Jefferson City Public Schools officials expect the developer seeking to use Tax Increment Financing to rehabilitate the Truman Hotel & Conference Center property to propose a new plan, after school board members voiced concerns about the amount of new property tax revenue that wouldn't reach the district.
"We've made it clear that the proposal that was before us wasn't one that we could support," JCPS Chief Financial Officer Jason Hoffman told Board of Education members at a work session Monday evening. "I think a negotiation is happening."
Hoffman said he and JCPS Superintendent Larry Linthacum are set to meet with developer the Puri Group of Enterprises today to discuss details of a new proposal. Hoffman and Linthacum are two of 11 members of the Jefferson City TIF Commission, which votes on whether to send TIF proposals to a full City Council vote.
The TIF Commission is scheduled to hold a public hearing at 5:30 p.m. May 31 at City Hall. Hoffman said he does not expect the commission to vote on the new proposal at that time.
"They're going to be presenting this proposal to the full TIF Commission and then asking for no vote because they're not going to have all the documents ready at that time," he said.
The Puri Group, which purchased the 1510 Jefferson St. hotel in July 2013 and closed the hotel permanently in November 2015, submitted an application to the city earlier this year for roughly $8.89 million in TIF assistance for construction and rehabilitation costs at the 8.51-acre property.
The redevelopment plan includes replacing the Truman Hotel's three existing outer buildings with a new Holiday Inn & Suites and replacing the main building with a new Courtyard by
Marriott, as well as renovating the existing 24,000-square-foot meeting space and adding a Cheerleader Pub and Grill inside the first hotel.
The Truman Hotel TIF, as originally proposed, would have reimbursed the developer with 100 percent of the increased property tax revenue and 50 percent of increased sales tax collected on the property, until the TIF-reimbursable amount was repaid.
Local government entities that receive property tax revenue - including Jefferson City Public Schools, Jefferson City, Cole County and others - would continue to receive revenue during the TIF's lifespan based on the property value before improvements were made.
"All of the original proposal is out the window at this time, is my understanding," Hoffman said, adding he expects the new proposal still involves some level of property tax contribution that would affect potential district revenue. "We're hoping to come to some type of compromise."
The school board first voiced concerns about the proposed TIF at an April 5 special session, where board members questioned how the TIF would affect the district under its originally proposed terms. The board opted to pursue negotiations with the Puri Group to reduce the level of property tax reimbursement from 100 percent, funneling some new revenue to the district during the TIF.
Because nearly half of the school district's revenue comes from property taxes, the TIF would affect the district more than the other government entities that benefit from local property tax.
While the school district would have gained a projected $1.69 million in revenue over the TIF's 23-year lifespan, it stood to forfeit $11.6 million in new property tax revenue that instead would go to reimburse the Puri Group over that period, Hoffman has told the News Tribune previously.
The Puri Group's most recent estimate, given at the May 9 school board meeting, is that the project will generate $33.29 million in increased tax revenue for the city and county, as well as $62.8 million in hotel payroll, over 23 years.
"I know the Puris are anxious to get started as soon as possible," Hoffman said. "They expected a vote and this thing to pass way back, and so their revenues, all these projections, were based on them starting construction by now."
Representatives of the Puri Group have previously told the News Tribune the project will only go forward if the TIF does, and that their third-party financing is contingent on the TIF's approval, echoing the conclusion of an initial third-party evaluation by Springsted on behalf the city that the project could not profitably proceed without economic development assistance.
Previous coverage:
Developer meets with JCPS board to discuss TIF, May 10, 2016
Truman Hotel TIF meeting rescheduled, April 12, 2016
Schools historically have little power in TIF decisions, April 10, 2016
JCPS balks on proposed Truman Hotel TIF, April 6, 2016
Truman hotel seeking Tax Increment Financing for proposed developments, March 20, 2016