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TIF request ready to go before city commission
A tax increment financing (TIF) proposal is in the hands of the city, but many deals will have to be made and much more communication is necessary before the plan goes anywhere.
The TIF Commission will meet Tuesday to begin discussions of a development group's request for $24 million to $28 million in tax increment financing, funding that would help pay for the infrastructure for a 900-acre residential project near an already constructed golf course.
The Prestwick Plantation development group had earlier estimated needing $12 million to $15 million in TIF funds for the project. The new, higher request is reflected on a recently completed report the group will present to the TIF Commission.
The project will bring $2 billion in economic stimulus to the area over the course of the project, the developers say. Total construction costs are estimated at $415 million.
Still a long way from city council consideration, the TIF proposal calls for a $4 million allocation to the Cape Girardeau school district, $580,000 to the city of Cape Girardeau for equipment and another $1.42 million to the city for improvements to Bloomfield Road.
In turn, the city, the school district and a handful of other taxing entities would pay for the infrastructure with the extra tax dollars it receives as the property increases in value. The funding for the infrastructure would only come from the extra taxes generated by the project.
The developers estimate that the taxes will increase from $46,000 -- the current property taxes being paid -- to $5.6 million by the end of the term of the TIF.
The proposal doesn't specify how and when the $4 million would be paid to the school district and over what period of time. That will unfold as the commission and developers sit down and iron out the details.
"It's all still in negotiations at this point," said Bob Suelman, who is spearheading the Prestwick Plantation development group. "What we're trying to do is help the school board out as much as we can."
Dr. Bob Fox, president of the school board, was concerned about the time schedule of how the $4 million would be paid and the length of the TIF.
The proposal does not say specifically say how many years the TIF will last, but a chart of estimated TIF revenues implies that it would be in effect from 2003 until 2025.
"That's a long time to go without those taxes," Fox said. "But there's no question the potential economic benefits to the community are huge."
The state of Missouri limits TIF projects to 23 years.
During that time, the developer would still be paying taxes on the property, and much of that money would go back into the project.
The developers say the project could support up to a $31 million TIF.
Chauncy Buchheit, the deputy director of the Southeast Missouri Regional Planning and Economic Development Commission who has been hired by the city as a consultant, said the developers' numbers are pretty accurate.
Now, Buchheit said, it will be up to the TIF Commission and the developers to hash out a compromise.
Bonds or notes
Suelman said there are two means by which the city could pay for the infrastructure.
If TIF status is approved, the developer could go to the city with the paid items -- like streets, sidewalks and sewers -- and, in turn, the city would issue a note to the developer. Over a period of time the notes could be sold to another investor for cash, Suelman said.
The other way it could be handled would be to get conventional financing, which Suelman said becomes easier with TIF. The city could sell bonds and give the developers the money up front. But Suelman strongly pointed out that the developers, not the city, would be responsible.
Buchheit said the city would definitely have to have financial protection in place before TIF status could be granted.
"Typically in a TIF deal, the city has no liability," Buchheit said. "The TIF Commission will probably make a recommendation on how to finance it, and the developer will have to come up with an idea how to finance it. All these questions will have to be answered."
The commission meeting is open to the public. It will be held at 7 p.m. Tuesday at the Osage Centre.
335-6611, extension 127