Mid-Missouri Company Sets Hopes on Reviving Area Mall

2 years 5 months 2 weeks ago November 18, 2013 Nov 18, 2013 Monday, November 18 2013 Monday, November 18, 2013 10:20:00 AM CST in News
By: Nick Thompson, KOMU 8 Reporter

JEFFERSON CITY - Kirk Farmer has been in the public eye before in Mid-Missouri as a starting quarterback at Jefferson City High School and at the University of Missouri.

Now, Farmer is often seen in the council chambers at Jefferson City's John G. Christy Muncipal Building pitching his family companies' economic proposals to city officials.

Farmer works alongside his father and his uncle at Farmer Holding, a company that owns a multitude of commercial properties in the Capital City.

Farmer Holding bought Capital Mall in December 2012 for $11 million and now the company is going to the city council to win approval to tap into several sources of public funding to make a "blighted" property a destination for mid-missouri shoppers.

Farmer wants to complete a pair of projects. First, its hoping to get the city to chip in to help with a $37 million price tag for rebuilding the mall.

Second, it wants to win the bid to build the city's proposed hotel and conference center at the mall site.

 

FARMER LOOKS TO REBUILD MALL

 

After Farmer purchased the mall, it had Shaner Appraisals of Kansas perform a "blight" study to detail the decline that happened while General Growth Properties owned the mall.

Capital Mall was built in the 1970s, and the blight study found owners have taken on few capital improvement projects since it was built.

The report said there are "visual signs of suspect mold" and said the mall's exterior in general is in poor shape.

The study said the mall and the surrounding area have higher vacancy rates and have generated fewer tax dollars and lower sales numbers.

Farmer would like to use a public financing method known as Tax Increment Financing, or "TIF," to rejuvenate the old mall. To win approval for a TIF, a developer must prove a property is "blighted", or in disrepair.

Jefferson City's Tax Increment Financing Commission recently approved the Capital Mall TIF on Oct. 28.

Farmer would enter the TIF agreement with the understanding tax revenues are currently declining at Capital Mall.

Under the TIF plan, Farmer would pay all of the sales and property tax it currently pays. The TIF plan would not "abate" or reduce Farmer's current tax liability on the property, which Kirk Farmer said is an advantage of the plan.

"We can use tax increment financing and not get into the existing tax base, not abate real estate taxes, not abate sales taxes -- just create all upside so that the public is not on the hook for any dollars compared to if nothing happened," Farmer said.

With a "TIF," governments and developers enter the agreement with the idea a re-developed and more attractive property will increase economic activity. The increased economic activity results in higher sales and property tax revenues, which is the "incremental" tax revenue. The city then allows the developer to use the incremental tax revenue to pay off some of the cost of the re-developing the property.

The Farmer TIF Plan would raise $10.6 million for renovations at Capital Mall. Farmer is also asking the city council to make the mall a Community Improvement District (CID), which would raise an additional $5 million. The CID would raise the sales tax rate for customers on the property by one percent for 40 years.

Interim City Administrator Drew Hilpert said city officials have long known Farmer would come to the city asking for public financing and is aware a TIF may be necessary to attract outside investors for the mall. Hilpert said it is not always fair to ask a developer to take on the entire cost of a project and "put all their eggs in one basket."

"It would be the largest TIF Jefferson City has utilized, so it's new territory for us," Hilpert said. "We're exploring it and doing our due diligence to see number one, do they need it, and number two, is it worth the investment?"

Ward 1 city councilman Jim Branch told KOMU 8 News Oct. 30 the TIF is crucial to keeping the mall open.

"I would rather help them a little bit and have a positive cash flow on it rather than saying no, it's on your own and we end up shutting it down and having nothing," Branch said.

Not all Jefferson City residents feel the city should get involved with Farmer on the mall. Tim Stallman has written several opinion pieces in the Jefferson City News-Tribune and has called the TIF more "welfare for the rich."

"Why should the taxpayers be bothered with any of this? They're not gonna make any money," Stallman said. "The public does not gain from using tax dollars on private enterprise."

 

CONFERENCE CENTER GETS ADDED INTO THE MIX


Shortly after purchasing the mall, Farmer Holding saw another opportunity to beef up the amenities on the property.

Jefferson City has considered building a hotel and conference center for decades, and a final decision could come as early as November 18.

Farmer Holding would retrofit the proposed hotel and conference center into the southeast side of Capital Mall.

Farmer Holding would build 30,000 square feet of conference space and a 150-room hotel and would retrofit it into Capital Mall.

The city passed a lodging tax increase recently and has $9 million it can use to turn over to a developer to build the facility. Farmer is one of two companies competing to win the final bid and wants to build the facility on the southeast side of the mall.

Conference centers are not often profitable ventures and Farmer concedes that fact, saying in its final proposal it expects the hotel to generate about $1 million annually but it said the conference center would lose nearly $250,000 each year.

Farmer wants to build 30,000 square feet of conference space and a 150 room hotel.

It will cost $36 million to build and the company would get the $9 million from the lodging tax if it wins approval from the city council.

Farmer is budgeting for a $12 million private investment if it wins, which means it would need to raise an additional $15 million.

Farmer said that funding gap is much lower than its competitors' funding gap.

The company is going up against Ehrhardt Hospitality Group, which wants to build the hotel and conference center at Broadway and McCarty Streets in downtown Jefferson City.

Ehrhardt would have to build a parking garage, make land acquisitions and take on several costs Farmer would not have to consider with its proposal.

Throughout the conference center deliberations, the city council has said it does not want to have to provide an additional subsidy to help the developer.

Farmer said it can cover its funding gap without going to the city council to ask them to spend more money, whereas Farmer said a downtown conference center would likely require additional financing.

Jefferson City resident Charles Gaskin is partly retired and spends time researching the facts and presenting his findings to city officials. Gaskin said a conference center in Jefferson City is a bad idea because it seems it is highly unprobable the facility would be profitable enough to operate without requiring an additional subsidy at some point.

Gaskin respects city leaders and the companies working on the proposals, but he said the city has not done enough to study the market for the project.
He said city officials have taken an "If we build it they will come" approach as opposed to first finding who would use the facility and then build to meet that need.

However, in its final pitch to the city council, Farmer said it could cover much of its funding gap with the Capital Mall improvements and the TIF. Farmer also said its proposal would create more than 100 jobs and would bring in more than 100,000 people each year.

Kirk Farmer said Jefferson City wins if Farmer Holding can win approval for both the TIF and the conference center, because both area residents and visitors will be attracted to an updated mall.

"We want to help harness those dollars and keep them in the community," Farmer said. "Then if we can create an atmosphere where people outside are coming in and having conferences at our site, we think we have a pheonomenal mixed-use development."

The city's consultant for the conference center, Johnson Consulting, said the question for the city is whether it puts more weight on downtown revitalization efforts or supporting mall renovation.

Farmer Holding said if it had to choose it would prefer to get approval for the TIF. Hilpert said they city council will consider that as early as December.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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