The capital has used tax reduction or exemption as an economic development tool for years.
Four candidates for two city council seats in the April 5 municipal elections generally agree that these tax incentives have been used with varying degrees of success.
One method of tax abatement that has been used is when local governments reduce or eliminate taxes for properties being renovated or built. Homeowners apply for these discount agreements with a fixed rate in mind, and their applications are assessed by the city, county, or other entity.
Another commonly used tool is tax increment financing (TIF), which allows developers to finance improvements in degraded areas using a portion of additional sales and/or property tax revenue resulting from the development. The increase that helps fund the improvements is the difference between the municipal revenue generated by the area in the year before development and the amount generated each year after development.
Both practices aim to eradicate the blight in the community and are frequently used to encourage economic development.
While proponents see them as a viable and effective economic development tool, critics have said abatements either starve tax districts, such as schools, of revenue or impose a greater tax burden on residents while benefiting those companies.
Candidates for Wards 1 and 3 seats in the April 5 ballot weighed in on those programs at a forum hosted by the News Tribune on Wednesday evening; they were asked to identify positive and negative examples of reductions in the capital.
Ward 1 residents will vote between Jacob Robinett and Jack Deeken, while incumbent Erin Wiseman will face Bob Scrivner for the Ward 3 seat.
Deeken pointed to O’Donoghue’s Steaks and Seafood on East High Street as a successful cut, noting the state of the area before the popular restaurant arrived.
“This whole area was bad; there was a convenience store, Blackwells, but nothing else,” he said. “They were trying to launch Prison Brews, but you were successful and this whole corner is now viable, and it’s doing great.”
He expressed concern over the recent proposed agreement with Jefferson City Medical Group for a tax abatement of 75% for the first five years and 25% for the next five to incentivize the construction of an outpatient facility of 28.00 square feet with an estimate. A prize of 17 million dollars. The new facility is expected to open this spring. Deeken questioned the use of the reduction for the project, citing the quality of health care in Jefferson City.
“They really need to be looked at closely,” he said. “I don’t think I would have given the TIF to the medical group for a for-profit surgical center, especially considering everything they tried to do to stifle medical care.”
While Ward 1 candidates had different levels of experience with tax abatements, both agreed that the “jury is still out” on the 2014 Capital Mall redevelopment deal. Robinett said that he had more research to do on the subject, but he questioned the project alongside his opponent.
“I know the intent was to attract and bring about that improvement,” Robinett said. “The beautification has gone there. We’ve lost some of our big businesses that were there; they’re attracting some of the smaller businesses like Starbucks and Pizza Hut. So I think the jury is still out. “
In the Ward 3 run, Scrivner, who once served on the board, said the deal struck with Command Web in 2009 was an example of successful tax reduction.
“I think it’s been a great TIF,” he said. “We gave, for us at the time, a pretty substantial incentive to get them here. They paid for it early and since then they’ve done multiple expansions, multiple equipment upgrades, increased significant number of employees, and we haven’t had to give any incentive at all for further expansion.”
Scrivner also questioned the abatement granted to Capital Mall.
“We were all hopeful back then. I voted for it,” he said. “I think we all wanted to make sure we could keep Penneys and Sears and those anchor stores that were there and keep a mall viable. It didn’t work out so well: Sears is gone, Penneys is still there, Dillards is converted and the old Sears building is now – the state is in there, so we’re not getting any revenue from it, so that one probably didn’t do very well.”
Wiseman, the Ward 3 incumbent, said the 2017 approval of the Community Improvement District of St. Mary’s Hospital, where the hospital was once located along Missouri Boulevard and Bolivar Street, continued enhance economic development in the region.
“He’s got the Marriott Hotel, he’s got the Starbucks now, the Burger King there,” Wiseman said. “Finally, we’re the 50th state capitol to have an independent Starbucks, so it was pretty exciting they brought it to us at this resort, so that seems like a pretty good tax cut.”
On the other hand, she said that the Truman Hotel redevelopment project, which was approved in 2017 to build a new hotel, demolish the old building and build a second hotel and which has been in the works for several years, did not progress as expected.
“I know there were plans over the years, but I think it was a little disappointing for me during my time,” she said.
As the forum wrapped up Wednesday evening, Randy Halsey, who served on the board for 18 years in the 1980s and 1990s, approached the four candidates to share his personal concerns about tax abatements and specifically the Truman Hotel. .
In an interview Thursday, Halsey told the News Tribune that the mall project is achieving its expected financial returns by attracting small businesses to its property as well as larger entities to the building, such as the Durham Sports department store near Dillards.
“The mall was dying,” Halsey said. “This developer has achieved the expected returns. They have made a justified return on the tax abatement that they have obtained, and that makes all of us, I would say, say that they have undoubtedly met expectations, and they always do.”
However, Halsey was less than enthusiastic about the reduction of the Truman Hotel.
In February 2017, the city council approved a plan for Puri Group Enterprises Hospitality Inc. to demolish two hotels and redevelop land at 1510 and 1590 Jefferson St.; the council had deemed the sites as destroyed.
The bane designation granted Chapter 99 property tax abatements on both plots for 10 years if the housing authority, which oversees the abatements, subsequently approved the abatements. About a month later, the Housing Authority signed a contract with Puri that outlined its requirements to build a Holiday Inn at 1590 Jefferson St.
Puri was to begin construction on the $56 million project within 90 days of council approval of the plan and he was to finish the hotel by the end of December 2018 under the agreement.
The Holiday Inn opened on February 28, 2019. Puri attributed the delays to issues that arose after the old building was demolished.
In October 2019, the Housing Authority was told that the old Truman Hotel, which sits next to the new Holiday Inn, could soon be demolished, but plans to build a second hotel on the property have been delayed.
Five years after council approved the redevelopment plan, the Truman Hotel has not been demolished.
Halsey questioned the delay to the project, noting that those who voted for it while it was before the board probably wouldn’t have known it would happen.
“The city has the right and the power to end the deal as it stands now because the money has gone through the city,” he said. “The Housing Authority is an agency under the city and that said, they could, say, shut it down.”
The hour-long forum can be viewed at newstribune.com.