Hotel project breathes life into projects in Jackson TIF district

A new hotel to be built in a nearly two-decades-old Jackson special taxing district will help Jackson make infrastructure improvements along Old Orchard Road, an outer road to Interstate 55.

Civic leaders said the TIF has been successful in bringing businesses to the area. Without the incentive, they said the land parallel to the interstate would not be attractive enough to stimulate growth.

After several years of little activity, the hotel

project has breathed new life into the TIF and development in one of the city’s most coveted new commercial areas.

The development comes four years before the original TIF was set to expire.

The hotel will be built at 3003 S. Old Orchard Road and is expected to open in 2019.

The Jackson Board of Aldermen and Midwest Hospitality Group LLC of Sunset Hills, Missouri, entered into an agreement at a Aug. 21 regular board meeting to use tax-increment financing, or TIF, funds to bring infrastructure to the future hotel site.

The developers will be reimbursed for the cost of bringing utilities and road improvements to the site, Jackson city administrator Jim Roach said.

According to the agreement, the developer will receive up to $210,000 in reimbursements if the hotel is operational by the end of the second quarter in 2019.

The city will spend up to $100,000 for electrical improvements and will be reimbursed by TIF funds, according to the agreement.

Without the incentives, Roach said, the hotel project would not have happened.

“The site itself, topography and lack of utilities to that site would have kept that from being a viable project,” Roach said.

But the hotel will generate sales tax, and there will be a property-tax revenue increase, Roach said.

“It’s a self-funding deal,” he added.

The site, however, has many advantages for a new hotel, including proximity to I-55 and the Cape Girardeau SportsPlex, built specifically as a family sports destination to help boost hotel and motel stays.

Old Orchard Road effectively links two interchanges. There is a nearby restaurant and heavy vehicle traffic. The new hotel would be the second in the area.

A TIF allows for all or a portion of the increased tax revenue generated by a development and puts it toward the district. This displaces tax revenue that would have gone to other taxing districts, especially school districts when it comes to property taxes.

A TIF project may be approved only if it cannot be completed without the public financial support.

The TIF district was established in December 1998 to help develop the I-55 corridor, Roach said.

At the time, Old Orchard Road mostly was gravel, two lanes and did not have a lighted intersection at U.S. 61, Roach said.

A couple of businesses existed here and there, he said, but certainly no infrastructure, and no plan in place for a coherent development schedule.

Chauncy Buchheit of SEMO Regional Planning was involved in the TIF district’s creation. He said a TIF is typically meant to improve a blighted area.

“The legal definition for TIFs’ blight is different from what you think of as urban-core blight,” Buchheit said, where buildings are dilapidated and infrastructure is in poor repair. “This was more what they consider green-field blight.”

Buchheit said the cost for the city to provide the infrastructure would have been prohibitive.

“That’s really what the TIF provided, was infrastructure: streets, sewer and water, associated lights and stormwater control with the streets. We’ve really seen that blossom, if you will,” Roach said.

There are two project areas within the TIF district, Roach said. TIF 1 is closer to U.S. 61 or Jackson Boulevard, where the Buchheit store is. TIF 2 includes East Main Street, extending north from about County Road 306 to Ridge Road near Bent Creek.

The second district wasn’t activated until 2008, Roach said.

“You had a 10-year time frame from initiation of the initial TIF in 1998 to activate the second part,” Roach said.

Normally a TIF would be activated by a project in the district, Roach said, such as the Buchheit store in 1998.

But there hasn’t been a project in TIF 2, Roach said.

“Through the retail initiative and other things, we are trying to create that activity, but so far, there’s nothing to speak of,” Roach said.

The TIF district’s base tax year was set in 1998, Roach said. From there going forward, property tax collected within the district was captured by the TIF fund.

Fifty percent of all newly created sales tax revenue in the district goes to the TIF fund, Roach said, and those dollars may be dispensed only to TIF-eligible projects within the district.

“Our TIF was set up to fund public infrastructure,” Roach said — primarily utilities, roads and some site work defined as public, such as grading and stormwater capture.

Roach acknowledged TIFs have gotten something of a bad name.

“It seems that it could be abused, frankly,” Roach said, adding, “I think it’s important the way they’re set up.”

Roach said Jackson’s TIF initially was set up with tight parameters on what it could be used.

“It’s worked well,” Roach said.

Other properties adjoining the TIF district have benefited as well, Roach said.

Delmonico’s restaurant and the former Ashley Furniture, while not TIF projects, benefited from road improvements and a utility network brought in initially to serve the Buchheit store, Roach said.

“I think it’s worked fantastic for Jackson and that area,” Roach said. “I can’t predict what’s going to happen going forward, but so far, it’s been good.”

Another important point moving forward, Roach said, is the benefit to tax-receiving entities, including the Jackson School District.

“Ultimately, when this goes away in 2021, they should see a real increase in their revenues,” Roach said. “Without the TIF, the development never would’ve been there, in my opinion.”

That sentiment was echoed by Bleau Deckerd, associate superintendent of finance and business operations for the district.

“We definitely see the TIF district as a long-term gain for the school district,” Deckerd said.

Getting businesses and retail operations to move into the area creates jobs, and people moving in for jobs often bring families whose children then attend the city’s schools, Deckerd said.

“It’s a win-win for the [school] district,” Deckerd added.

Deckerd said he could see a TIF being less of a positive, depending on the development status of the area in question and what development was brought in, “but in our view, I don’t think it’s been anything other than a positive.”

In addition to the hotel project, Roach said an area of Old Orchard Road near Slate Lane is set to be straightened using TIF funds.

That project, which Roach said should cost about $100,000, could have been paid for using transportation sales tax revenue. But by using TIF funds on this project, the city has those transportation tax funds available for projects elsewhere.

Roach said another TIF project in the works will bring sewer improvements, but that project still is in its early stages.

“We try to stretch as much as we can so we can do more projects,” Roach said.

mniederkorn@semissourian.com

(573) 388-3630

Pertinent address:

3003 S. Old Orchard Road, Jackson, Mo.