By Andy Ostmeyer
JOPLIN, Mo. —
The Missouri Supreme Court is expected to hear arguments today in a case that one expert believes could have implications for Joplin’s tornado recovery plans, as well as for other large tax increment financing proposals throughout the state.
But, David Wallace, CEO of Wallace Bajjali Development Partners of Sugar Land, Texas, and John Brancaglione, vice president for PGAV Planners, a St. Louis company that worked on the Joplin TIF plan, believe otherwise.
“If you look at the issue the court is going to deal with here, it’s not something you can translate easily from one TIF to the next,” Brancaglione said Tuesday.
PLAN VERSUS PROJECTS
Paul Puricelli is an attorney for Paul McKee’s Northside Regeneration Project in St. Louis.
At more than 1,500 acres and $8 billion, it is one of the largest TIF projects in the state and includes nearly $400 million in TIF financing. St. Louis officials approved it, but a St. Louis circuit judge, Robert Dierker, ruled in 2010 that TIF funding should be voided. He concluded that the TIF proposal was more of a general development plan for the area, and that it initially failed to include defined redevelopment projects and a cost-benefit analysis for each project. And unless the TIF district is tied to defined projects, he said, TIF district boundaries could continually be expanded and ultimately include an entire community.
A panel of appellate judges agreed, but citing interest in the case and the importance of the issues raised, transferred it to the Missouri Supreme Court.
The Missouri Eastern District Court of Appeals summarized the Northside TIF proposal as one outlining “land uses and development concepts,” but added that the plan “did not set forth any specific or enumerated development projects.”
The question before the court is how specific the proposal has to be, Puricelli said. He noted that larger TIF districts, which are not site specific the way a single shopping center TIF plan might be, can take years to develop. Identifying what projects will be built where becomes more problematic if the duration of the TIF district is measured in decades.
In its proposal to the city in connection with its work as master developer for tornado recovery, Wallace Bajjali laid out 18 projects and their costs. The list includes $162.5 million for single-family homes to be sold at the market rate; $40 million for reduced-price housing; $25 million for an assisted living center; $74 million for a medical office building; and $68 million for a performing and visual arts center. The 18 projects — including a $12 million payment to the school district to compensate for lost revenue — add up to $806 million. The Joplin TIF plan also includes a cost-benefit analysis for the projects, Wallace said, but no specific locations have been identified yet for each proposal.
Puricelli said the question raised by the Northside Regeneration TIF plan is what level of detail is required, particularly for large TIF districts.
He said that market forces change over time, some investors will drop out and others will come along, and new projects will be proposed. Much of what may develop in a larger TIF district won’t even be known on “day one,” but only after the TIF district is approved, he said.
“It might not be apparent until you have the ‘Open for Business’ sign on it,” he said.
Brancaglione, the vice president for PGAV, whose planning division contracted with Wallace Bajjali and the city to prepare the redevelopment plan, said Joplin’s TIF proposal, while a large district covering many square miles, is not like the Northside Regeneration TIF project because it contains specific projects and more details. The proposed Joplin TIF district includes more than 6,000 parcels and more than 3,000 acres.
It also dwarfs existing TIF districts in Joplin, which were for specific shopping centers on Range Line Road with identified anchors — Kohl’s, and Academy Sports & Outdoors.
“Is there something,” Brancaglione said, “that could come out of the decision here that affects us? Maybe.” He added that legal rulings can always have unintended consequences. But he believes Joplin’s TIF proposal meets the threshold for project details set forth in state regulations, even if sites for specific projects are not identified.
“I don’t think you should be too quick to translate Northside to other projects,” Brancaglione said.
He acknowledged that there will be changes along the way.
“When you create a TIF of this nature, you really are going to be making modifications over time,” he said.
Wallace said that when the TIF plan was developed for Joplin, the companies involved in the project took into the account the questions being raised by the St. Louis case.
What is not outlined in the Joplin plan is what has been identified for each specific parcel of land. Wallace said that level of detail is not only not needed, but it also couldn’t be given without driving up project costs. Identifying a specific lot for a specific project will raise or lower the value of that lot and nearby properties, and could double or triple the cost of acquisition, which would run against the city’s best interest, he said.
He also said a “large-scale destructive event,” such as the May 22, 2011, tornado in Joplin, called for a large-scale redevelopment plan.
ANDY OSTMEYER is the metro editor for The Joplin Globe.
438 TIF districts
UNDER MISSOURI LAW, cities and counties must file annual reports on tax increment financing districts with the Missouri Department of Economic Development. There are currently 438 TIF districts making reports in Missouri.
Source: Missouri Department of Economic Development