TIF Commission unanimous in approval of Farmer plan

This aerial file photo from April 2011 shows St. Mary's Health Center as it sat in a triangle bounded by Missouri Boulevard at left, U.S. 54 at right, and U.S. 50 at the bottom of the picture.
This aerial file photo from April 2011 shows St. Mary's Health Center as it sat in a triangle bounded by Missouri Boulevard at left, U.S. 54 at right, and U.S. 50 at the bottom of the picture.

The Jefferson City TIF Commission unanimously recommended approval for a plan to redevelop the historic St. Mary's Hospital site using tax increment financing Wednesday night.

In February, Farmer Holding proposed two projects to redevelop the former site of the St. Mary's Hospital using TIF funding to make the project feasible and turn it into a site for restaurant, retail and office space. A May staff report issued by the city recommended approval of Farmer Holding's application. The commission voted 10-0 to recommend approval of the project to the Jefferson City Council after the vote was pushed back one month at the TIF Commission's May meeting.

TIF Commission member Eric Struemph did not attend the meeting due to a prior commitment.

The City Council is expected to discuss the proposal at its July 17 meeting and vote on the proposal Aug. 21. City officials said, however, the vote could easily be bumped to a later date.

Farmer Holding Company Principal Rob Kingsbury and the company's attorney looked excited after the meeting, but said there's still work to do.

"This is good," Kingsbury said. "It's part of the process. It's an important step. It helps to get the TIF Commission's recommendation, but hopefully the City Council will give the same consideration."

Farmer Holding proposed a $44.6 million project involving Lincoln University or a $30.9 million project creating only commercial space. The company sought $7.3 million in TIF assistance for the Lincoln project or $6.7 million for the commercial project.

Under FHC's plan, Lincoln University could use parts of the old hospital for an expansion of its nursing or other programs. The LU project would contain four pads with 21,000 square feet of commercial space.

The commercial project would construct six pads with 30,200 feet of commercial space. Under both plans, a medical office building and the 112-year-old St. Mary's Hospital building would remain standing and be converted into offices.

The company wants to build only one project. If the City Council approves Farmer Holding's request, the company will then decide which project to pursue.

In its proposal, FHC said the rate of return on investment for both projects without TIF funding would be minus 6.32 percent. Using slightly different metrics than FHC's accountant, Jefferson City's financial advisory firm, Springsted found that the the developer's return on investment without TIF assistance would be 3.61 percent for the Lincoln project and 3.56 percent for the commercial project.

With TIF funding, FHC said its return on investment would be 8.65 percent on the Lincoln project and 8.79 percent on the commercial project. Springsted found Farmer Holding would receive an 8.22 percent return on investment on the Lincoln Project and 9.4 percent return on the commercial project with TIF funding.

Maxwell said the numbers calculated by FHC and Springsted both show any developer needs TIF funding for this project.

"We cannot move forward with this project without TIF funding," FHC attorney Korb Maxwell told the commission.

FHC would pay for all costs initially through private equity and financing. If approved by the City Council, TIF financing will be paid out over 23 years.

"We are investing and investing heavily," Maxwell told the TIF Commission. "This is a shared investment by all shareholders in the community."

FHC currently pays $23,051 per year in property taxes on the St. Mary's site. That would increase to $743,202 under the Lincoln project and to $1.3 million per year under the commercial project when the 23-year TIF is paid off, the company said. Farmer Holding also contends either project will have an economic benefit of about $1.6 million per year on the city after the TIF is paid off.

The TIF Commission's scheduled May 18 vote was delayed because the Jefferson City Board of Education did not have time to review the Springsted analysis before the meeting.

Because of that, the commission breezed through presentations by the city, Springsted and FHC. Commissioners did not debate the matter, having discussed it at the May meeting.

Only a handful of residents showed up at the meeting. Jefferson City resident Ed Williams told the TIF Commission they should vote against the proposal because retail stores are closing nationwide.

"More commercial space is not needed on Missouri Boulevard," Williams said. "We're going to build more with taxpayer money? Come on."

The school board endorsed the proposal Monday, but now without dissent. Board of Education members Scott Hovis, Lori Massman, Vice President Rich Aubuchon, President Steve Bruce and Treasurer Lorelei Schwartz voiced support for the FHC plan at the meeting.

Board member Pam Murray voted against approval, while member Michael Couty, JCPS Secretary Stephanie Sappenfield and Superintendent Larry Linthacum did not take positions.

Ultimately, both school board representatives on the TIF Commission voted for the proposal. Bruce said at the board meeting that supporting the St. Mary's project was an investment the school board wanted to make.

Jefferson City resident Patsy Johnson came out of Monday's school board meeting fuming, and said she thought the school board needed to worry about education instead of economic development.

"I just don't feel like it's right," Johnson said Monday night. "We pay taxes, but then you're working for tax breaks for a company. "

After Wednesday's meeting she again looked upset. Her remarks to the TIF Commission were unplanned and brief: "I support everything that Ed Williams said."