New development on the long-vacant Crestwood Plaza site is one step closer to reality after the Crestwood Board of Aldermen unanimously approved the establishment of a community improvement district in a special meeting last week.
A petition that would establish the Crestwood Crossing Community Improvement District to fund a Dierbergs grocery store and other retail development at the former Crestwood mall on Watson Road, was unanimously approved by aldermen 7-0 in a special meeting Aug. 17. Ward 4 Alderman Tony Kennedy was absent.
St. Louis-based grocery store chain Dierbergs is asking for a 40-year, 1-percent CID sales tax for the shopping center it proposes on half the site that was once the Crestwood Plaza mall. The other half of the 47-acre site will be a new 81-home subdivision from McBride Homes, which is not seeking any kind of tax incentives. The full site will still have to go through mixed-use zoning from Crestwood to move forward.
Revenue from the sales tax will be used to reimburse about $3.5 million in CID-eligible costs to redevelop the property, which is currently an empty grass lot.
The CID is in conjunction with $13.5 million in tax increment financing, or TIF. Dierbergs had originally sought the approval of its own TIF but withdrew that request in July and instead will use part of the $15 million in TIF incentives the city passed in 2016 for a prior developer, UrbanStreet Group.
The entire site has $25 million in TIF, CID and a transportation development district, or TDD, that was previously approved for UrbanStreet, including the $15 million in TIF, $5 million in CID and $5 million in TDD.
Dierbergs Vice President of Real Estate Brent Beumer told aldermen that they would seek the CID sales tax but not the TDD.
“We are in the process with the city to negotiate our redevelopment agreement that would enact that TIF plan that was previously approved. … From the outset of this project, we told the city we would like to move forward with one of the previously contemplated tax mechanisms, that being the community improvement district,” Beumer said. “For competitive reasons, we don’t feel like having two additional sales tax.”
Under Missouri statute, TIFs can last up to 23 years. Because the previous TIF for the site was approved in 2016, Dierbergs has approximately 18 years remaining on the existing TIF, which Beumer said makes the CID all the more important.
“The CID and the TIF to a certain extent work together. … By the time we would be fully complete with our construction, really instead of a 23-year duration, you’re looking at probably somewhere closer to 16 years of eligible revenue,” said Beumer. “The CID becomes an important component for us because it gives us a little bit more coverage, for lack of a better term.”
The CID would last longer than the TIF — 40 years instead of terminating in 18 years — as a means of “risk protection.”
“We’re asking for the CID to have a longer duration, because if revenues don’t end up being where they are from a projection standpoint, the CID would have additional time past the 16 years to pay off any obligations that occurred,” said Beumer.
Mark Grimm of Gilmore & Bell, the city’s special and bond counsel for the mall redevelopment project, said the approval of the CID was just one-step in a multi-step process to come.
“This is the first step of a multi-step process because the mayor … with the approval of the aldermen, will need to appoint members to the CID. So the actions by the board tonight will not even be sufficient for the CID to have an initial meeting because it won’t have members,” Grimm said. “There will be a redevelopment agreement, there will be a district project agreement … and all of that will occur before an initial meeting of the Board of Directors.”
The CID is specific to the Dierbergs project and if Dierbergs is unable to close the deal on the ground, the CID will automatically sunset in summer 2022.
“We are trying to close that contract and … we really need to be closed by the end of the year,” said Beumer. “That’s our goal to close … by the end of the year.”