Developers call Cape bond plan a risky deal

The city of Cape Girardeau could find itself saddled with a risky investment if it issues bonds to help fund construction of streets, sewers and water lines to serve the proposed, pricey Prestwick Plantation residential development, some developers say.

But Cape Girardeau officials say the value of the developed land would provide some financial protection if Prestwick fizzled and the city were forced to pay off the bonds.

"In our opinion, this is a fairly tried and true method," city manager Doug Leslie said.

In the proposal for a neighborhood improvement district, announced this week, the city could issue bonds to cover infrastructure work such as extending water and sewer lines to the development and street construction.

City water lines run within a mile of the proposed development on Bloomfield Road. Through the proposed neighborhood improvement district, the city could issue bonds to cover the work of extending water and sewer lines to the development, city planner Kent Bratton said. Previous estimates put the cost at $1.7 million to extend the lines.

Prestwick Plantation developers want to build a 700-home subdivision near the Dalhousie Golf Club.

Developer Cord Dombrowski earlier had asked for tax-increment financing of the infrastructure, a move that would have involved tax abatements. But the request was withdrawn when school district officials said abatements would cost them $5 million in lost property tax revenue.

Dombrowski was out of town this week and couldn't be reached for comment.

City officials say no tax abatements would be involved in a neighborhood improvement district and the city would have no upfront costs.

But other developers question the viability of the project.

California Homes developer Mike Peters, who is building an upscale residential subdivision called Emerald Forest on Bloomfield Road near the proposed Prestwick Plantation site, said most of the homes in his subdivision are in the $200,000 price range.

Peters, who didn't ask for help from the city, said initial plans indicated that Prestwick Plantation would have homes starting at $350,000. He questioned whether the market would support that price.

"I would say there is a lot of risk for the city," Peters said.

A neighborhood improvement district would put the burden on the home buyers to pay off the bonds, he said.

City officials said the bonds would be retired with special assessments paid by the affected property owners over 20 years.

A developer friend of Peters, Sebastian Rucci -- who is both a lawyer and developer in Youngstown, Ohio, and has done developments in Missouri -- said that the success of any residential neighborhood improvement district depends on the developer being able to sell lots and homes.

"If he misses his projections, it will be bad," Rucci said.

Rucci said most developers would seek conventional bank loans rather than deal with the bureaucracy of government.

Leslie said the city has issued bonds for other projects, just not as part of a neighborhood improvement district. The city issued bonds to build the Renaissance Aircraft building and make infrastructure improvements at the Cape Girardeau Regional Airport. But that financing arrangement doesn't involve a neighborhood improvement district, although it does involve an agreement by the company to retire the bonds and make lease payments.

mbliss@semissourian.com

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