Title
Conceptual Economic Development Incentive Request: Chapter 100 incentives for the Daxon Farms Project, 1215 NE Bowlin Road; Sallee Development, Inc., applicant.
Body
Issue/Request:
This is a conceptual presentation pursuant to the City's Economic Development Incentive Policy to use Chapter 100 of the Missouri Revised Statutes to incentivize the development of a residential project consisting of approximately 306 build-to-rent townhomes on approximately 34 acres at a density of 9 units per acre located at 1215 NE Bowlin Road, which is east of I-470 and south of Bowlin Road, for (1) sales and use tax exemption on construction materials and (2) a fixed payments in lieu of taxes (PILOTs) structure that is intended to equal the actual real property taxes that would be generated without using Chapter 100, to provide certainty for financing the project.
Key Issues:
Evaluation of a request for sales tax exemption on construction materials and a fixed PILOTs schedule for 10 years for the proposed residential townhomes project.
Proposed City Council Motion:
No motion requested as this is only a conceptual presentation. The Developer is seeking the City Council's feedback pursuant to the City's Economic Development Incentive Policy.
Background:
Developer is requesting a Chapter 100 economic incentive in the form of (1) sales tax exemption on construction materials and (2) a fixed PILOTs schedule that is intended to equal the actual projected taxes for the first 10 years of the life of the project, using guidance from Jackson County as to property valuation for new residential projects.
The site of the proposed development currently consists of 34 acres of vacant property located south of Bowlin Road, north of existing residential development (Montecello subdivision), and east of commercial development located east of I-470. The property is currently owned by RL Sallee Real Estate Investments, LLC, and has a 2026 Jackson County market value of $207,620, which will generate about $2,800 in property taxes this year.
The City Council previously approved a Chapter 100 Plan for development of this property consisting of apartment development at a higher density than the current proposal. The prior Chapter 100 Plan cannot be used for this new proposed project.
Impact/Analysis:
The sales tax exemption request would have an impact on the City based on the loss of use tax revenues. The total estimated benefit to the developer is a savings of approximately $1,457,408. It is estimated that 50% of the construction materials purchased would be subject to local sales and use tax because they would be out-of-state purchases, resulting in an estimated $337,150 in abated sales and use tax from the City which is about 23% of the total benefit of the sales and use tax exemption to developer.
The proposed PILOTs structure over the requested 10-year period is intended to result in no real property tax abatement for the project.
The total benefit to the Developer is about $1.46 million exclusively from the sales tax exemption on construction materials, which is about 2.4% of the $61,300,000 total project costs.
Timeline:
Start: Q1/Q2 2027, then vertical start in Q2/Q3 2028 delivering for 24-26 months
Finish: 2030-31
Presenter
Curt Petersen, Polsinelli, P.C., legal counsel for applicant
David Bushek, Gilmore & Bell, economic development legal counsel
Ryan Elam, Assistant City Manager