Developer: Decision to toss both proposals would be disappointing
Sunday, March 30, 2014
For at least one of the developers hoping to build a proposed conference center in Jefferson City, a potential decision to throw out current proposals would be disappointing.
The City Council is expected to make a decision between two conference center proposals April 7. The proposal from Jefferson City-based Farmer Holding Co. includes a 61,000-square-foot conference center to be located within the Capital Mall, with a 127-room hotel attached and a total conference center cost of roughly $14 million. The hotel itself would cost just under $14 million.
The proposal from Hannibal-based Ehrhardt Hospitality Group includes a nearly 45,000-square-foot conference center in the 300 block of West McCarty Street, with a 150-room hotel attached. The conference center would cost $13.8 million and the hotel itself would cost $15 million.
One City Council member is putting together a resolution to be presented April 7 that would eliminate both proposals, largely because of the potential for a general fund obligation and the amount of special incentives being requested by both developers.
For Joe Bednar, an attorney representing the Ehrhardt Hospitality Group, the idea of city funds being obligated may be due to some confusion on the proposal.
“If that’s true, then there may be a misunderstanding on their part as to how incentives work,” Bednar said.
The Ehrhardt proposal, as laid out by City Attorney Drew Hilpert, would use a community improvement district (CID) to levy an additional 1 percent sales tax, a transportation development district (TDD) also to levy an additional 1 percent sales tax, and the use of all sales taxes from the new hotel and conference center for the project itself.
A CID is an area, created by approval of the City Council and a vote of affected land and business owners, where an additional tax may be levied to pay for public improvements as defined by the state.
In order to be established, a TDD must either be approved by the city or county it will function in. The district then can set the tax rate to be applied, which is used to fund transportation-related improvements either within the district or connected to the district. That can include streets, streetlights, parking lots or other transportation infrastructure.
The combined use of all requested incentives, being called a Special Local Conference Center Incentive, would require the city to pay the developer $327,000 per year with a 1 percent annual increase for 20 years, which would presumably be raised through the use of the incentives. But if the estimates fall short, the city would be obligated to pay the full amount promised.
Bednar said the way to ensure the city would not be obligated to use general revenue is to move the Ehrhardts to the pre-development agreement phase, where city staff, officials and the developer can sit down and draw the boundaries of the taxing districts in a way that ensures the revenue needed will be captured.
“What happens is the staff gets together with the council and with their experts, and they arrive at a consensus estimate of what revenue is going to be raised,” Bednar said. “We want to do everything we can to assure them that the current existing general revenue will not be used.”
As for the incentives being requested, Bednar said the council indicated in its request for proposals that it was open to the very incentives being proposed.
“We’re a bit surprised by this position now,” Bednar said. “We certainly don’t want to take advantage of anybody … We’d be very disappointed if they decided not to do a conference center.”
Kirk Farmer, with Farmer Holding Co., said though the city’s summary of both proposals states the requirement of an appropriation pledge for the Farmers project, they are not actually requiring one.
“We are however, trying to show the Council and the public every possible solution that is available to raise more dollars to close the funding gap and also to create the largest and nicest facility possible,” Farmer said in an email. “What we have attempted to do in this process is lay out options so the council, the (Jefferson City Convention and Visitors Bureau), the (Jefferson City Area Chamber of Commerce), and the many important associations that will drive traffic to the convention center can choose the facility they need with the available funding dollars.”
The city’s summary states the developer would not require an appropriation pledge for a smaller sized facility. Farmer said there are still many unanswered questions about what size facility the city really needs and those answers would directly influence the amount of incentives needed.
Farmer said the proposal, with the incentives being requested, would make the project “very achievable at our site without city general revenue funds.”
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