South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

South St. Louis County News

St. Louis Call Newspapers

Panel could vote on Novus proposal night of public hearing


Staff Reporter

The Sunset Hills Tax-Increment Finance Commission could cast a vote on a proposed $163.9 million development at a public hearing March 21, according to Chairman John Smith, a Ward 2 alderman.

The commission will not meet until convening to hear public comment at 7:30 p.m. Monday, March 21, in Salon A of the Holiday Inn Southwest/Viking Conference Cen-ter, 10709 Watson Road.

The commission must make a formal recommendation to the Board of Aldermen within 30 days of the public hearing and a decision could be made that night, Smith said. Al-dermen then will cast the binding vote.

At issue is a request from Novus Development Co. for $42 million in tax-increment financing assistance, or TIF, for a $163.9 million development at Watson Road and Interstate 44 by South Lindbergh Boulevard. Novus President John Browne wants the assistance to develop 67 acres with “high-end” retailers, restaurants and office space, called Main Street at Sunset.

If approved, 255 homes of the Sunset Manor subdivision would be razed and the Lindbergh School District could lose about 100 students.

At last week’s TIF Commission meeting, members be-came increasingly interested in Browne’s ability to deliver “high-end” tenants while Browne pleaded against suggestions the city cap specific categories of TIF assistance.

TIF Commission member Pat Lanane, Lindbergh School District’s assistant superintendent for finance and the school district’s chief financial officer, proposed capping assistance in each category to impose fiscal accountability on Novus.

If capped, TIF funds for land acquisition, for example, couldn’t be used for road improvements. If costs exceeded the allocated assistance, Novus would cover the difference, not Sunset Hills.

If funds from some categories weren’t needed, Novus would lose the money.

“It isn’t so much the category as the total dollar benefit to balance the project to recognize an (adequate gross profit),” Browne said during the Feb. 14 meeting.

“When you’re asking me to limit each one of these categories, what if I have a savings in one so I don’t get to draw? Take an example here, the land cost ends up being $2 million more, and you don’t change our extraordinary costs or reimburse it, I took a loss there,” he continued. “Where do I make that up? I hope to make that up from one that I’m under. Limiting each individual category misses the point of a guaranteed maximum (return).

“The important part here is the total dollar amount,” Browne added.

Lanane replied, “I guess the philosophical difference I would have is I would be asking you to do what you do on all the other projects that don’t use TIF and that’s taking your very best shot at making the numbers and taking that risk that ‘I might not make money on this.’ I think there ought to be every bit as much risk with TIF assistance as there is without TIF assistance.”

Lanane also suggested Sunset Hills consider shifting some of the proposed TIF assistance to a Community Improvement District, or CID, to shorten the life of the TIF debt and, in effect, give taxing entities quicker access to the revenue generated by property value enhancements within the TIF district.

In a CID, a sales or property tax within the district is used to support public enhancement projects.

A petition for a CID must be signed by property owners controlling at least 50 percent of the assessed valuation as well as 50 percent of all property owners within the proposed CID, according to the Missouri Department of Eco-nomic Development.

Meanwhile, Browne insists nearly 85 percent of the development already has commitments — though not signed contracts — from high-end retailers. He has said he cannot release their names because of confidentiality reasons.

With Browne’s description of the tenants, the development would create unique retailing for St. Louis and St. Louis County and attract shoppers from the entire metro area.

In effect, John Brancaglione, a city financial consultant from Peckham Guyton Albers & Viets, projects the development will generate $350 in sales per square foot rather than the typical $300 per square foot of typical shopping centers.

“What we’re trying to do here is not be absurdly conservative and at the same time not be looking at examples that we think are too far out there because we don’t have any market data that shows what some of the retailers will do specifically in this location,” Brancaglione said.

“That $350 per square foot may still be conservative but we’d rather be there,” he added.

Still, the inflated sales figures are dependent on the retailers Browne insists he can deliver.

And at a previous meeting, Brancaglione said the development could be “a real problem” if those high-end tenants didn’t come. If existing businesses shift to the space, Sunset Hills will have exhausted consumers and depreciated an area with vast potential because of its proximity to the interstate and two major roads, he said.

“In your opinion, those tenants are viable tenants for this project?” asked commission member Ted Jacoby, a city appointee.

“Much to my surprise, I must admit, normally at this stage of this kind of a project where the developer is in no position to be able to deliver anything to a tenant on a particular date, it’s really unusual for (tenants) to put anything in writing,” Brancaglione replied. “The fact that (Browne) had what I would call letters of interest from as many (re-tailers) as he had was a pretty unusual situation at least in our experience.”

“The success or failure of this detailed analysis is in the execution,” said commission member Bill Holland, a city appointee. “How tightly wound up are these prospective retailers that you say you’ve got up to 85 percent commitment for?”

Browne said the undisclosed tenants would not have spent the time and money to prepare letters of intent if they weren’t committed to the project.

“I’m just worried about, well not as much worried, but interested in the deliverability (of the high-end tenants),” Holland said.

Browne said, “Really I don’t think you’ll ever see much more than letters of intent until the project is actually approved.”

Lanane said, “I have concern about existing businesses both in the Sunset Hills area and the Crestwood area, particularly those businesses that are small businesses founded by a family that has been in operation many, many years.

“Depending on the types of anchors, some of those anchors could have the potential of putting them out of business,” Lanane added.

“At least in terms of those people who’ve indicated interest in this project in written form or verbally, there isn’t anyone in that group that ought to impact any small business,” Brancaglione said. “The tenants for the other half of the square footage, I don’t know. I can’t answer that question. Some of the retailers that I know they are talking to I know are nowhere else in the area and nowhere else in the market …

“Based on what we know at this point, because this is intended and specifically designed to be unique, any time you do something like that it has a benefit to the other commercial areas that are around,” he said.

“I think it would be interesting to study that to see how far out that (trickle-down effect) goes because if I’m not mistaken, sales tax revenues in the county are not up,” said commission member Glenn Powers, director of the county Department of Planning. “Sales-tax revenue for the county as a whole has actually not gone up. It’s gone down. Of course some of that could be attributed to the economy in recent years.”

“If you look at timelines … the numbers need to be turning around and going the other direction,” Brancaglione said.