After months of debating, the City of Sedalia has its first TIF district.
The Sedalia City Council approved the proposed TIF (Tax Increment Financing) district on U.S. Highway 50 with a 6-2 vote, with Ward 1 council members Jim Cunningham and Jo Lynn Turley voting no. The vote came after an hour-long meeting in a packed council chambers that offered plenty of groans when presented with information the audience didn’t agree with.
“We found the project, without assistance, could not reach a market-level return,” said Tom Kaleko, of Springsted Inc., the financial firm hired by the city to complete a “but for” analysis. “So the next step then is to ask the question, if the project were to have less expenses or higher revenues, how much would have to bury in order to reach a market level without assistance? And in each case, what we determined was the means necessary would be very unlikely to occur.”
During his presentation, Kaleko noted the city’s costs could possibly decrease, depending on the actual amount spent by Star.
“There will be a provision that says if the developer is able to bring it to market at a lesser cost, then the city’s percentage of the cost would drop by that same amount,” he explained. “… Likewise, if the developer were to realize greater revenue from the leases and land sales, again there would be a proportional decrease in tax assistance.”
The TIF district is now in effect on two parcels of what is now officially considered blighted land: behind the Galaxy Theater and in front of the Econo Lodge.
Council heard from a few citizens along with a representative from Wilson & Co. regarding a traffic analysis of the Highway 50 and Oak Grove Lane intersection, Joe Lauber, the city’s attorney for economic development, Kaleko, and Curt Peterson, attorney for Star Acquisitions Inc., of Liberty, the developer who plans to develop the TIF district land.
Council members asked several questions of the presenters, including Ward 4 Councilman Tollie Rowe who asked about the seemingly high interest rate of 6 percent.
“In the plan there is a reference to the developer as being reimbursed. Part of the plan says the developer will be reimbursed for their interest costs. In the plans it is assumed it will be 6 percent,” Kaleko replied. “We don’t know that for a fact, that’s a projection at this point. What we typically try to negotiate is the reimbursement cost will be whatever the actual rate paid by the developer. Six percent is not an unreasonable assumption to include for this type of project in the current market.”
Peterson added later in the meeting that “6 percent is a number a lot of developers are using” in similar situations.
One concern, brought up by Pettis County Western Commissioner Jim Marcum, was the impact on traffic flow in the area of the Galaxy Theater. Part of the development of that parcel includes constructing a small road behind the theater, connecting Main Street and Highway 50, to help with traffic flow. Marcum said while he is generally in favor of TIF districts, he is not in favor of this particular proposal because of safety concerns traffic-wise.
A representative from Wilson & Co. presented a traffic study conducted at the intersection, stating the issue with traffic in that area is not a capacity issue.
“With traffic capacity, we don’t need any more lanes,” he said. “Once future development comes in, what we found is the eastbound left turn lane is a failure. What we found is it’s not a capacity issue, it’s a geometric layout issue. The intersection spacing is too close and the overall roadway network isn’t set up the way to handle the traffic.”
He offered both short- and long-term possible solutions, with an estimated budget of $20 million, but he noted the ideas were simply that — just ideas that were not set in stone, and Wilson & Co. is still studying the area to come up with a final plan.
Peterson addressed the question from Ward 4 Councilwoman Vicky Collins regarding the possible number of jobs this development will bring to Sedalia. He said it will bring about 50 full-time equivalent jobs, meaning that number includes the number of full-time positions combined with the number of part-time positions that equal full-time; the number does not represent individual positions.
He also addressed concerns he has heard from council and the community about the idea of an out-of-town developer coming into Sedalia and asking for financial assistance.
“… One thing to remember … across from (the Econo Lodge site) is a multi-tenant building that Tim Harris, of Star Acquisitions, built eight years ago and it’s a great looking building, multiple tenants. Game Stop, Radio Shack, you all know the building,” Peterson told council. “Mr. Harris didn’t ask for any TIF, any CID, and the reason is Mr. Harris doesn’t come into a community and build and ask for public incentives to build something that he builds all over the state all the time without any help unless, and only in the event that the site needs help and that’s exactly what the consultant for the city has proved. These sites cannot be developed like this unless they get help.”
Rowe also asked if Star had any contracts with tenants for these sites. Peterson said they don’t have any signed leases — he said those typically aren’t signed until financing (in this case passing the TIF) is in place — but that Harris has been talking with and has leads with “local, regional and national companies” to fill the spots.
Nicole Cooke can be reached at 660-826-1000 ext. 1482 or @NicoleRCooke.