Developers of land along Highway Z have a $70 million development planned, but they are going to need help from the city and residents to make it a reality.
Representatives from Z Development, which owns about 30 acres of land near the intersection of Highway Z and Interstate Drive, met with the Wentzville Board of Aldermen at a work session Wednesday to discuss the possibility of creating a Community Improvement District (CID) and using tax abatement at the site.
The developer is requesting a 50 percent tax abatement, which means that half of property taxes in the area would go to the taxing entities and the other half would go to a redevelopment corporation that would reimburse Z Development for development costs.
Chapter 353 of Missouri law allows for up to 100 percent abatement of real property taxes in an area if it is deemed blighted. Tax abatement is eligible at 100 percent for 10 years. For the next 15 years, up to 50 percent of the incremental property tax could go to the developer.
Rick Podhorn, owner and developer of the Highway Z site, said that the area may be considered blighted because of the extraordinary development costs. The land has a heavy rock base that the developer would have to blast before building anything on the site. The project will cost about $70 million to develop about 110,00 of commercial space. About 18 of the 30 acres are unusable because of the terrain and jurisdictional waterway. Podhorn said that the current condition of the land, which has accumulated trash and derelict vehicles, also helps its eligibility for blighted classification.
Bob Swank, economic development director, said that he has shown the property to at least three developers and all of them have asked about what types of incentives would be available. "This is a very hard site to work with," Swank said. "You aren't going to find someone who can develop this without some sort of tax incentive." Podhorn said that an equivalent project on flat land would cost $7 million to $8 million less to develop.
Under the current agricultural zoning of the land, it generates about $1,092 of real estate taxes for the city of Wentzville per year. If it were rezoned as commercial, it would generate about $4,474 a year. By the time the site were at full taxation, year eight, it would generate about $886,000 annually for the city—$236,307 in real estate taxes and $649,700 in city sales tax. For all taxing entities, the property currently generates about $7,597 from real estate taxes and would generate about $31,000 as a commercial-zoned property. By full taxation, it would generate about $4.2 million—$1.6 million in real estate taxes and $2.6 million in sales tax.
"Our choices basically are that we can let a granite mountain sit there and continue to collect $1,000, or we can help them out and eventually collect $886,000 on it," said Mayor Paul Lambi. "It's like priming a pump—you have to put the first cup of water in there to get it going, but then you can pump out lots of water."
The CID would require a 1 percent sales tax to be added to all purchases made in the development. This money also would go toward the redevelopment corporation to refund the developer. "I'm afraid that a 9 percent sales tax will go over like a lead balloon," said Alderman Peggy Meyer, Ward 2.
Laura Lashley, of Development Dynamics, said that her experience with similar projects has shown that a 1 percent increase does not impact purchases where the development does not offer large-item purchases. The Highway Z site will not support a big-box developer, the developers said. It will most likely have a service station, pharmacy, bank, sit-down restaurant, fast-food restaurant, coffee shop, dry cleaner or gift shop.
At a special meeting after the work session, the board approved the first and second readings and final passage of a bill regarding the Highway Z roadway. The board approved an original agreement with the Missouri Department of Transportation and Z Development.
At the board's March 23 meeting, Z Development offered to foot part of the $1.1 million bill to move Highway Z slightly to the west of the current road, widen it to five lanes and add sidewalks on both sides. The old Highway Z road will be obliterated. MoDOT will use toward the widening about $600,000 of the savings from the current construction project of building a full interchange at the intersection of Highway Z and Interstate 70, and the developer will pay up to $800,000. The cost includes grading, paving and associated street
infrastructure on the property from Interstate 70 to Peruque Creek Bridge. The city will repay the developer over a five-year period, with an interest rate of 7.5 percent.
The minor changes to the agreement, approved Wednesday, took MoDOT out of the agreement as the primary contractor. The city now has a contract with Z Development instead of MoDOT.
Mandy Sheets Of the Suburban Journals
Wentzville Journal
Sunday, Sep. 04 2005
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