Area TIF projects affecting Cape

Just because Cape Girardeau hasn't approved any tax increment financing projects doesn't mean the city hasn't already been affected by them.

Jackson, Mo., and Sikeston, Mo., have used tax increment financing to develop commercial areas. Those areas have taken potential tax dollars away from Cape Girardeau, which depends heavily on out-of-town shoppers.

TIF is the process of using the extra tax revenue generated by an area to pay for its own streets, sewers and other infrastructure elements. With TIF money, Jackson has built infrastructure to allow for development at the Interstate 55 interchange. As a result, the town now has a Buchheit home improvement store and plenty of room for further development.

Sikeston has used TIF for the same purpose. With the help of a hometown developer, Sikeston turned cotton fields into a number of new revenue sources, including a Lowe's, an Applebee's restaurant and a new bank.

Increase less than inflation

City finance director John Richbourg, in a financial presentation to the city council last spring, named commercial development in other area towns as one reason Cape Girardeau has not seen revenue come in at expected levels. In fact, Richbourg has specifically named Sikeston's Lowe's and Jackson's Buchheit as examples of the development that has cost Cape Girardeau tax dollars.

Cape Girardeau's revenue increased, but it was lower than the rate of inflation, forcing the city to dip into reserves the last three years to cover costs. The city is looking for ways to increase revenue as city leaders have declared a financial catastrophe will occur if the sales tax revenue remains flat.

Numbers aren't available regarding the exact effect of other regional commercial developments to Cape Girardeau's finances.

In the past, the city's attraction as a regional hub was enough to draw business. But as more and more towns in the area begin using TIF to develop, Cape Girardeau may be forced to consider doing the same, said city manager Michael Miller.

"In the past, we didn't have to attract them, they would almost gravitate here," Miller said. "But with some other communities using that, we may have to also."

Traditional TIF

Jackson, Sikeston and Cape Girardeau County have all tried traditional TIF projects, and officials with all those entities say they're happy with the results.

The county used the TIF for infrastructure to bring in an industry, Nordenia U.S.A., formerly known as M&W Packaging. The plant now employs 350 people.

Sikeston currently has two TIF districts, one that has brought in several businesses and another that has not worked.

The first TIF district Sikeston entertained was around the town's main intersection, Main Street and Malone Avenue. The area is the former site of the Missouri Department of Transportation regional headquarters that moved to near Miner.

TIF status made sense, said Sikeston director of economic development Bill Green, because MoDOT was a tax-exempt property. The project allowed for MoDOT to move its location in hopes that the area would be developed commercially.

The developers, Novus Development Group, had plans to move an Albertsons store to that spot, but Albertsons, which could have used TIF funds to demolish the MoDOT facility, decided not to locate in Sikeston. Instead, it located in Cape Girardeau, but closed in March as the company fell on hard times nationwide.

Now, the old MoDOT building sits vacant.

"We're growing weeds there now," Green said.

In another part of Sikeston, near U.S. 60, TIF money was used to build a new stormwater system, a new road and put up traffic lights.

The key component to the deal was Lowe's. Once the developer, Scott Matthews, got a contract from the national chain, the city granted TIF status in four-and-a-half months. In the last two years, other businesses have joined the area.

Green said Sikeston city officials came up with a list of four reasons they were losing retail dollars to Cape Girardeau: a home improvement store, restaurants, foreign car dealerships like Nissan and Mazda and entertainment opportunities like movie theaters.

With TIF, Sikeston was able to get a home improvement store and a new restaurant.

"When we're here, we like to shop here," said Lloyd Zimmerman of Dexter, Mo. "We've already been to Cape to the doctor, but we thought we'd stop by on the way back and look at some flowers for our flower garden."

Unorthodox TIF

The Prestwick Plantation proposal for Cape Girardeau that is on the table is unorthodox in that it is meant for residential development.

The TIF Commission is debating granting TIF approval to a developer who wants to build a 900-acre subdivision around a just-completed, recently annexed golf course. The TIF proposal is for $30 million -- $24 million to go for infrastructure, $4 million to go to the school district and about $2 million to go to the city to improve Bloomfield Road and buy equipment.

An overwhelming majority of the 125 active TIF projects in the state are used for infrastructure for commercial or industrial development projects like the ones done in Sikeston, Jackson and Cape Girardeau County. This proposal is one of the few residential TIF districts in the state.

Mike Downing, the assistant director for business expansion and attractions for the Missouri Department of Economic Development, said the state does not break down TIF projects by residential, commercial and industrial. But he said the only residential projects that came to his mind were done in the Kansas City area.

Laura Whitener, the chairman for Kansas City's TIF Commission, said the city has approved three TIF projects that have been partly or mostly residential. The TIF money paid for infrastructure to an area that would otherwise not have been developed, much like what the Prestwick group intends to do in the far southwest corner of the city. But all of Kansas City's residential TIF projects, she said, have had some support from sales tax and that all the projects included some businesses.

The Prestwick Group's proposal -- aside from a small amount of sales taxes generated from the clubhouse -- would be funded exclusively with property taxes.

Cord Dombrowski, one of the developers in the Prestwick group, argues that property and real estate taxes are more predictable than sales taxes. Once the property is purchased, the property will always be taxed, he said, whereas a business could vacate a building and no sales tax dollars would be poured into the TIF district.

bmiller@semissourian.com

335-6611, extension 127