Wednesday, July 15, 2009

Downtown Redev: Due Diligence or Malfeasance?

I read some statements in today's CC Headliner article, "Redevelopment project may be in jeopardy. LCRA board members resign because of lack of progress". that I feel require a response. Everyone is entitled to their opinions, but it seems to me that if you are going to make assumptions about the motives of the members of Board of Aldermen, you should at least have the intellectual integrity to ask them what their motivations are. I, for one, did not receive a phone call from either John Custer or Eric Griessel.

I cannot speak to you today about the specific details of the current status of the project, as I have not yet been briefed, but I can speak to you about my feelings towards the last developers agreement, delays in the project since I was elected, and what the Board of Aldermen and city staff are doing to protect your tax dollars.

1. What was wrong with PlazaCorp's first proposed developer's agreement?

There were two major problems with the first agreement PlazaCorp presented to the board.

The first problem was in the tax incentive structure. To summarize, the project is located in a TIF district. This allows the project area to 'capture' 100% of the property tax and 50% of the sales tax generated in the project area and use that revenue for approved purposes (infrastructure, roads, etc.). PlazaCorp wanted the TIF incentives PLUS the remaining 50% of the sales tax generated in the project area. Thus, collecting 100% of the property taxes and 100% of the sales tax in the project area.
THE PROBLEM: Three years ago the people of Ozark overwhelming voted in favor of collecting a sales tax to pay for our new OC. I did not feel that it was ethical to take a dedicated tax that you voted for and use it for a project other than the OC. If the proposed agreement would have passed, that is exactly what would have happened.

The second problem, and perhaps the biggest, was that PlazaCorp's agreement would make the city financially responsible for projects' debt in the event that there was a shortfall. In essence, the city would have to co-sign the debt. As long as the development kept its retail space filled and met its projected revenue this would not be an issue. The development would pay for its self. PlazaCorp seemed confident in its numbers, but if they were so confident in the success of the project, why would they need the city to promise to cover the shortfall? If the project did not meet its projected revenues and the city promised to make up any shortfall, the city could have been on the hook for more that $800,000/year. That is more than 16% of this year's general revenue budget. Plus the near $300,000 in dept service per year we would still owe on the rest of the downtown properties not being developed by PlazaCorp.

THE PROBLEM: Although this is the worst case scenario, even if it were only half that bad, the city could not fulfill its commitment without devastating the necessary services you and I depend on the city to provide.

2. Why was the approval of the developer's agreement delayed?

There was no discussion of this proposal in a Board of Alderman's meeting because the resolution to adopt this proposal was removed from the agenda by it's sponsor, Mike Esteral.

Later, in a special Board of Alderman's meeting, our outside consultants gave a presentation to the board on the feasibility of the project. You can watch the video here:
http://ozarkmissouri.blogspot.com/2009/05/2009-05-26-special-board-of-aldermen.html
As a result of this meeting, the Mayor, with the board's support, directed staff explore all options in order to better protect the interests of the taxpayer.


At the end of the day, your Board of Aldermen are responsible for the financial health of our great city. The LCRA board is not. Because they are afforded this luxury it is easier for them to say they "...[don't] want the city to be too cautious." They do not answer to you, and they are not appointed to be stewards of your tax dollars. It is much easier to be risky with that which you are not responsible.
Also, the LCRA is only tasked with focusing on the downtown redevelopment project. They don't have to be concerned with the impact it will have on the rest of the budget and functions of the city. I, as an Aldermen, must take the 'big picture' into account. PlazaCorp's initial proposal did not fit very well in that 'big picture'.

The success of this project is important to me and I know that it is important to every member of our board and all of our staff. Success does not just mean getting some buildings up and moving in some tenants. Success does not mean putting almost 1/5 of our general revenue budget at risk. Success means giving you a downtown project that we can afford and that is not going to put necessary municipal functions and services at risk.

In closing, some may not like what I have to say, and others may disagree with my reasoning, but I can assure you that my motivations lie only with the best interest of the citizens I represent and the protection of their tax dollars. It is unfair and unfounded to assume that I or anyone else has made any decision regarding this downtown project in hopes that it would fail. The failure of this project would be a failure for the City of Ozark and I can assure that whatever our differences, we are all striving for the betterment of our community.

If you are interested in helping the downtown project become a success there are now 3 open positions on the LCRA board. I would encourage each of you to put in an application to volunteer for the board.

CLARIFICATION: I mentioned above that the TIF would capture 100% of the property tax. To clarify, it would be 100% of the property tax above what the city is currently collecting. For example, if the city was collecting $100 right now, than the city would continue to collect that $100. The project area would only capture anything above that $100. Let me know if you have any questions.

6 comments:

  1. What on earth is going on with the city's website? It seems like it's been down at least two weeks now. There's no excuse for that.

    Thank you for maintaining the blog. It's the only online presence the city of Ozark has right now.

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  2. What is going on with Ozark's website? I feel like it's been down for two weeks now.

    Thank you for having this blog. It's nice to get your views on issues and it's the only online presence the city of Ozark has right now.

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  3. Now we hear that the theater has backed out....this seems like the Herr's project redux....TIF's are ridiculous for the most part.

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  4. I'd like to comment on your statement regarding citizen involvement. I am a 16-year resident of Ozark. Through the years, I have watched with awe and confusion as our "leaders" have made incompetent and unethical decisions. As a professional person who works in a public position, often in the media, I cannot afford to associate myself with this mode of operation. I care about the city and its future, but am unwilling to be a part of a government like this. You can accuse me (us) of not caring, but that isn't true.

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  5. Ozark Resident,

    I am not sure which statement you are specifically referring to, but if I made it sound like I think that just because you are not involved that means you don't care, I am sorry. I know a lot of people who, because of the work they to or the positions they hold, or because of the businesses they own, they cannot be publicly involved in politics. My husband is one of those people. The nature of his work does not allow him to be in public spotlight, but that does not mean he doesn't have opinions or care very much about the way our city is run. It sounds to me like this is the type of situation you are in, and I understand this completely. I whole heartedly apologize if I made any statement that used a broad brush and made it appear that I thought people in your type of situation didn't care. That would not have been my intention.

    I would like to make a suggestion though, to people like you and my husband. If there are things being done in this city that concern you, please find someone in our local government that you can trust who you can voice your opinions and suggestions to. Someone who will keep your name in confidence. We are elected to represent you, and we can do that without telling everyone who you are. If you don't have anyone you can do this with, you can always post anonymously here. I would encourage that.

    You are also always welcome to call me 417-231-1045.

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  6. Melissa: Thank you for your thoughtful response, no offense taken. I appreciate your willingness to reach out to the citizens of Ozark. We need more bright, energetic people like you involved in Ozark.

    Ozark Resident

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