique of the applications.
Craig Van Matre, attorney for The Tiger Hotel developers, urged the commissioners to lay out their concerns.
"What we desperately need is for you to say: 'This is a worthy project, City Council,' and if there's somebody that has doubts about that, we sure would like to have the opportunity to address those today," he said.
Commissioners, however, seemed to have no doubts about the project.
“Isn’t The Tiger a no-brainer?” commissioner Andrew Beverley asked in a side conversation with fellow commissioner Bruce Walker.
“Yeah,” Walker agreed.
Commissioner Teresa Maledy said the public might disagree, given that most people see only The Tiger Hotel's renovated ballroom and top floor offices, not the other 85 percent of the building that has had no renovations since John Ott, Dave Baugher and Al Germond — who formed Tiger Columns LLC — bought the property.
In a previous Missourian interview, Ott described the rooms as "mothballed" since the owners shut down a senior-living business in January 2007.
Tiger Columns received $710,338 in Historic Preservation Tax Credits from the state to help finance renovations that already have been done. The owners, however, are seeking more money through tax-increment financing to renovate the rest of the building.
Most of the commissioners talked about their excitement for their project.
"I certainly do not have any reservations; I think this is spot-on to what the City Council had in mind. I strongly endorse it," Beverley said, with much of the commission echoing his statement.
To be eligible for tax-increment financing, applicants must demonstrate that their projects have a financial need, that they will either eliminate blight or preserve sensitive areas or structures and create a public benefit, such as jobs.
Commissioners had more concerns about the urban-style building proposed for the corner of Tenth and Locust streets. Doing business as Trittenbach Development, brothers Jonathan and Nathan Odle want to knock down three old houses and build an eight-story mixed-use structure that would include a grocery store, apartments and a large amount of office space.
“I guess my first question is: Why?” said commissioner Ernie Wren, who was appointed by the Boone County Commission. “When you’re looking at The Tiger Hotel, you’re talking about renovating a historic structure. With this project, you’re just razing lots and building commercial and residential space.”
Wren’s point was that any developer could pick a commercial lot and create a plan for a grand building comparable to the Odles’ project. He asked what makes the Odle project worthy of public financing.
Wesley Fields, the attorney representing the Odles, said the project “fits well within the policy the city has established for considering and approving tax-increment financing,” even more so than The Tiger Hotel.
The money acquired through tax-increment financing would be used only to buy more blighted property or for bringing infrastructure such as sidewalks and utilities up to date, Fields said.
Wren also cited concerns about the lack of parking for those who would live in the Odles’ building. Their plan calls for 11 parking spots to be used primarily by those who work there.
Nathan Odle said the city-owned parking garage across an alley from the proposed site could hold almost two cars per apartment on its busiest days.
Assistant City Manager Tony St. Romaine confirmed that.
Although some commissioners joined Wren in voicing concern about the project, others said they are excited.
“I think this is the kind of project that makes sense,” Beverley said of the Odles' project. “I think it’s an easy decision from my perspective as a taxpayer and a stakeholder downtown.
“There’s a reason why we haven’t seen any construction cranes downtown — other than for parking structures or City Hall,” he added, arguing that this type of project is nearly impossible without public financing, even in times when the economy is thriving.
St. Romaine added that the project meets recommendations outlined in the Sasaki study, which is used frequently as a barometer for downtown development.
"I think we need to use the Sasaki study as a guiding light," Maledy added.
Laura Radcliff, who was hired by the city as a consultant for the finances of each proposed deal, said her company has studied both projects and found that their internal rates of return without tax breaks are unreasonable.
Internal rates of return are determined using a complex mathematical formula. They are typically used as a benchmark for developers to determine whether a project is worth the investment, Radcliff said in a telephone interview Wednesday.
The Tiger Hotel's internal rate of return jumps from 6.8 percent to 9.3 percent with tax-increment financing, while that of the Odle's proposed building leaps from 4.1 percent to 10 percent with the tax break.
Developers generally don't invest in a project unless the rate of return is roughly between 8 percent and 10 percent, Radcliff said.
The Tax Increment Financing Commission might use internal rates of return to determine whether the projects are feasable with or without public assistance, but no member cited any concern about the affordability factor.
Beverley said the fact that neither of these projects were done when the economy was thriving is proof that the developers couldn't afford them.
The public will have a chance to comment and ask questions about both projects at 6 p.m. June 4 in the mezzanine conference room of the Daniel Boone Building, 701 E. Broadway.