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Council leaning toward OK of St. Mary's TIF

Council leaning toward OK of St. Mary's TIF

August 20th, 2017 by Philip Joens in Local News

The former St. Mary's Hospital property is being considered for a tax increment financing project, which would turn the campus into retail, restaurant and office space if approved by the Jefferson City Council.

Photo by Shelby Kardell /News Tribune.

A proposed redevelopment of the historic St. Mary's Hospital property using tax increment financing appears likely to pass when the Jefferson City Council votes on the project Monday night.

Several council members reached by the News Tribune last week said they supported the plan and anticipate it will pass.

No council members expressed outright opposition, and a few council members said they were undecided. Even with approval of the project likely, questions remain about a component project that would redevelop part of the hospital for use by Lincoln University.

From Aug. 16-18, the News Tribune reached out to all 10 members of the Jefferson City Council and Mayor Carrie Tergin to gauge support for the proposal. Of the 10 members, nine, plus Tergin, were reached for comment.

Six members said they planned to vote to approve the St. Mary's redevelopment plan. No members said they would vote against the plan; three of the nine members reached said they were undecided.

Six votes are needed by the council to pass the measure. Tergin also said she would vote for the plan if her vote is needed to break a 5-5 tie by the council.

Ward 2 Councilwoman Laura Ward was the only member of the council who could not be reached last week.

Her Ward 2 colleague, Councilman Rick Mihalevich, said he intends to vote for the plan because the nonprofit St. Mary's Hospital did not pay a large property tax when it used the facility. He also said the risk of development falls on the developer, and city attorneys determined the developer needed TIF assistance to receive a reasonable return on investment.

"This town has grown based on the growth of state government, and that's been lacking over the last few years," Mihalevich said Wednesday. "The council should take action to try to promote economic development when we can in the absence of the state."

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In February, Jefferson City-based Farmer Holding Company proposed two projects to redevelop the former site of St. Mary's Hospital using TIF funding to make the project feasible and turn it into a site for restaurant, retail and office space. The Jefferson City TIF Commission voted 10-0 on June 14 to recommend approval of the project to the full council.

Farmer Holding proposed a $44.6 million project involving Lincoln University and a $30.9 million project creating only commercial space. The company is seeking $7.3 million in TIF assistance for the Lincoln project or $6.7 million for the commercial project. If the council approves the proposal, FHC will choose which of the two plans to pursue.

Under FHC's plan, Lincoln University could use parts of the old hospital for an expansion of its nursing or other programs. The LU project would contain four pads with 21,000 square feet of commercial space.

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.

Ward 4 Councilman Ron Fitzwater said he thinks the project represents an investment by the city in a project that could help spur further economic activity. He thought Farmer Holding did its due diligence and made a good case that the project is feasible only with taxpayer assistance.

Fitzwater also thought FHC proved its ability to tackle TIF projects after it undertook a renovation of Capital Mall using TIF funding in 2013.

"They've done a good job of complying with what they said they would do at the Capital Mall," Fitzwater said Wednesday. "So I think their track record and laying out their vision and proceeding to implement it is pretty well. "

Ward 5 Councilman Larry Henry remained undecided Thursday afternoon.

"Honestly, I'm not sure how I feel," Henry said. "As much as I want to see something done with that property, I'm a little uneasy in terms of how economically viable developing that property (would be)."

Henry planned to study the projects' merits over the weekend. He said he sees two good plans in the Lincoln and commercial projects, but he wished FHC had narrowed the proposal to just one project to give more certainty about the project's merits.

Ward 4 Councilman Carlos Graham also was undecided Wednesday afternoon; but like most council members, he said he sees why something should be done with the property.

"Right now, when you drive by there, it's certainly an eyesore," Graham said. "So what do we do?"

Farmer Holding Principal Rob Kingsbury said in May the company had several restaurants ranging from sit-down to fast-food and fast-casual establishments interested in leasing space. Several office tenants were interested in leasing space at the site, too, he said at the time.

Kingsbury again declined to name interested tenants Wednesday afternoon. He also did not name a timeline for announcing which project will be chosen.

The commercial project isn't Farmer Holding's first choice, though. In documents filed with the city, and at meetings with commissions, boards and other stakeholders, Farmer Holding repeatedly promoted the Lincoln project as a way to give back to the community and give the city mixed-use space.

Kingsbury said in June if the City Council passed the TIF, FHC would try to meet with Lincoln University the next morning to make that happen. Kingsbury again said Wednesday if the TIF is approved, FHC will contact Lincoln immediately.

"Our first call will be to Lincoln University to ask some time to have a meeting with their leadership to begin to understand what specifics need to be done to help them with resources that they need to pursue the Lincoln plan," Kingsbury said. "We'll look forward to being able to share more with the leadership at Lincoln."

It's still not clear how much money LU would need to contribute if the Lincoln project were to move forward. LU likely would need state funds to cover the cost of creating new programs or expanding existing programs that would use the space.

A June 8 meeting of the Lincoln University Board of Curators showed the school may be in a tight financial situation, though. Curators cut $3.76 million from LU's operating budget for the 2017-18 fiscal year and approved the administration to cut 48 jobs, including 15.5 teachers, from the budget.

Five council members expressed doubts about whether the Lincoln project would happen, but four plan to vote for the TIF. All council members reached acknowledged more conversations need to happen about money Lincoln might need to make the project happen.

In mid-June, outgoing Lincoln University President Kevin Rome did not say how much funding it would take for LU to participate in the project. He also did not specify what discussions the university has had with Farmer Holding.

"If Lincoln receives support from the state, it would be very beneficial for the school of nursing and its students," Rome said at the time. "Lincoln has been in and out of talks concerning the acquisition of space at St. Mary's for several years."

When asked what Lincoln's involvement with the project is at this point, Lincoln University spokeswoman Misty Young responded with a one-sentence statement: "The university is glad to still be in consideration for this project."

Ward 3 Councilman Ken Hussey plans to vote for the proposal. He, like all council members reached, loves the idea and location for the Lincoln project. Hussey said, though, it doesn't look likely to be built.

"Given the current state of the state budget and higher education funding, I think it's kind of a long shot at this point," Hussey said.

Henry also likes the Lincoln project but said he'd feel better if it were a certainty.

"I think you need to set aside the Lincoln project and focus on the second option," Henry said. "It sounds like a really good project when it's presented; but if the funding is not there, I just don't see how that works."

Mihalevich also said the Lincoln project is unlikely.

"I personally think it's going to be very hard to come up with that," Mihalevich said.

Anticipated council voting

For: Mihalevich, Fitzwater, Schreiber, Wiseman, Hussey, Kemna

Against: not available

Undecided: Graham, Henry, Prather

Mayor Tergin (in case of tie): Intends to vote in favor

Unreached by the News Tribune: Ward