Developers want South Side TIF amended

Tax revenues falling short of projections

With sales and property tax revenues in Jefferson City's South Side falling short of projections made five years ago, the developers of Dunklin Street Properties LLC intend to soon propose amended terms to the South Side Tax Increment Financing (TIF) district.

The TIF district was formed in November 2009 to help fund infrastructure improvements in what was then a blighted area of Jefferson City. During 2009 and 2010 the development group led by Larry Kolb and Steve Rollins completed improvements such as work on curbs, gutters and sidewalks; lighting; landscaping; parking lot resurfacing and expansion; and stormwater drain repair on the 100 block of East Dunklin Street.

While the improvements have been completed, the developers are now in the phase of paying off debt. But they may not be able to do so as quickly as they'd prefer without somehow increasing the tax revenues earmarked to support the project.

Tax Increment Financing allows developers to finance installing or improving certain types of public infrastructure involved in projects in blighted areas using a portion - or "increment" - of the additional sales and/or property tax revenue produced in the specified geographic area that directly results from the development. In other words, the "increment" that funds infrastructure improvements is the difference between the revenue the area generated in the year before the development and what it generates each year after the development.

This particular TIF did not increase costs to taxpayers, but instead dedicated any increased revenue from the already existing tax rate to funding the infrastructure improvements.

While the improvements were made only on East Dunklin Street, the South Side TIF district garners sales and property tax revenue from the area bound by Cedar Street on the north, Washington Street on the west, Monroe Street on the east and the stretch of Ashley Street from Jefferson Street to Madison Street on the south.

The cost of the infrastructure improvements was about $570,000, with assumed 5 percent interest bringing the TIF-qualifying debt to be repaid to around $730,000, according to original projections. That debt had been projected to be repaid within 10-12 years.

However, tax revenues have fallen short of those original projections, Kolb said.

"When we organized the TIF in November of 2008, Blattner's Furniture store, which had three storefronts in the district, was in business. Then right after that in 2009 Blattner's went out of business, so that affected our sales tax base considerably," Kolb said. "We have received almost enough money each year to pay the interest, but we haven't been paying much down on the principal."

Two more businesses within the TIF district's boundaries - Victoria's Bridal & Formal Wear and Plaza Tire Service - closed recently, further decreasing the sales tax revenue available to go toward the development debt. While tax revenues have not fallen short of the developers' debt payments so far, they are trying to prevent any shortage from happening in the future, Kolb said.

One-half of increased sales tax revenues over the base year of 2009 goes toward the TIF debt annually.

"As we remodeled the 100 block of East Dunklin, we anticipated more sales tax-producing retail businesses, and we ended up with some offices and other things like (Wilson's Yoga Studio) - very vibrant businesses, but they don't create sales tax," Kolb continued. "We're looking at a way to amend the TIF where we're relying a little bit more on property tax bases more than sales tax."

The TIF district also garners the full increase in property tax revenues from the 74 properties in the area over the base year of 2009, but values haven't increased as hoped.

"Since 2009, because of economics, we haven't quite had the property tax increase, for all of Jefferson City," Kolb said. "Of those 74 properties, only 12 of those have gone up in property tax (valuation)."

On a related note, Kolb said, the legally specified geographic boundaries of the TIF district do not correspond with the originally proposed map rendering, further lessening potential property tax revenues.

"We think with our new amendment we'll be able to work on a plan that will maybe increase the TIF district (in size) so we pick up more of the property and help pay it down," Kolb said.

The next step will be for the developers to meet with Jefferson City's TIF Commission - made up of 11 community members appointed to represent the taxing entities within the area (city, county, school district and library board) - along with each party's attorneys to iron out the proposed amendment's details, then formally propose the amendment to the commission and, if approved by the commission, propose it to the City Council.

"We hope within the next two months that we could complete everything," Kolb said.

Jefferson City currently has two other existing TIF districts: Capital Mall and High Street (O'Donoghue's).