Council asked to use eminent domain, approve tax breaks
Thursday, July 31, 2008
Renaissance Property Group, LLC., believes they’ve proven to the city that they can be a good neighbor and provide affordable, clean and well-maintained low income housing alternatives for residents. Now the group is asking to build an additional 56 units as “Phase 2” of its Orchard View Apartments off Maple Valley Drive.
A representative of Renaissance addressed the city council Monday evening asking for approval of an application for federal and state tax credits as part of the proposed expansion.
The plan is to build more apartment buildings next door to the existing Orchard View complex just off U.S. 67 on Maple Valley Drive. Rent for the two- and three-bedroom apartments is based on household income of the occupants, and is estimated to run between $450 and $500 a month including water, sewer and trash service. East Missouri Action Agency, which encompasses many programs including utility assistance, retraining, and low-income assistance, has partnered with Renaissance on the project.
But the particular portion of the project Renaissance was coming to the city for Monday evening was to ask for “endorsement” in the application process for MHDC tax credits. Developers like Renaissance make application on state and federal levels seeking available tax credits to help with funding housing projects which will house low-income tenants. Each year several developers make application for the credits, but only 20 or so are chosen in Missouri. Renaissance has made request for the credits over the past four years but was not chosen, therefore holding up completion of Phase 2 of their apartment complex.
While “tax credits” are meant to provide tax breaks over a period of years for developers looking to build housing for low-income families, many developers take the tax credits and sell them immediately to large corporations for a portion of their face value to generate money immediately. In this case Renaissance Property Group LLC apparently take the federal and state tax credits, if approved, and sell them for likely 80 to 90 cents per $1 tax credit on the open market. Then Renaissance would have that cash immediately. The purchaser of the tax credits — often a large corporation or investment group completely unrelated to the building of subsidized housing — then uses those tax credits for face value breaks on future tax liability.
Councilwoman Phillips questioned the developer at length regarding the tax credits.
Aside from questions about the funding process, several council members showed favor for approving the second phase of the complex being built. Councilman Larry Forsythe and other made positive comments about how the first phase of Orchard View had been built and maintained, and the need for such housing.
In unrelated actions, earlier in the evening a different developer asked the city council to step in and use the power of eminent domain if needed to clear the way for a proposed shopping mall.
Development group R.L. Jones wants to build a shopping plaza spanning several city blocks near the corner of Potosi and Maple streets and reaching to Walton Drive. If needed, they want the city to use the power of eminent domain to declare existing businesses as “blighted”, which would make way for their destruction to make room for the developer’s new shops.
Randy Black, the public spokesman for Ramona and Lloyd Jones, made a presentation to council members Monday evening in which he requested the group give some form of nod of approval to the developers so they would know they had the city’s support before moving on. Black said R.L. Jones already owns the shopping center which houses Tractor Supply, Deals, Fashion Bug, Blockbuster and other shops, but that the company is not necessarily pleased with the development of the existing center. The plan calls to expand the center and improve the look of the entire development.
While the council agenda stated the developer would be asking for a Tax Increment Financing (TIF) plan and Community Improvement District (CID) — programs used to divert more tax revenue directly toward a development — there was only brief mentions of either the TIF or CID.
Another spokesman said the group was hoping to use a TIF district to generate tax revenue to help with development costs. A TIF captures a portion of all new sales tax revenue growth within a designated area and funnels those dollars to the developer to help retire some debt from the project. In this case the spokesman said R.L. Jones would be looking to capture 50 percent of all new sales tax growth within the new shopping center over the first several years. Sales taxes are generally divided among tax-financed entities — such as public school districts, ambulance districts, road and bridge districts, etc. In the case of a TIF district, the tax-reliant groups lose a portion of the future tax revenue for a set number of years — generally for just slightly more than two decades.
The developer said the group would also like to implement a CID, an additional sales tax amount only imposed on purchases within the CID district, in this case the shopping complex. The spokesman said the group would be requesting a one-cent per $1 sale tax to help generate revenue. The concern with a CID is that while it generates additional revenue from each sale, it also means customers are paying more taxes to buy within the development as opposed to making purchases outside the CID district.
Black and others spoke for about 30 minutes on the proposed shopping center. He said the group would like to purchase properties including two mobile home parks, and businesses along Potosi and Maple streets. He added that one of the mobile home parks was already under contract, and that the county had agreed to have a real estate appraiser give an estimate on the value of a former county maintenance building. He said R.L. Jones intended to pay market value, or above market value, to purchase the necessary properties within the footprint of the proposed shopping center.
Then the developer said some of those businesses did not seem willing to sell at a reasonable price. That’s why, he told the council, he needed the city to agree to partner in possibly forcing those landowners to sell their land in needed.
Mayor Jeannie Roberts asked, “By way of eminent domain?”
“Well ... yeah,” Black answered. He later followed up by saying, “We can’t allow somebody to hold us up and rob us,” referring to property owners who might ask for more than fair market value for their land.
Eminent domain is a legal process in which municipalities can deem an area or single property as “blighted,” to allow for legal action to force demolition of structures on the property or their sale to make way for new development. Initially, eminent domain was only used to make way for projects such as highways, public buildings or utilities. In recent years the legal use of eminent domain has expanded to include forcing the sale or demolition of properties to make way for new commercial developments. The use of eminent domain for such causes has been hotly debated and is still being challenged in some of the nation’s highest courts.
Roberts thanked Black for his presentation and said the area proposed for the new shopping center “is a truly blighted area.”
Councilman Dennis Smith suggested doing away with a TIF agreement for a development west of U.S. 67 and moving the agreement to the Jones development. Actually making that move would be much harder than some might think. A TIF agreement cannot readily be transferred from one area to another. Development of TIF districts take months and even years to refine.
Black said it was his group’s goal to develop a shopping center which would serve as a segue from downtown to the retail locations of Maple Valley and beyond. He cited how new growth often takes place on the fringes of a community, leaving the downtown area to slowly fade away. He told how he was from Bonne Terre, and how that community had seen it’s original downtown are all but perish.
He continued singing the praises of Farmington, adding how when he was traveling the country and someone would ask where he was from he would always tell them he was from “near Farmington”, instead of saying “Bonne Terre”.
When questioned about the status of the existing shopping center owned and operated by R.L. Jones, Black said, “We’re not overly proud of the look of it now.” He presented an artists rendering of how the shopping complex would look in its proposed new condition.
Council members listened and asked questions, but no action was taken on the proposal during Monday night’s meeting.
In other actions, the council threw their approval behind a plan to build additional tennis courts at the high school. A group of citizens is working to raise revenue to help fund the construction. The school district is being asked to help as well. Councilman Stuart Landrum asked that the council consider donating $10,000 to the project as a show of city support. The group agreed in a voice vote to make the donation to the project.
And City Administrator Greg Beavers announced that two new businesses will be moving into the industrial park. The first will employ about 12 to 15 skilled workers. The second will likely employ up to 35 workers. Both additions have come about through work of the city’s Industrial Development Authority board, Beavers said.
Members then voted on and approved a number of bills. Among them, the group approved contracts with Thurman, Shinn and Company for auditing services, First State Community Bank for banking services, and approved resolutions appointing citizens to citizen advisory committees.
The council will meet next on Aug. 25.
A representative of Renaissance addressed the city council Monday evening asking for approval of an application for federal and state tax credits as part of the proposed expansion.
The plan is to build more apartment buildings next door to the existing Orchard View complex just off U.S. 67 on Maple Valley Drive. Rent for the two- and three-bedroom apartments is based on household income of the occupants, and is estimated to run between $450 and $500 a month including water, sewer and trash service. East Missouri Action Agency, which encompasses many programs including utility assistance, retraining, and low-income assistance, has partnered with Renaissance on the project.
But the particular portion of the project Renaissance was coming to the city for Monday evening was to ask for “endorsement” in the application process for MHDC tax credits. Developers like Renaissance make application on state and federal levels seeking available tax credits to help with funding housing projects which will house low-income tenants. Each year several developers make application for the credits, but only 20 or so are chosen in Missouri. Renaissance has made request for the credits over the past four years but was not chosen, therefore holding up completion of Phase 2 of their apartment complex.
While “tax credits” are meant to provide tax breaks over a period of years for developers looking to build housing for low-income families, many developers take the tax credits and sell them immediately to large corporations for a portion of their face value to generate money immediately. In this case Renaissance Property Group LLC apparently take the federal and state tax credits, if approved, and sell them for likely 80 to 90 cents per $1 tax credit on the open market. Then Renaissance would have that cash immediately. The purchaser of the tax credits — often a large corporation or investment group completely unrelated to the building of subsidized housing — then uses those tax credits for face value breaks on future tax liability.
Councilwoman Phillips questioned the developer at length regarding the tax credits.
Aside from questions about the funding process, several council members showed favor for approving the second phase of the complex being built. Councilman Larry Forsythe and other made positive comments about how the first phase of Orchard View had been built and maintained, and the need for such housing.
In unrelated actions, earlier in the evening a different developer asked the city council to step in and use the power of eminent domain if needed to clear the way for a proposed shopping mall.
Development group R.L. Jones wants to build a shopping plaza spanning several city blocks near the corner of Potosi and Maple streets and reaching to Walton Drive. If needed, they want the city to use the power of eminent domain to declare existing businesses as “blighted”, which would make way for their destruction to make room for the developer’s new shops.
Randy Black, the public spokesman for Ramona and Lloyd Jones, made a presentation to council members Monday evening in which he requested the group give some form of nod of approval to the developers so they would know they had the city’s support before moving on. Black said R.L. Jones already owns the shopping center which houses Tractor Supply, Deals, Fashion Bug, Blockbuster and other shops, but that the company is not necessarily pleased with the development of the existing center. The plan calls to expand the center and improve the look of the entire development.
While the council agenda stated the developer would be asking for a Tax Increment Financing (TIF) plan and Community Improvement District (CID) — programs used to divert more tax revenue directly toward a development — there was only brief mentions of either the TIF or CID.
Another spokesman said the group was hoping to use a TIF district to generate tax revenue to help with development costs. A TIF captures a portion of all new sales tax revenue growth within a designated area and funnels those dollars to the developer to help retire some debt from the project. In this case the spokesman said R.L. Jones would be looking to capture 50 percent of all new sales tax growth within the new shopping center over the first several years. Sales taxes are generally divided among tax-financed entities — such as public school districts, ambulance districts, road and bridge districts, etc. In the case of a TIF district, the tax-reliant groups lose a portion of the future tax revenue for a set number of years — generally for just slightly more than two decades.
The developer said the group would also like to implement a CID, an additional sales tax amount only imposed on purchases within the CID district, in this case the shopping complex. The spokesman said the group would be requesting a one-cent per $1 sale tax to help generate revenue. The concern with a CID is that while it generates additional revenue from each sale, it also means customers are paying more taxes to buy within the development as opposed to making purchases outside the CID district.
Black and others spoke for about 30 minutes on the proposed shopping center. He said the group would like to purchase properties including two mobile home parks, and businesses along Potosi and Maple streets. He added that one of the mobile home parks was already under contract, and that the county had agreed to have a real estate appraiser give an estimate on the value of a former county maintenance building. He said R.L. Jones intended to pay market value, or above market value, to purchase the necessary properties within the footprint of the proposed shopping center.
Then the developer said some of those businesses did not seem willing to sell at a reasonable price. That’s why, he told the council, he needed the city to agree to partner in possibly forcing those landowners to sell their land in needed.
Mayor Jeannie Roberts asked, “By way of eminent domain?”
“Well ... yeah,” Black answered. He later followed up by saying, “We can’t allow somebody to hold us up and rob us,” referring to property owners who might ask for more than fair market value for their land.
Eminent domain is a legal process in which municipalities can deem an area or single property as “blighted,” to allow for legal action to force demolition of structures on the property or their sale to make way for new development. Initially, eminent domain was only used to make way for projects such as highways, public buildings or utilities. In recent years the legal use of eminent domain has expanded to include forcing the sale or demolition of properties to make way for new commercial developments. The use of eminent domain for such causes has been hotly debated and is still being challenged in some of the nation’s highest courts.
Roberts thanked Black for his presentation and said the area proposed for the new shopping center “is a truly blighted area.”
Councilman Dennis Smith suggested doing away with a TIF agreement for a development west of U.S. 67 and moving the agreement to the Jones development. Actually making that move would be much harder than some might think. A TIF agreement cannot readily be transferred from one area to another. Development of TIF districts take months and even years to refine.
Black said it was his group’s goal to develop a shopping center which would serve as a segue from downtown to the retail locations of Maple Valley and beyond. He cited how new growth often takes place on the fringes of a community, leaving the downtown area to slowly fade away. He told how he was from Bonne Terre, and how that community had seen it’s original downtown are all but perish.
He continued singing the praises of Farmington, adding how when he was traveling the country and someone would ask where he was from he would always tell them he was from “near Farmington”, instead of saying “Bonne Terre”.
When questioned about the status of the existing shopping center owned and operated by R.L. Jones, Black said, “We’re not overly proud of the look of it now.” He presented an artists rendering of how the shopping complex would look in its proposed new condition.
Council members listened and asked questions, but no action was taken on the proposal during Monday night’s meeting.
In other actions, the council threw their approval behind a plan to build additional tennis courts at the high school. A group of citizens is working to raise revenue to help fund the construction. The school district is being asked to help as well. Councilman Stuart Landrum asked that the council consider donating $10,000 to the project as a show of city support. The group agreed in a voice vote to make the donation to the project.
And City Administrator Greg Beavers announced that two new businesses will be moving into the industrial park. The first will employ about 12 to 15 skilled workers. The second will likely employ up to 35 workers. Both additions have come about through work of the city’s Industrial Development Authority board, Beavers said.
Members then voted on and approved a number of bills. Among them, the group approved contracts with Thurman, Shinn and Company for auditing services, First State Community Bank for banking services, and approved resolutions appointing citizens to citizen advisory committees.
The council will meet next on Aug. 25.
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Reader Comments (4)The comments below are from readers and do not represent the views of the Daily Journal
G5255 posted on Tuesday, August 5th, 2008 at 12:54 am
The very thought of entertaining the notion of another development in our city limits with a TIF is ludicrous. I am assuming that this is one that at least some members of our City Council/Mayor approve of?? I mention this since if memory serves me correctly and the conversations I have had with various "well connected" members of our community are even somewhat true, it is apparent that if there was not some "inside" favoritism or possibly vested interest the Koman Development on the west side of 67 would have been started on time, had a new Target store in a secondary market for them, and been off and running. I don't have enough words here to give much more, but suffice to say that we certainly have more than our share of politics and personal vested interest which has stymied not only Koman but also caused development issues with the Pogue rezoning on Karsch. There are way too many of these type incidents in both State & National goverment, we certainly neither need them or benefit from them as residents. The greater good should be on the forefront of any & all decisions.
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SFC for 18yrs posted on Sunday, August 3rd, 2008 at 10:26 am
Roberts thanked Black for his presentation and said the area proposed for the new shopping center is a truly blighted area.
With the exception of the trailer park on that section of Maple Street, what part is "truly blighted" Ms. Mayor????
Let's fill the shopping center we already have before we even think about building another White Elephant. The only one's that will be held up will be the owners along the "blighted area"...
Enjoy your term - I'm pretty sure it's going to be the only one you get!!!!
With the exception of the trailer park on that section of Maple Street, what part is "truly blighted" Ms. Mayor????
Let's fill the shopping center we already have before we even think about building another White Elephant. The only one's that will be held up will be the owners along the "blighted area"...
Enjoy your term - I'm pretty sure it's going to be the only one you get!!!!
cliff roberts posted on Friday, August 1st, 2008 at 9:28 am
"we can't allow somebody to hold us up and rob us." this coming from a guy who wants our city to force its residents and business owners to sell their property so his company can have a nice looking strip mall. and what is the defenition of "blighted"? it had better be very specific if our city is going to take away by force something an American owns, or even a non Amercian. this is America. i think in some very limited cases, eminent domain is necessary, but i urge the city council to weigh this carefully. and do we need another shopping mall? i know that business is booming on the new mall just of hwy 67 on maple st...oh wait, there still aren't any open stores in our newest shopping mall. is that the defenition of blighted, vacant?
Eric_M posted on Thursday, July 31st, 2008 at 8:38 pm
We cant allow somebody to hold us up and rob us,?
Oh, brother.
Oh, brother.
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