Tax-increment financing

The Tiger Hotel, prominently featured in Columbia's skyline, is one of two properties whose owners have applied for tax-increment financing. (Matt Thompson / Columbia Tomorrow)

Authorized by the Columbia City Council in March 2008, tax-increment financing, commonly known as TIF, is intended as an incentive for projects that eliminate blight and create jobs. The council has approved two TIF applications, one for the Tiger Hotel and another for a mixed-used development on Tenth and Locust streets.

The specifics have yet to be determined, but it appears that over 23 years, TIF will cover $3.3 million of the Tenth and Locust development’s projected $17.1-million price tag, as well as $1.7 million of the $8.9 million it’s projected to cost to turn the Tiger Hotel into a boutique hotel.

Here’s how tax-increment financing works: When developers fix up buildings, their property values – and the resulting tax bills – normally go up. But with TIF, the extra taxes those owners would pay are instead pumped back into the development project, sometimes to pay for streets, parking, utilities or other infrastructure needs. The flip side is that the city, the county, the school district and any other taxing entity must forgo the extra property tax revenue it would otherwise receive as a result of the higher property value on improved properties.

The city of Columbia once strongly opposed the use of tax-increment financing, saying it was unfair to give developers tax advantages that others don’t receive. Public sentiment against tax-increment financing came to a head in Ashland in 2002, when a Jefferson City developer hoped to use the tool to defray the cost of infrastructure surrounding his proposed Ashland Crossings retail center, which would have included a grocery store. Residents and representatives of public taxing entities cried foul.

The Process

Winning approval for tax-increment financing is a lengthy and expensive process. Applicants must pay a $10,000 fee, which is returned if the project is rejected. The TIF Commission receives the applications and after review with the city’s attorneys and the applicants, the commission schedules a public hearing. It then recommends whether the City Council should approve or deny the application.

The Commission is made up of eleven members, six of whom are appointed by the mayor, with consent of the City Council. Two members are appointed by the Columbia School District’s Board of Education, and another two by the Boone County Presiding Commissioner. One member is appointed to represent all other tax-levying districts affected by the redevelopment.

By law, tax-increment financing requires that projects meet at least three criteria. Applicants must demonstrate that their projects:

1. Would be infeasible without public assistance.
2. Are proposed in areas that are either blighted or in need of conservation.
3. Would create substantial public benefit.

The Tiger Hotel

Tiger Columns LLC, the company that owns the Tiger hotel, has recieved $1.7 million worth of TIF assistance for its proposed $8.9 million renovation of the historic skyscraper hotel on Eighth Street. The owners – John Ott, Al Germond and Dave Baugher – want to covert the eight-story building to a boutique hotel. Only two floors of the structure are in use now.

The Tiger hotel TIF application argues that there would be a “catalyst effect” from such a high-caliber project downtown. They believe the Tiger Hotel would become a destination in and of itself and that it would bring more people with more spending money downtown.

Tenth & Locust Property

Trittenbach Development, owned and operated by Columbia residents Nathan and John Odle, have proposed another Columbia high-rise that would rival the Tiger Hotel in height. The eight-story structure would feature a grocery store, a restaurant and a rooftop swimming pool. It would include five floors of apartments that would rent for about $1,200 per month; 11 indoor parking spots and 15,000 square feet of office space.

The Odles were given a $3.3 million tax break over 23 years to accomplish their dream, which would cost an estimated $17.1 million in total. Their application states that construction of the building alone would see 100 workers a day on site, with the goal of completing the project by late summer 2010. Once the building is complete, they said, it would create an additional 25 permanent jobs.

News

TIF applications recommended by Commission

June 10th, 2009 by Elizabeth Lucas

Both the Tiger Hotel and the Tenth and Locust property won approval for the applications by the TIF Commission yesterday, although by a narrow margin. The Commission voted 5-4 to approve the Tiger Hotel application, with Commissioner Teresa Maledy, President of Commerce Bank, abstaining. Commerce Bank holds the mortgage for the property. The vote for the Tenth and Locust property was 6-4.

In both cases, Jim Ritter and Tom Rose of the Columbia Public Schools Board of Education voted against approval of the application. They were joined by Tom Schauwecker, Boone County Assessor, and Ernie Wren, both appointed by the Boone County Presiding Commissioner, Ken Pearson.

The applicants will go before the City Council for approval or denial after another public hearing.

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Discussion over TIF heats up

June 9th, 2009 by Elizabeth Lucas

The TIF Commission is expected to make their recommendation to the council this afternoon at 2 p.m. concerning the TIF applications for the Tiger Hotel and the Tenth and Locust property. The Commission held a public hearing last week Thursday on the matter and tabled the vote after three and a half hours of public comment.

In the meantime, TIF came up at the School Board meeting Monday night, where the Board voted to oppose the recommendation for TIF. Two members of the School Board, Interim Superintendent Jim Ritter and Vice President Tom Rose, are also members of the TIF Commission.

A group called Citizens Against Unfair Taxation has released a document listing the TIF commissioners and highlighting what they consider serious conflicts of interest by some of the commission’s members who will vote on the recommendations today. Missourian reporter Kathleen Pointer is currently investigating the credibility of those accusations and developing the story.

To see who else is on the TIF Commission, and how the Commission was established, see the overview on this website’s “Tax Increment Financing” page, or go here on the city’s website.

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TIF Commissioner steps down

June 6th, 2009 by Kathleen

At the beginning of the public hearings held by the Tax Increment Financing Commission on Tuesday, commissioner Steve Erdel announced that Jay Burchfield, who was not present, had decided to resign as a commissioner because of possible future conflicts of interest. Erdel didn’t detail what potential conflicts of interest Burchfield was referencing (there was no indication that he was talking about The Tiger Hotel or the Tenth and Locus developments that were up for public hearing) but he did say that Burchfield felt he should “bow out” now.

Burchfield was secretary for the commission and the commission moved for Ernie Wren to take up the position before the hearings began.

As far as a replacement goes, Erdel said since Burchfield had been appointed by the mayor discussions with him about a replacement would occur.

It was interesting timing in regards to the subject of a conflict of interest. David Klarich — who represents Citizens Against Unfair Taxation — discussed that he felt the commission and City Council needed to “carefully consider” that some of the members could potentially benefit from the passage of the proposals.

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UPDATE: high school sub-area plan findings

May 4th, 2009 by Pat Sweet

After a very minimal amount of digging, a discussion draft intended to guide the nitty-gritty of the sub-area plan has popped up. Patrick Zenner, development services manager for the Columbia department of planning and development, was kind enough to provide the document.

It outlines the priorities of the Columbia and Boone County Joint Planning and Zoning Commission to the folks that are now putting together the actual final draft. It is not an early version of the final draft – all the details are not final and in a lot of cases not even there, and the language is fairly casual – which is kind of a letdown but there is still some interesting stuff to pore over. (more…)

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Tenth and Locust project comes under fire; The Tiger hotel a ‘no brainer’

April 28th, 2009 by Jewels Phraner

Projects applying for public financing came under scrutiny at today’s Tax Increment Financing Commission meeting.

The developers — one group proposing to restore the Tiger Hotel to its former glory as a boutique hotel and the other proposing an eight-story residential-retail-office building — applied for the tax break in late January, and this is the first meeting where commission members were able to critique them.

The urban-style building proposed for the corner of Tenth and Locust streets came under fire by some commission members. (more…)

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CPS Board of Education talks about TIF

April 24th, 2009 by Jewels Phraner

At the Columbia Public Schools Board of Education meeting today, Vice President Tom Rose spoke to other board members about tax-increment financing.

It was mostly a informational presentation where he explained how TIF works and talked about both projects that have applied for the downtown tax break.

Even though it potentially shifts property taxes away from Columbia Public Schools, Rose said he was excited about the projects.

“It seems like an exciting venture that would improve our downtown economy,” he said.

Rose said he hopes to garner more community support in light of losing some of the property taxes.

“I’m not afraid to say that (tax levies) are something we’ll have to look into in the next two years,” he said.

To get approved for tax-increment financing, the developers must prove they could not afford the project without the tax break.

Rose sits on the city’s Tax Increment Financing Commission, who were appointed to review the projects before they go before City Council.

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School board to discuss tax-increment financing

April 22nd, 2009 by Jewels Phraner

I’ll be attending The Columbia Public Schools’ Board of Education will meeting at 7:30 Thursday morning, to hear the discussion on tax-increment financing, or TIF.

When a project (like The Tiger Hotel or the eight-story building proposed for Tenth and Locust streets) is approved for tax-increment financing, the property taxes for the site stays frozen for up to 23 years. Therefore, entities such as the Columbia Public Schools and the Daniel Boone Regional Library, which receive a large percentage of collected property taxes don’t benefit from any higher property taxes that comes along with improved properties.

Of course, the argument is that the developers couldn’t afford the multimillion dollar projects without TIF assistance, so Columbia Public Schools and the library system wouldn’t see that money anyway.

Regardless, the conversation at the school board meeting tomorrow should be interesting.

The board meets at the administration building, 1818 W. Worley St.

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Tiger Hotel ‘beyond rehabilitation’?

March 3rd, 2009 by Jewels Phraner

Watchword reader Doc commented on this post regarding this story on the Tiger Hotel’s TIF application.

I felt like it was worth a new post so it wouldn’t get buried in the comments.

The problem with the Tiger Hotel is not that it is a landmark, we can all appreciate that. The problem is that it’s beyond re-hablitation and additionally as to whether it is the responsability of the local community and taxing authority to subsidise a failed private business venture to recover the investment the investors unwisely made.

These investments were not made to benifit the tax payer, nor the Columbia community but to make a return on what was seen as a risk worth exploitating. The failure here is the naviete and ego centerism of the investors in dealing with construction issues well beyond their, and their advisors understanding. Simply put, due to the structure itself and the construction techniques used in erecting the Tiger Hotel, with the exception of the spaces below the Mezzanine it is for the most part unusable. Particularly in providing the amount of cash flow needed to sustain a RTI and provide for the building’s maintaince and continued renewal of its outdadted mechanical infrastruture.
(more…)

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Trittenbach wants pay-as-you-go TIF for development

February 26th, 2009 by Jewels Phraner

A story about the second tax-increment financing applicants will appear in the Missourian Thursday morning.

The $17.1 million development proposed for the corner of Tenth and Locust streets will include an 8-story building with retail space (for a grocery store, for example), office space and 58 two-bedroom apartments. (more…)

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Should The Tiger hotel be approved for TIF?

February 19th, 2009 by Jewels Phraner

COLUMBIA — The Tiger hotel owners submitted their application Feb. 9 for tax-increment financing. In short, they’re asking for a $1.7-million investment from the city, in lieu of increased property taxes.

Projects qualifying for TIF must exhibit three qualities:
• They must be in an area of blight or an area deemed for conservation,
• Once the project is completed, it must create a significant public benefit
• And it must not be possible unless the city helps.

After looking at the application, do you think The Tiger hotel project meets those three qualities?

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