The City of Sedalia may have a new TIF district soon to help with retail development near Main Street and U.S. Highway 50.
The Pettis County Ambulance District Board of Directors heard a presentation on the proposed TIF district from the city, specifically Lee’s Summit-based attorney Joe Lauber who works as special counsel for the city on economic development. A TIF district — tax increment financing — is used to help incentivize developers to work on a “blighted” piece of land.
“We don’t always incentivize,” Lauber said. “… There are parcels of land out there that have obstacles keeping them from being developed.”
The land in question is located behind the Galaxy Theater near Main Street and U.S. Highway 50, as well as a small piece of land located in front of Econo Lodge on U.S. 50. Star Development, of Liberty, has expressed interest in developing the two sites for a total of four businesses, either retail stores or restaurants, with the goal of opening them by the end of 2016.
The company came to the city with an he idea of creating a TIF district to help correct problems with the land, such as drainage and road work to help ease traffic on the already congested intersection. Lauber said surveys were conducted on both areas to determine that developers would indeed have difficulty developing the land without assistance from the city.
“These areas aren’t producing sales tax. They’re not doing (the city) any good, they’re not doing (PCAD) any good, anybody else who has a sales tax out there. (The land is) sitting out there and doing nothing for us,” Lauber said. “… We’ve confirmed that (Star) is right, that because of some of the costs that are involved, it won’t develop, so it’s going to keep sitting there; it’s not going to develop without incentives.”
The TIF district will affect the city, county and all taxing entities inside the city, including PCAD. However, only PCAD is given the option of approving or denying participation in the district due to a state statute that allows emergency districts to review the proposed district. All other entities will automatically be included if the district is approved by both the 11-member TIF commission — comprised of members of the city, county, school districts and one person to represent all other taxing entities — and the Sedalia City Council.
“First of all, it does not increase taxes,” Lauber said, noting that citizens won’t notice the TIF when they make a purchase at one of the proposed businesses. “What it deals with, is a development occurs and creates new revenue, revenue that wasn’t there before. That revenue can be utilized to reimburse the development that occurred.”
Star plans to invest $11.1 million into the development project, with $2.6 million in assistance from the TIF district paid over 23 years. Each of the included entities will pay into the TIF district, and in exchange, hopefully the future businesses will bring in increased sales tax for the city, county and entities. Lauber said it would amount to about $16.6 million in new sales tax revenue.
“We’re going to take that new revenue, and it’s going to be shared,” Lauber said. “If you are a property tax entity, like a school district, 100 percent of the revenue actually gets shared to pay for the development. For all sales tax entities, like the (ambulance) district, 50 percent of the revenue gets shared under the normal TIF law.”
PCAD would receive about $650,000 in additional revenue over the life of the TIF, and it would be responsible for paying about $325,000 over the 23 years as its portion of the $2.6 million incentive.
Lauber called the proposed deal a “pay-as-you-go” TIF — there would be no public financing, and Star will only be reimbursed if its projects are successful. If the projects are more successful than projected, it won’t take the full 23 years to pay the company.
Lauber and the city asked PCAD for its approval of participating in the TIF district so the project can continue to move forward. The PCAD board verbally agreed to participate in the proposed TIF district, and will take an official vote during its next meeting.
The board was also asked if it would be interested in giving general approval to future TIF districts that may be proposed over the next few years, but the members decided they will only approve TIF districts on a case-by-case basis.
Nicole Cooke can be reached at 660-826-1000 ext. 1482 or @NicoleRCooke.