COLUMBIA — For those who believe tax-increment financing is a critical tool for jump-starting redevelopment downtown, this past week’s approval by the City Council of two applications for the TIF incentive couldn’t have come at a better time.
City officials cite economic indicators that suggest the central business district is in a downward spiral that must be reversed. City Manager Bill Watkins worries about a lack of new business, declining amounts of taxable property and a lack of diversity in development.
“If we continue doing what we’re doing, downtown will not be what the vision statement says,” Watkins said. “It would become an area of government office buildings, churches and bars.”
Watkins was referring to goals for downtown that were ratified by the Vision Committee in December. The vision foresees downtown as a “hip and vibrant district with a diversity of easily accessible businesses, residences, attractions, and institutions; it is an exciting gathering place for all types of people.”
Although that’s a laudable vision, it’s not happening now, Watkins argues, citing statistics that he believes show downtown is struggling. The number of new business licenses issued downtown, for example, isn’t keeping pace with the rest of the city. Sales tax revenue is down across the board, but it’s declining even more in the central business district.
Watkins and Assistant City Manager Tony St. Romaine also note that about 62.5 percent of property downtown is either surface parking or is owned by churches, educational institutions or government.
That’s why Watkins, the council and St. Romaine are hoping tax-increment financing will lead to the kind of “catalytic” projects that will take downtown in a new direction. Those sorts of projects were first identified as crucial in the 2006 strategy for the southern half of downtown that was developed by Sasaki Associates.
“Something that’s a catalytic development indicates that the creation of that project will create lots of additional business activity around it,” St. Romaine said.
Trittenbach Development and the owners of the Tiger Hotel each won approval from City Council last week for tax-increment financing. Trittenbach, a company owned by Nathan and Jonathan Odle, will use the incentive to help fund a mixed-use development at Tenth and Locust streets, and The Tiger owners will use the financing to help pay for a conversion of the building to a boutique hotel.
Tax-increment financing allows developers to funnel into their projects some of the increased property taxes that result from improvements on their properties. They can use TIF assistance to cover up to 20 percent of the total cost of the projects. Approved redevelopments are also eligible to use up to 50 percent of sales taxes, excluding the hotel bed tax, to defray the cost of their projects. Applicants must demonstrate their projects are infeasible without public support and that they are either eliminating blight, conserving an important property or boosting an identified economic development area.
Mayor Darwin Hindman said during the council discussion of the TIF applications that the Tiger and Trittenbach projects are exactly what the Sasaki strategy calls for.
“The Sasaki Study pointed out some of the ideas we can do to make downtown Columbia a more vital place,” Hindman said. “There is under-utilized space that needs to be utilized downtown. It pointed out so many things that could be done.”
TENTH AND LOCUST*
The council granted the Odle brothers’ request for tax-increment financing to assist with redevelopment of their property at the northeast corner of Tenth and Locust streets. The property now has two aging apartment houses standing on it, and the area was deemed “blighted.” They want to replace the homes with a 100,000-square-foot mixed-use building that would include 16,280 square feet of office space, 10,600 square feet of retail space, 11 parking spaces and 58 apartments. Nathan Odle has said there is potential for a downtown grocery store in the building.
The developers also plan to have the mixed-use building certified by Leadership in Environmental and Energy Design. At the council meeting, Odle said they hope to get silver LEED certification.
The project’s total costs are estimated to be about $17.1 million, and the brothers hope TIF financing will cover about 19 percent, or $3.3 million, of the cost.
Odle emphasized the potential for a grocery store at the council meeting and said the “higher end” apartments would bring new people — young professionals and MU employees — to live downtown. Much of the housing downtown now is targeted toward students.
Sixth Ward Councilwoman Barbara Hoppe said the Trittenbach project wouldn’t displace any current business or housing,but will only add to it.
St. Romaine said during a meeting with Missourian reporters and editors that the Odles’ development could be truly catalytic by spurring restaurant and other developments in the area.
The Odles predict construction of their building will create about 100 job and that the development will create about 25 permanent jobs with an estimated payroll of $678,000. They told the council that they hope to begin work on the building late this year and to finish in late 2010.
THE TIGER HOTEL
Now that TIF has been approved by the city, The Tiger Hotel owner John Ott said the next step for he and fellow owners Al Germond and David Baugher is to approach banks about obtaining financing for the project.
Craig Van Matre, attorney for the owners, said the project is tentatively scheduled to begin in early 2010 and probably will take “the better part of the year.”
“It’s kind of a complicated job because when you do a rehabilitation project it takes twice as long as building from scratch,” Van Matre said. “You have to deal with a lot of small things that take time.”
The Tiger Hotel, which is listed on the National Register of Historic Places, has seen limited success in recent years. Plans call for converting it into a “boutique” hotel with about 65 guest rooms that will become a destination all its own. Developers plan to spend about $8.9 million dollars and to use $1.7 million in TIF assistance.
St. Romaine said the Tiger Hotel project is another excellent example of the type of catalytic projects the Sasaki plan calls for — the rooms will fill up during graduations, football and basketball games and events such as the Roots 'N' Blues 'N' BBQ Festival.
“People need to go out to eat at night,” St. Romaine said. “They want to go a clothing store or to a jewelry store or walk over to the Missouri Theatre for a show at night.”
Although TIF funding has been approved for The Tiger and for Trittenbach, the developers and city staff still have a lot of work to do.
“All council did was to approve the redevelopment area, the plan and the project,” St. Romaine said. “The actual specifics of how the TIF is to be administered and lots of other issues still have to be negotiated.”
The agreements, which Watkins hopes will be presented to the council in September, will include specifics of how the tax-increment financing will be administered, how long the TIFs will remain in place and what would happen if the developments were sold or they bring in more revenue than anticipated.
St. Romaine said that once the entire process is finished, the city and other developers will have a sturdier base from which to work. The fee that accompanies TIF applications, for example, was $10,000 for The Tiger Hotel and for Trittenbach, but the city ended up spending closer to $20,000 to evaluate each application.
St. Romaine said the developers entered preliminarily funding agreements and will be paying additional costs, but because theirs were the first two applications he’s unsure what future application fees will be. The city uses the fees to pay for evaluations by outside consulting firms.
The city hired Gilmore and Bell, Stifel Nicolaus & Co. and Spectrum Consulting to evaluate the first two TIF applications, and the developers also hired outside help to address the specifics of their projects. Assembling the applications was a tall task; The Tiger’s proposal was 172 pages long.
St. Romaine said there are no new TIF applications on file, but Watkins speculated other projects might come forward.
One proposal that’s been out there for years but seen no progress is a District Village proposed by dentist Lynn Miller in 2006 for property on the southeast corner of Tenth and Locust streets.
The District Village, like the Odles’ project, would be a mixed-use building with commercial and residential space, as well as underground parking. When he announced the idea, he won the support of city officials because the proposal aligned with the type of development they were hoping to see downtown.
Whether Miller might be interested in filing an application for tax-increment financing, now that the Tiger and Trittenbach developments have been approved, is unclear. He did not respond to repeated requests for an interview.
The City Council, in hopes of facilitating Miller’s development, agreed in 2006 to sell a city-owned surfacing parking lot him. Watkins said a contractual option for the city to buy back the lot will be available soon.
“(But) I don’t think there’s any interest in doing that,” he said.