Title
Public Hearing: Oldham Village Tax Increment Financing Plan; Oldham Investors, LLC, applicant
Body
Summary of Developer’s Incentive Requests:
Oldham Investors, LLC (“Developer”) is requesting incentives to redevelop the former ADESA Auto Auction site (the “Project”) and other properties in the area that have been acquired by Developer for the Project. Developer is requesting the following incentives for the Project:
1. Tax Increment Financing Plan - This incentive would collect payments in lieu of taxes (PILOTs) and economic activity taxes (EATs) to as allowed by the Real Property Tax Increment Financing Allocation Redevelopment Act as set forth in Chapter 99.800, RSMo et seq. (the “TIF Act”).
2. Community Improvement District - The City approved the 291 South Regional LCRA Redevelopment Plan as discussed below. The City’s intention at that time was to pursue a community improvement district (“CID”) with boundaries that are coterminous with the approved 291 South Regional LCRA Plan. The City evaluated sales tax revenue generation that would result from including the area south of the 291 North interchange in the regional CID. Developer thereafter requested that the CID include the area south of the 291 North interchange, as well as the Hy-Vee store located at 310 SW Ward Road. The petition being presented to the City Council includes the property originally proposed to the City Council when the 291 South Regional LCRA was approved in November 2023, along with the additional properties that Developer is requesting to include in the CID area.
The CID would generate revenues to fund these regional public improvements, as outlined in the CID Petition:
(A) 291 North Interchange costs - These include (i) costs already funded by the City to relocate the Missouri Highway Patrol Troop A Headquarters to another location in the City as a result of the 291 North Interchange project and (ii) anticipated costs overruns for the 291 North Interchange project which must be funded by the City pursuant to the Cost Share Agreement between the City and the Missouri Highways and Transportation Commission (MHTC).
(B) Public Improvements for the Oldham Village project - These improvements include relocation of Oldham Parkway through the Project, and the construction of significant sewer improvements to serve the Project.
(C) 3rd Street / Highway 50 Interchange Costs - The City is planning to pursue a cost share arrangement with the Missouri Department of Transportation (MoDOT) to fund what is anticipated to cost in excess of $30 million to construct substantial long-term improvements to the 3rd Street and Highway 50 interchange.
3. LCRA Redevelopment Plan - The City approved the 291 South Regional LCRA Redevelopment Plan in November 2023 through the adoption of Ordinance No. 9783 to facilitate development and redevelopment of property along the 291 South corridor. The “Project 1 (Oldham Village) LCRA Plan” as filed by Developer was heard by the LCRA Board of Commissioners on October 2, 2024. The Oldham Village LCRA Plan would provide for:
(i) sales tax exemption on construction materials for the Project, and
(ii) 75% tax abatement for the apartments.
After the hearing, the LCRA Board adopted Resolution 2024-3 which recommended approval of the Oldham Village LCRA Plan. The Chair of the LCRA Board voted against the resolution due to concerns that he expressed with the design and layout of the Project, rather than the proposed businesses, the proposed land uses or the requested LCRA incentives for the Project.
4. Transportation Development District - Developer is proposing a transportation development district (“TDD”) for the Project that would impose a sales tax to fund public transportation improvements. The TDD would only include properties within the Project Area, and the TDD boundaries are not coterminous with the CID boundaries.
Key Issues for this Agenda Item:
This is a public hearing to consider the Oldham Village TIF Plan.
Impact/Analysis:
The Cost Benefit Analysis in the packet, which legally supports the TIF Plan, provides a comprehensive review of the tax benefits to all taxing districts as a result of the TIF Plan. Baker Tilly has provided a “But For Determination Report” that was available for the TIF Commission meeting, which analyzed the requirement that the City Council make a factual finding that the TIF Redevelopment Area would not reasonably be anticipated to be developed without the adoption of tax increment financing.
Since the TIF Commission hearing, and as a direct result of testimony from that hearing, Baker Tilly has performed additional sensitivity analysis for the entire incentive package to evaluate at what point the project becomes financially unfeasible for the Developer to undertake with incentives. “Sensitivity analysis” further analyzes how reductions in the level of incentives for the project, in $1 million increments for this Project, affects the internal rate of return for Developer.
This additional analysis bolsters the factual finding that the City Council must make in connection with the “but for” finding for the TIF Plan, which is that sufficient information was provided by Developer for the TIF Commission to evaluate whether the Project as proposed is financially feasible. The TIF Commission received the original Baker Tilly Report which supports the “but for” finding, which includes the financial feasibility component.
The presentation slides and other supporting material in the meeting packets provide a detailed analysis of the TIF Plan and related incentives. The additional sensitivity analysis performed by Baker Tilly analyzes the impact of a reduction in incentives for the Project as the result of any incentive tool, and not just the TIF incentive.
Timeline:
Start: 1st quarter 2025
Finish: This is a phased project. The schedule for the incentives and the overall project will be governed by the redevelopment agreement to be negotiated between Developer and the City, and other associated contracts.
Presenters
Matt Pennington, Oldham Investors, LLC, and other developer team members.
David Bushek, Chief Counsel of Economic Development & Planning.
Ryan Elam, Assistant City Manager