TIF commission sets public hearing on West Park Mall redevelopment

Representatives of the West Park Mall ownership group lobbied before Cape Girardeau TIF Commission in an effort to redevelop the aging property.

At the commission's meeting Friday, June 2, John Hansen, managing director of Integra Realty Resources Corporate and Public Finance Group, serving as financial adviser to the mall ownership group, told commissioners River City Centre LLC is proposing a tax increment financing (TIF), reimbursement and fee waiver package for the 65-acre project.

The project's cost, about $107 million, would be offset by the tax increment financing by up to about $50 million in fee waivers (estimated at about $100,000), reimbursements (exemption of construction materials from sales taxes, estimated at about $3 million) and tax benefits over a 23-year period.

Commission member Rob Gilligan, who is president and chief executive officer of Cape Girardeau Area Chamber of Commerce, noted the tax benefits wouldn't result in $50 million coming out of city and county coffers. Instead, the TIF district would divide property and retail sales tax increases above a determined baseline 50-50 with the local taxing bodies. The total amount provided to developers would depend on documented tax receipt increases.

The idea behind a TIF district is to encourage development by allowing the developer to receive up to half of increased tax receipts over a given period because the investment in the property resulted in increased economic activity.

River City Centre LLC plans to begin construction in August for the first phase of a redeveloped West Park Mall in Cape Girardeau. A group of Southeast Missouri developers purchased the mall June 30, 2021.Courtesy The Lawrence Group

River City Centre LLC plans to begin construction in August for the first phase of a redeveloped West Park Mall in Cape Girardeau. A group of Southeast Missouri developers purchased the mall June 30, 2021.Courtesy The Lawrence Group

In a report, Hansen noted increased valuation of the property should more than triple, from $3.2 million now to more than $10 million.

While he declined to indicate who developers are pursuing to occupy the rebuilt facility, he and the commissioners discussed the idea of truly capturing increased retail sales by factoring in "cannibalization" from other retailers. Simply, "cannibalization", in this case, refers to shifting sales tax revenue from Retail Outlet A to Retail Outlet B in the same market. In such an instance, there is no true increase in sales tax revenue, they noted.

Hansen told the group he previously lived in Cape Girardeau while working for Procter & Gamble. He contended the local retail market is unlike many in that the geographic location from which Cape Girardeau retailers draw customers is much larger than the footprint of Cape Girardeau and Jackson.

"Cape Girardeau is a hub for a very large trade area, and it's not enough to look at the population and buying patterns in Cape and Jackson. You need to look much further out. I would argue the trade area is many times the size of the population of Cape and Jackson," he said. "We want to make Cape more of a hub."

Hansen also argued the project would have an "indirect" effect on economic activity — creating 750 construction jobs and new retails jobs totaling about 700.

"Those will impact people living in Cape and Jackson and the surrounding areas. That will put people to work and will create income for those households," he noted.

Commissioners, while noting they have at times recommended TIF districts that didn't fully meet all the requirements for such a designation, seemed generally supportive of this project.

"Cape Girardeau runs this city on retail sales," commissioner and former mayor Jay Knudtson said. "I firmly believe this is precisely what TIF and the spirit of TIF was designed for."

Not everyone agreed.

An audience member — Herbert Wedemeier, senior vice president and general counsel for Drury Southwest — bemoaned an "appalling lack of information" on the project. He wondered about the public benefit of giving up the tax revenue.

"What are TIF uses being used for? To building a restaurant? A clothing store? If this mall is a failed operating model, is putting more money into the mall, good money after bad?" he asked. "We don't even know where the money is going."

Commissioners took no action Friday. They scheduled a public hearing on the proposal for 3:30 p.m. Wednesday, June 21, at the Osage Centre in Cape Girardeau.

After the hearing, commissioners will consider a recommendation on the matter.

Then, the measure would go to the City Council for a public hearing and a potential August vote.