Novus TIF proposal goes to Sunset Hills commission

By SCOTT MILLER

Staff Reporter

A $136 million development proposal seeking $42 million in tax-increment financing from Sunset Hills will be discussed next month by the city’s TIF Commission.

The TIF Commission, comprised of representatives of the city and affected taxing jurisdictions, is scheduled to meet at 7:30 p.m. Monday, Jan. 17, at City Hall, 3939 S. Lindbergh Blvd.

The Novus Development Co. of Webster Groves has asked Sunset Hills to provide $42 million in TIF assistance to help fund a 67-acre, $136 million development project at the southeast corner of Interstate 44 and South Lindbergh Boulevard.

The company wants to build a “lifestyle shopping center,” called The Summit, including un-enclosed shopping, restaurants, grocers, a hotel and office space, and the city is eyeing the sales-tax boom that would follow.

But some area residents oppose the plan, claiming they were “scared” into selling their homes to Novus to make way for the development. At the same time, the Lindbergh School District, which will have two voting members on the TIF Commission, is concerned the development will strip much-needed revenue from schools.

“They’re trying to steal our homes and businesses,” said Kathy Tripp, owner of one of the 255 homes Novus is trying to purchase to clear way for The Summit. “A man (representing Novus) went door to door and he made it sound so scary. He was telling people: ‘If you don’t sell to us, we’ll take your house by eminent domain.'”

Novus President Jonathan Browne did not return several telephone messages left by the Call.

Sunset Hills Mayor Jim Hobbs said he hadn’t ruled out using eminent domain if homeowners don’t sell, but also said many of them wanted to sell.

“At this time, hopefully that doesn’t come into play,” he said, referring to eminent domain. “The vast majority want to sell their homes, so that’s what’s driving this. I have to be representing the entire city.”

Nearly 70 percent of the 255 homeowners affected have agreed to sell to Novus, according to the proposal Novus submitted to Sunset Hills.

“I’d bet of that 70 percent, 30 percent signed under duress,” said Tripp, who says she has been approached by several concerned neighbors.

But Hobbs disputed Tripp’s figures.

Novus is offering 175 percent of the assessed value of each home, according to the proposal the company presented to the city, but Tripp says her home is appraised much higher. Novus offered her $146,000, 175 percent of the assessed value, but her house recently was appraised at $160,000, she said.

“If I’m being forced out, if I have to go, I want something in return for it,” she said.

Lindbergh School District officials also have concerns.

Tax-revenue growth generated within a TIF district must repay the bonds or other obligations used to cover the costs of the site improvements. In effect, school districts and other taxing entities don’t see any of the revenue growth from that particular district until the TIF obligations are retired — in this case, 12 years.

The tax money Lindbergh receives from that particular area remains stagnant, which creates a drain on school funds because the district most heavily relies on property tax revenue, according to school district officials.

Pat Lanane, Lindbergh’s assistant superintendent for finance and chief financial officer, projects the proposed Novus TIF would cost Lindbergh about $350,000 per year for the next 12 years, or about 3.5 cents per year of the district’s $3.14 property tax rate per every $100 of assessed value.

“I have to do the whole analysis (on the proposal) before I make up my mind on this, which will be done, but I can tell you I will have a long series of questions regarding that TIF on Jan. 17,” the assistant superintendent told the Call.

“I have not made any assessments to be fair to them (Novus) and I’m still considering; A) whether the TIF is needed; or B) whether the $42 million is too much or not. My initial reaction is, $42 million, that’s a big number. That’s not going to be a favorable fact,” he said. “That money is coming primarily from three sources. Some of it is coming from the sales tax. Some of it is coming from property taxes from the school district. And some of it is coming from property taxes to other special districts, but about half would be coming from property taxes to the school district.”

In October, the Lindbergh Board of Education adopted a TIF statement warning local municipalities of their displeasure with TIF districts. The statement questions whether or not many development companies actually need the assistance and whether or not the land to be developed actually is “blighted.”

In the statement, the school district lays out several guidelines that must be met for it to favor instituting another TIF:

• The school must later receive payments it would have normally received from the “captured” property taxes.

• The length of the TIF should not exceed 10 years.

• The municipality shall implement an additional sales tax to help repay TIF bonds.

• Projects should include significant property growth.

• Old commercial properties seeking TIFs for redevelopment must demonstrate a historical reduction in assessed value — “blight.”

Also, the district only will support new growth, meaning projects that redistribute existing commercial properties will not receive support, according to the statement.

The Mehlville and Fenton fire protection districts also will have representation on the Sunset Hills TIF Commission. Besides Lanane, Lindbergh Board of Education President Mark Rudoff will serve on the commission. Sunset Hills appoints the majority of the representation on the panel.

Responding to Lindbergh’s concerns, Hobbs said, “Right now, I think they’re being a little shortsighted. It’s going to benefit everyone.”

The Summit project will generate new city tax revenues in excess of $880,000 per year during the TIF and $2.4 million per year after the TIF obligations are retired, according to the proposal Novus submitted to Sunset Hills.

“We expect this development to have a tremendous financial impact on the city of Sunset Hills and the surrounding area,” the proposal reads. “In addition to providing a new project and image for this entrance into the city, this project will enhance the revenue base for the city and the other taxing districts. The real property component should generate approximately $1,156,000 in additional real estate taxes upon completion of the project, based upon estimated construction costs and the values of the completed buildings and improvements.

“The development should also generate approximately $244 million in sales and $4,278,000 in sales taxes during its first year of operation,” the proposal states.