A proposal to redevelop the Watson Plaza shopping center that includes $2 million in tax-increment financing assistance now will be considered by the Crestwood Board of Aldermen.

The city’s TIF Commission voted last week to recommend approval of G.J. Grewe Inc.’s redevelopment proposal to the Board of Aldermen. The TIF Commission is an advisory body and the final decision to accept, reject or modify the panel’s recommendation will be made by the Board of Aldermen.

The eight TIF Commission members present at the July 26 public hearing voted unanimously to recommend approval of the redevelopment proposal for Watson Plaza, which is adjacent to the city’s Watson/Sappington Road Redevelopment Area where a Kohl’s Department Store opened last fall.

The proposed Watson Plaza Redevelopment Area is comprised of six parcels of land totaling roughly 18.42 acres.

G.J. Grewe Inc. was the only company to respond to the city’s request for proposals to redevelop the shopping center and the Board of Aldermen in March voted unanimously to adopt an ordinance selecting the company as the preferred developer for the redevelopment of Watson Plaza.

In its plan, G.J. Grewe Inc. is proposing a PETCO and a new Walgreens on the site of the vacant Tippin’s restaurant as well as retaining the center’s existing tenants. The company owns the entire shopping center with the exception of the former Service Merchandise building, which it has under contract to purchase.

The cost of the proposal is estimated at $11,226,305, excluding funding generated by a Transportation Development District that would be used to pay for improvements to Watson Road that would enhance the flow of traffic. Besides TDD funds to offset transportation-related expenses, G.J. Grewe Inc. is seeking $2 million in tax-increment financing to facilitate land-acquisition costs.

In a TIF district, tax receipts for school districts, fire districts and other taxing entities are frozen at existing levels for the length of the TIF — up to 23 years. As land within the TIF district increases in value, the incremental tax revenue — 100 percent of property taxes and 50 percent of sales and utility taxes — is used to retire the TIF obligations.

The incremental property tax revenue, also called payments in lieu of taxes, or PILOTs, are deposited into a special allocation fund that is used to retire the TIF obligations.

During a May 26 meeting of the TIF Commission, Tom Curran, a commission member who is representing St. Louis County, noted that John Brancaglione of Peckham Guyton Albers & Viets Inc., who serves as the city’s planner, had said the period of time to retire the TIF obligations would be seven years — with or without the PILOTs.

Given that, Curran suggested the TIF Commission consider whether to recommend the PILOTs be excluded from retiring any TIF obligations and be passed through to such taxing entities as the Lindbergh School District, which then immediately would benefit from the redevelopment project.

TIF Commission members considered Curran’s suggestion June 21 and agreed to incorporate the pass-through of the PILOTs as part of the redevelopment plan that was considered during a public hearing July 6.

Before the commission voted last week, Vice Chairman Pat Lanane, who serves as assistant superintendent for finance for the Lindbergh School District, had one question for Mark Grimm of Gilmore & Bell. Gilmore & Bell is serving as bond counsel to the city for the TIF project.

“I had one question, I guess, for Mr. Grimm in the audience there,” Lanane said. “The language regarding the PILOTs, I assume that’s been incorporated into the document here. I haven’t had a chance to look through all of it since we just got it.”

Grimm said, “Yes sir, it has.”

Last week’s meeting was a continuation of the July 6 hearing. The public hearing was continued because some documentation was lacking, including a boundary description of the redevelopment area, an affidavit from the developer stating that absent the use of TIF assistance the project wouldn’t go forward, and a revised letter of commitment to finance from the developer’s bank. That information was provided to the commission at last week’s meeting.

At the July 6 hearing, resident David Brophy addressed the commission, voicing his support for the proposed redevelopment of the Watson Plaza shopping center, provided the developer did not seek any additional public funding — an assurance Gary Grewe later gave at the meeting.

“I would like to state to begin with that philosophically I’m opposed to TIF,” Brophy said July 6. “However, as has been shown by remarks and comments at previous meetings here and so on, I don’t think that there is any reasonable alternative to a TIF. The situation which worries me is that I’ve heard that the numbers are tight, whatever that should mean. I hope it does not mean the same thing that it meant with respect to the Kohl’s TIF in which the actual cost of the TIF was $2.2 million, but the cost for Kohl’s wound up to be about $3.5 million, as I believe.

“So that is a concern. I hope that the developer, in other words, does not come back for more money. Nonetheless, I see no reasonable alternative, no other solution offered to get this property redeveloped, which is critical to the future of Crestwood,” Brophy continued. “I do not see a viable business district lasting much longer without this type of redevelopment taking place … We are in a very competitive situation with our surrounding suburbs and so on and we need viable businesses and so on. One advantage of this TIF proposal is that not only will most of the tenants who are currently at the plaza remain, but new tenants will be brought in. That is a positive for Crestwood. That helps to keep us competitive as a business district as a whole and I certainly hope that lacking any reasonable alternative being offered that this TIF goes through.”

The opening of Kohl’s last fall marked the final chapter in a process that began in August 1997 to redevelop the northwest corner of Watson and Sappington roads.

In January 1999, the Board of Aldermen voted to approve a redevelopment agreement with THF Realty that granted the developer nearly $2 million in TIF assistance for the corner’s redevelopment. In October 2000, the Board of Aldermen approved an amended redevelopment agreement with THF that called for the Kohl’s to be located on the corner. The amended redevelopment pact also increased the amount of TIF assistance the developer is eligible to receive by $375,000 — to $2.285 million from $1.91 million. In addition, the amended pact created a TDD and a community improvement district, two funding mechanisms that brought the total assistance package THF Realty was eligible to receive to $3.5 million.

Curran later noted July 6 the concerns raised by Brophy about the increased subsidies THF Realty was given to re-develop the corner of Watson and Sappington roads. Because of those concerns, Curran said that he wanted a general assurance from the developer that the amount of TIF and TDD assistance “as presented are the extent of what you would anticipate for the subsidies just so that that issue isn’t hanging out there …”

In response to Curran’s request, Grewe said July 6, “… As far as additional subsidy, no. We will not participate in a CID (Community Improvement District) on this project. The TDD will be for the modifications of the road as we’ve proposed before and the TIF. That will be it. There will be no additional request for assistance on this project.”