Joplin’s master development firm will pick up the pace on land acquisitions to qualify for an expiring state tax credit program that ends Aug. 28.
David Wallace, CEO of Wallace Bajjali Development Partners, told the Joplin Redevelopment Corp. on Tuesday that based on calculations by his firm’s legal and investment advisers, the JRC could make more than $5 million on the sale of tax credits through the Distressed Areas Land Assemblage Tax Credit Program.
According to a description by the Missouri Department of Economic Development, the program was intended to redevelop blighted areas. It was created by the Legislature in 2007. A cap of $95 million was set on the program, and up to $20 million of it could be issued each year.
Department documents show that about $41 million has been issued since the program began.
A St. Louis developer, Paul McKee, is listed as the recipient of those tax credits. He was redeveloping an area of north St. Louis. Eligibility requirements of the program appear to have been created specifically for McKee’s project. He has not finished it, and the JRC may be able to capitalize on the fact that McKee did not claim all of the tax credits, according to Wallace.
McKee testified before the Legislature in February that he would like the program extended until 2019, but the Legislature did not pass any measures to do that.
A development company for Cerner Corp. in Kansas City also lobbied to extend the program. Cerner owns the land where the former Bannister Mall was located. The company previously intended to build its Sporting KC fields there, but it moved the project to Kansas because neighbors did not want the project. The land is being considered for other commercial development.
Wallace had told the JRC last week that there might be a possibility of applying for a tax credit program. At the time, he estimated the value at $4 million, but he said Tuesday that the calculations of his financial advisers showed it could generate more than $5 million. “That’s a lot of money that would be coming into the JRC this year,” Wallace said. The tax credits would be sold before the end of the year.
Wallace said the money would belong to the JRC and, added to $8 million the JRC would realize from the sale of land for the master developer projects in the tax increment financing district, the board would have $13 million for future Joplin development projects after those by the master developer are finished.
“In order for us to do this, we are going to accelerate some things,” Wallace told the board.
Eligibility for the land assemblage program requires that the JRC have at least 50 acres acquired for redevelopment. Wallace said the JRC has bought about 26 acres and has about 29 acres under contract that would need to be closed. There are some transactions in negotiation that would have to be wrapped up by Aug. 15 in order to complete the JRC application for the tax credits before the end of August, Wallace said.
Amy Susan, spokeswoman for the state’s Department of Economic Development, said it still would be possible to complete the steps this month.
Asked how long it would take for the DED to process an application, she said by email: “It depends on the completeness of the application. Applications received between now and Aug. 27, if complete and eligible, could possibly receive an authorization with conditions that would allow them access to the program after the program expires.”
JRC members asked Wallace if there is enough money available to pay for the land deals. The city’s finance director, Leslie Haase, said she believes there would be. Wallace said one of the properties to be purchased would come with some owner financing to try to ensure that the board would not run short of money on the transactions.
It is expected that the JRC will spend $10.9 million buying land that is being sold to Wallace Bajjali for the development projects, aside from that needed for the city-owned Joplin Public Library project at 20th Street and Connecticut Avenue.
The JRC agreed to meet at 4 p.m. Monday to try to wrap up the land deals needed to be eligible for the program. It also agreed to approve a $3 million bridge loan with Arvest Bank that would be paid off by the end of the year with money derived from its property sales to Wallace Bajjali.
RESOLUTIONS NEEDED for the tax credit application would go before the City Council at its regular meeting Aug. 19, City Attorney Brian Head said. The council is having a special meeting next Monday to hear an update from David Wallace on the status of redevelopment projects.