COLUMBIA — Residential developers are lined up for an opportunity to build in downtown Columbia. But with the city's electricity and wastewater systems at capacity, nobody is breaking ground yet.
Five new high-density residential developments have been put on hold while city officials search for a solution. But with millions of dollars in estimated infrastructure costs required for the projects — the exact amount needed isn't certain — funding for the needed infrastructure has become a problem.
In response, City Manager Mike Matthes has proposed a plan that would fund the needed power and sewer projects by creating a tax-increment financing district in downtown Columbia.
Tax-increment financing allows government officials to freeze property and sales taxes within a specified geographic area and divert any additional tax revenue, made up of future taxes on property upgrades or growth in sales, to a special fund to finance infrastructure and other projects.
Matthes has proposed a tax-increment financing district that would encompass downtown Columbia from Interstate 70 to the north and south to the MU campus. The district would extend from College Avenue on the east to Providence Road on the west.
The plan would allow the city to pay for electric, sewer and other projects without raising taxes or diverting money from reserve funds.
The city has not yet received an estimate on how much money the proposed taxing district would generate.
Matthes thinks the plan would generate enough money for the needed infrastructure downtown and possibly fund other work such as burying utilities on Business Loop 70, improving the COLT rail line, new parks, a museum district, making use of the Ameren cleanup site, a new farmers market, a depot for the Star Dinner Train and affordable housing.
But not everyone is satisfied with the plan.
During a meeting Tuesday evening, Third Ward Councilman Karl Skala questioned whether the city should cover the entire cost of infrastructure that is needed to meet the demands of private developers.
"I don't think we can be in the business of subsidizing new growth when we can't afford to maintain the growth that we already have," Skala said. "We need to find a balance for developers to pay for their impact on infrastructure."
But Matthes suggested that even without the new residential developments downtown, upgrades to infrastructure would soon be needed.
"There are ways to Band-Aid those problems, but in the near future, those projects need to be accomplished," he said at Tuesday's meeting.
The financing plan has also been questioned by members of the board that governs Columbia Public Schools, which depends on city property taxes.
Matthes said the city would ensure that the school district was not harmed by the financing plan.
"There are many ways to avoid that outcome," he said.
City officials still need to decide how long the taxing district should persist. Tax-increment financing districts can exist up to 23 years under state law.
After the plan is finalized, it will be presented to the Tax Increment Financing Commission, which can revise the plan and send it on to the City Council.
Graphic by Caitlin Campbell