Cape Girardeau officials hold public hearing on portion of West Park Mall redevelopment incentives package

Cape Girardeau City Council members began the process of considering a Community Improvement District to aid in redeveloping West Park Mall at a public hearing Tuesday, Aug. 15.

Representatives of River City Centre LLC asked for the CID hearing as part of their proposed $107 million project to revamp the aging retail site. Their CID proposal would impose a 1% sales tax as well as an annual $2 per-square-foot assessment on outlets at the 65-acre site for a period of 27 years. Developers would use those funds, up to $18.07 million (not including financing costs), for improvements to the site and costs related to certain services (maintenance, security, etc.).

John Hansen, managing director of Integra Realty Resources Corporate and Public Finance Group, a financial consultant hired by the developers, explained the local ownership group -- Lucas Haley, Michael Williams, Ben Ressel, Matthew Mills, Natalie Riley and Steve Holden -- bought the "flagship" property two years ago and put together a phased redevelopment plan for the mall structure itself and out-parcel projects around the site's perimeter. They have proposed redeveloping the site in phases -- reconstructing much of the building itself and designing the out-parcel developments.

He said rising construction costs and interest rates, as well as supply chain issues have presented "challenges" to the project, prompting the developers to ask for a $49 million incentive package. The figure does not including financing costs for the incentives that accrue over time. Asked-for incentives include the CID, a Tax Increment Financing component ($18 million), a Transportation Development District ($10 million), $3 million in sales tax reimbursement for construction materials and $100,000 in city fee waivers.

The city's TIF Commission recommended approval of the project. To date, City Council members have not taken action on that portion of the incentives package, which allows for developers and taxing districts to equally split increases in property and sales tax revenue over a specified period, 17 years in this case.

Hansen noted sales tax revenue declined about 20% in 2022 and property tax revenue for the site has declined nearly 50% since 2018. He told council members the group's projections show $80 million in tax revenue over 30 years, plus 700 "retained and added" jobs while stressing the city would not be guaranteeing any of the costs of the incentives.

Haley noted the project is not feasible without financial help.

"We cannot do this project without an incentive package," he said. "We think the benefits to the city outweigh the objections."

Several citizens offered opinions on the project, mostly supporting a redeveloped property, but questioning the size of the incentives package.

Dennis Vollink, a retired executive of Drury Southwest, said with financing costs, the value of the CID, TIF and TDD far exceed the value of "today" dollars.

"It really becomes more of a tax deal," he said.

He also questioned the expected 11% return on investment envisioned by the developers.

Jason Coalter, a local developer, also noted the potential ROI.

"No one should get rich doing a project on the backs of the citizens of Cape Girardeau without long-term skin in the game," he said.

Hansen contended the project's "cost of capital" is "conservative" and said the CID portion of the incentives package is an "assessment on ourselves. No on else pays that."

Kevin Whitfield, president of Drury Southwest, challenged the developers' blight study, which determined the property be blighted, a necessary component of a TIF designation. He also challenged the scope of the incentives package.

"The city doesn't have to participate to the level it is being asked," he said.

He cited a development in Independence, Missouri, in which the municipal government ultimately paid a portion of bond debt for a development project and said the city should not take on such risk.

Hansen later said River City Centre's proposal would not put the City at any risk regarding bond payouts.

"We are not proposing that in any form or fashion," he said, adding that reversing the mall's retail decline and adding value to the property would "secure" a base level of tax revenue going forward. "There is no situation where the City is going to be in a worse fiscal situation because of the approval of this project."

Council member Tameka Randle noted developers have not revealed a potential list of mall tenants. Haley noted such negotiations must remain private until deals are in place. He said the project has garnered significant interest from national retailers.

"We didn't want to do an 'if you build it they will come'. It's, 'They want to be here, and we need to build it for them,'" he said. "We have tenants who want to be here. They are ready to come to this space. We need to figure out how to make that happen."

Assistant city manager Trevor Pulley told council members that municipal staff has been negotiating with the developers for two months and continue to work through the development proposal.