Crestwood officials urged to not use mall revenues as decision-making tool regarding tax hike

City sets town-hall meeting for 6 p.m. Tuesday, Oct. 18

Kris Simpson

Kris Simpson

By Mike Anthony

The Crestwood Board of Aldermen earlier this year granted the owner of the former Crestwood Plaza $25 million in tax incentives to redevelop the 47-acre site at Watson and Sappington Roads.

But as elected officials contemplate asking Crestwood voters for a tax-rate increase, City Administrator Kris Simpson recommended against using anticipated revenues from the redevelopment of the mall site as a decision-making tool regarding a proposed ballot measure.

Chicago-based UrbanStreet Group, which purchased the mall for $2.265 million in 2014, plans a $104.3 million mixed-use redevelopment project for the site.

In March, aldermen approved the $25 million in tax incentives for UrbanStreet: $15 million in tax-increment financing assistance or a Chapter 353 tax abatement; $5 million in Community Improvement Dis-trict funds; and $5 million in Transportation Development District funds.

Six months later, however, Mayor Gregg Roby said he’s not ready to count on any revenue from the project at this time, as the only thing city officials know for certain about the mall site is that the buildings there are being demolished.

As first reported by the Call, City Admin-istrator Kris Simpson told the Ways and Means Committee Sept. 6 that the long-term financial outlook for Crestwood is “grim.”

During a subsequent Board of Aldermen work session, Simpson reviewed information he presented to the Ways and Means Committee that projects a $7.1 million deficit in the city’s general fund from 2017 to 2021. Among the assumptions used to arrive at that projection were providing current levels of service, employees progressing on the city’s pay plan when eligible, a 2-percent increase annually to the pay plan matrix, modest economic growth and average weather. Those assumptions did not include any potential revenue from the redevelopment of the former mall site.

In addition, Simpson outlined various tax-rate increase scenarios that would close that projected $7.1 million gap from 2017 to 2021. A 40-cent tax-rate increase would reduce the projected general fund deficit to $3.1 million and cost the owner of a $200,000 home $152 per year.

A 50-cent tax-rate increase would reduce the deficit to $2.1 million and cost the owner of a $200,000 home $190 per year.

A 75-cent tax-rate increase would result in a surplus of $302,000 over the five-year period and cost the owner of a $200,000 home $285 per year.

The city’s 2016 tax rates are 27.8 cents per $100 of assessed value for personal property, 24.8 cents per $100 for residential property and 41.4 cents per $100 for commercial property.

A town-hall meeting to obtain residents’ feedback on a possible tax-rate increase is set from 6 to 9 p.m. Tuesday, Oct. 18, at the Community Center, 9245 Whitecliff Park Lane.

At one point during the Sept. 21 work session, Ward 3 Alderman Jerry Miguel asked Simpson why he didn’t include any projected revenue from the redevelopment of the mall site.

“… It’s not built yet,” the city administrator said. “Something catastrophic could happen between now and then that could keep that from happening. It could also change radically from what we expect.

“We’re asking you in the next few weeks or months or days — however long the board needs to take — but we’re asking you relatively soon to make a decision that’s going to change the course of the city for five or 10 years or even longer. If you’re basing it on an assumption that you’re going to get some major windfall three years from now, I think that’s an extremely risky approach and I would not recommend it. That said, Ways and Means insisted that they see at least something with it …”

Anticipated revenue from the mall and a 50-cent tax-rate increase would reduce the projected five-year deficit to $1.1 million.

“The cumulative impact of the mall on its own in this scenario is roughly $1 million. That is a conservative projection, I’ll allow, based on what we’re hoping will get built there,” Simpson said. “However, as a decision-making tool, I think it’s an extremely risky approach to use to assume mall revenues when you’re making this decision.”

The city received an estimate of revenues the mall site would generate in a cost-benefit analysis prepared by its planner, Peckham Guyton Albers & Viets, or PGAV, and Simpson said he was using 50 percent of that estimate.

Miguel served on the board from 2004 to 2013 until he was ineligible to seek re-election because of term limits, and was elected again in April. He noted that in speaking with residents, they have the expectation that the redeveloped mall site will generate additional revenue for the city.

“PGAV has revenue starting in 2018. I can see putting that off a year for delays in the project, but I believe the expectation is that the revenues that have been projected are going to be realized by the city … I have a problem with not including the full — or at least 90 percent of the projected revenues, even if it’s pushed back a year,” Miguel said.

Simpson responded, “Well, as a mental exercise, alderman, if you look at this projection and you wanted to do that — I don’t recommend it — but if you wanted to do that, you could roughly reduce the deficit there, that deficit number at the bottom, by about another — if you say 90 percent, call it another $900,000. So you’re still at a $200,000 deficit, if you use that perspective, an admittedly very risky perspective to be making a multi-year decision on. I’m going to keep reiterating that point because I want to make sure that you understand.”

Roby said he agreed with Simpson.

“I think it’s very dangerous to assume anything that isn’t absolutely visible to you. I hate to say it, but I have seen many, many projects that were supposed to have been built, that people anticipated great revenues were going to be generated from, and they never happened …,” he said.

Simpson cited a development proposed in Richmond Heights, The Boulevard.

“That was a two-phase project,” he said. “The Recession happened and phase one got built. Phase two, as you saw today, is finally underway almost 10 years later.”

Roby said, “The only thing that we know that’s going to happen at that mall site is that those buildings are going to get demolished. Beyond that, we have absolutely no guarantee that the world isn’t going to come to an end and that development’s going to come to a halt.

“So I don’t count on any revenues from there until I see the checks starting to arrive in our finance officer’s hands.”

Fifty percent of PGAV’s anticipated revenue from the mall site and a 75-cent tax-rate increase would result in a $1.2 million surplus, according to Simpson’s projections.