City tries new ways to bring in business

Cape Girardeau will be moving into new territory for the city this week as it moves from promoting economic development through tax subsidies to developers to floating bonds for the purchase of industrial sites.

The closing of Dana Corp.'s Cape Girardeau facility off Southern Expressway cost the city about 200 good-paying manufacturing jobs. The proposal going before the city council this evening to finance the purchase of the building to house Schaefer's Electrical Enclosures Inc. would replace those jobs with about 150 new positions. While the pay and benefits structure offered by Schaefer's Electrical isn't as lucrative as Dana Corp., the employees I spoke to during a visit to their current operation in Advance, Mo., seem to enjoy their jobs. The company has also seen a significant increase in pay scales and benefits since the current ownership group took over in 1999.

The financing package creates no obligation to the bondholders on the part of city taxpayers. Schaefer's Electrical will be able to shave a few percentage points off its financing costs and will receive a tax abatement worth about $342,000 over 10 years.

The city has made substantially larger commitments of tax cash to other employers in recent years. In 2004, the city promised to allocate up to $5.1 million in sales tax revenue to land two retailers, according to a Nov. 5 memo to council members from city finance director John Richboug and city manager Doug Leslie.

To keep a Sears, Roebuck and Co. store in town, the city promised up to $2.1 million to land the Sears Grand on Siemers Drive. The deal calls for the city to pay 75 percent of the difference between sales tax revenue at the old Sears store on William Street and the new store to defray the costs of "public improvements" associated with the Sears Grand project. If the tax revenue isn't sufficient to cover the $2.1 million by the end of 20 years, the city is no longer obligated.

So far, the city has contributed $51,923 to this project, Richbourg wrote.

The same year, the city entered into a contract to pay Drury Land Development just under $3 million, at 4 percent interest, to cover the "public improvement costs" associated with the Kohl's store. The agreement called for the city to reimburse Drury from "all sales taxes" collected on the Drury property, both from Kohl's and any other retailers that open on the same property. So far, that has meant payments of $263,360, and the debt stands at $2.95 million. There is no expiration date on the agreement, Richbourg wrote.

And this year, the city took on another, similar obligation to assist Greater Missouri Builders with the renovation of Town Plaza. The city's tax subsidy commitment to the project is $3.6 million at 7.5 percent interest.

The city declared the plaza a blighted area. The agreement includes a 100 percent tax abatement on the value of improvements for 10 years, and a 50 percent abatement for an additional 15 years. On the old Sears building, now housing the NARS call center, GMB will receive a 50 percent tax abatement for 25 years.

Along with the use of "incremental" increase in tax revenue to support the project, a Community Improvement District has been formed and a 1 percent sales tax will be imposed on customers of retailers in Town Plaza with the money being dedicated to retire the city's obligation.

And the future could bring more such deals. While the major retail development for the new East Main Street/LaSalle Avenue interchange is on hold at this time, when THF Realty of St. Louis made a presentation earlier this year, the company representative "laid out a proposal that is very broad in scope and very rich in demands," Knudtson said in October.

All of the above projects have taken place while Knudtson has been mayor. The Schaefer's Electrical move comes after the company did extensive work exploring whether it could stay in Advance and fulfill its expansion plans. I asked Knudtson how he felt when jobs were being lured from another area community, and he said that he's got a great deal of respect for Advance and understands the meaning of the move to the community. But he also said something that could also sum up how he feels about all the above projects:

"As of today, I am the mayor of Cape Girardeau and my objective is to grow and develop the city of Cape Girardeau."

• Powerful woman: Magna-Tel Inc. president Mary Ann Farmer, who was recognized earlier this year by the Advertising Speciality Institute with its Women of Distinction Award, has been included for the second time on the institute's Counselor magazine as one of the most powerful and influential people in the industry.

Farmer is listed 41st on the magazine's Power 50, and is one of only six women on the list. She was 46th on the list in 2006.

Magna-Tel Inc., 775 S. Kingshighway, is entering its 49th year in business and was named a top three supplier of magnetic promotional products in June by Promotional Marketing magazine and is a finalist for ASI Distributors Choice awards.

• Another Schaefer: An entirely different company, also with the name Schaefer, announced they are producing bottled water at a new plant in Perryville, Mo. Schaefer's Water Centers, owned by Riverside Water Technology Inc., whose president is Michael J. Schaefer of French Village, Mo., has been in business for 30 years as a distributor of bottled water.

According to a news release issued last week, they are now bottling spring water from a source in Illinois and purified drinking water at a new bottling plant. The company remodeled its facilities about a year ago and included a bottling plant, but "immediately came to the realization that the building was too small," wrote Diane Geile of the company.

In addition to the new bottling plant, the company is expanding its warehouse to accommodate the increased business, the release said.

• Tourism award: Pinecrest Azalea Garden of Oak Ridge received the Spotlight Award during the 2007 Governor's Conference on Tourism at Lake of the Ozarks. Each spring, Gene and Linda Penzel's 52 acres of blooming rhododendron and azalea attract thousands of visitors to the region. The award recognizes a business or organization that is not usually associated with the tourism industry for noteworthy contributions.

Rudi Keller is the business editor for the Southeast Missourian. Contact him at 335-6611, extension 126