The Jefferson City Council passed four ordinances Monday night approving a plan by Farmer Holding Company to redevelop the historic St. Mary's hospital site using tax increment financing.
In February, Farmer Holding proposed two projects to redevelop the former site of the St. Mary's Hospital using TIF funding. The company said it needed the taxpayer funding to make the project feasible and turn it into a site for restaurant, retail and office space.
The council voted 9-0 to approve four ordinances for the plan. Ward 4 Councilman Carlos Graham recused himself from all four votes because he is employed by Lincoln University, which may become involved in the project.
Farmer Holding Company Principal Rob Kingsbury said after Monday's meeting he's thankful the city supported the project.
"We're very excited to continue working hard, and can't wait to transform the way the property looks today," Kingsbury said.
Farmer Holding proposed building a $44.6 million project involving Lincoln University or a $30.9 million project creating only commercial space. The company sought $7.3 million in TIF assistance for the Lincoln project or $6.7 million for the commercial project.
Under the first plan, Lincoln University would use parts of the old hospital for an expansion of its nursing program or other programs. The LU project would contain four pads with 21,000 square feet of commercial space.
If the Lincoln project does not get built, the commercial project would construct six pads with 30,200 feet of commercial space. Under both plans, a medical office building and the 112-year-old St. Mary's Hospital building would remain standing and be converted into offices.
Farmer Holding prefers the Lincoln plan, but the university hasn't detailed its recent involvment in the project for the News Tribune, and a lack of funding may hamper its ability to participate. Kingsbury said FHC will now reach out to Lincoln and discuss the plan with them.
"Now that we have the tools that we need from the City Council, we can really engage with them and talk about what their involvement could look like," Kingsbury said.
Kingsbury said Farmer Holding talked with Interim Lincoln University President Mike Middleton to update him on the project after he was named president in June. He did not name a timeline for deciding which project will be built.
In its proposal, FHC said the rate of return on investment for both projects without TIF funding would be minus 6.32 percent. Using slightly different metrics than FHC's accountant, Jefferson City's financial advisory firm, Springsted found the the developer's return on investment without TIF assistance would be 3.61 percent for the Lincoln project and 3.56 percent for the commercial project.
With TIF funding, FHC said its return on investment would be 8.65 percent on the Lincoln project and 8.79 percent on the commercial project. Springsted found Farmer Holding would receive an 8.22 percent return on investment on the Lincoln Project and 9.4 percent return on the commercial project with TIF Funding.
Council members ultimately agreed with the city and Farmer Holding's assesments.
Ward 3 Councilman Ken Hussey was the only council member to speak about the plan at the meeting. No residents spoke in support or opposition.
"I think it's a good use of that property," Hussey said. "I think it's a step in the right direction in a high profile spot in Jefferson City."
Hussey told the News Tribune last week he supported the project because he saw it as an opportunity to spur economic activity in the city. Kingsbury said new office space created by the renovations to the medical building and hospital could serve a big role in that.
"Anytime there is new activity, it helps the overall economy and the city," Kingsbury said. "Our hope is we can bring new businesses and new people to our community because that will bring dollars from outside our community into our community."
With the approval, it paves the way for FHC to design blueprints and create leasing documents for potential tenants. The council still must approve an ordinance introduced Monday which activates the taxing money that will be sent to FHC once the project is built and generating revenue.
Construction should start in 2018, and the company expects the project to be finished in 2020.