Published: Thursday, August 6, 2009 8:25 AM CDT
The Council Chamber of the
Glen Carbon Village Hall was packed for an informational workshop
about the proposed University Town Center and the STAR Bond
method of financing it.
Although the village board scheduled the workshop to allow the
principals of UTC to explain to village trustees their plan for
the development and how they would use STAR Bond financing, the
workshop attracted many interested parties. Only the trustees
were permitted to ask questions and they did.
Bruce Holland, managing partner of University Town Center (UTC),
said his team realized it needed to offer some incentive to
prospective tenants to bring them to the area. They looked at the
Sales Tax and Revenue Bond financing method used by Kansas City,
Kans. The state of Kansas pioneered the STAR Bond method when it
passed legislation in 1997 to help attract the Kansas Speedway
and to develop an adjacent tourism district encompassing 400
acres known as Village West.
Prior to the development of Village West, the area was similar to
the proposed acreage in Glen Carbon, primarily green space that
generated about $15,000 a year in property taxes. Now, it
generates more than $13 million a year in property taxes and
through December of 2007, businesses in Village West and the
Kansas Speedway generated nearly $46 million in local and state
sales taxes, use and transient guest taxes.
Trustees heard about the UTC proposal from a unique perspective.
Attorney Todd LaSala represented the city council in Kansas City
when Village West was being considered. He told the board about
the tourism and entertainment district that is situated 14 miles
from the Kansas-Missouri border.
LaSala said like Glen Carbon, the area has great access to two
major interstate highways and also like Glen Carbon, it was
largely undeveloped agricultural land. The two anchors in Village
West are Cabela’s, a very large outdoor sports store that
attracts 4 million visitors annually and the Nebraska Furniture
Mart that occupies a 1,098,000 square-foot building. LaSala said
the store owned by Warren Buffet’s Berkshire Hathaway
company is the largest furniture store in the world that is under
one roof.
He said the Illinois STAR Bond legislation is more restrictive
than the Kansas law. The 1 percent local sales tax and the 5
percent state sales tax would be used to pay infrastructure costs
for roads, bridges, and site utilities. It could also be used for
buildings if they are to be owned by the village for such things
as a fire station or police department. The sales tax revenue
could also be used for village personnel if they are required by
the project, including firefighters or additional police officers.
LaSala said only the sales tax generated by the project can be
used to repay the bonds.
“Only the bondholders are at risk – not the village or
the state,” he said.
Some of the restrictions include a prohibition on businesses with
the primary purpose of selling automobiles, a ban on a minor
league baseball stadium, and a prohibition on the relocation to
the district of any business within a 25-mile radius.
Kathleen Field Orr, an attorney who serves as special counsel to
the village, said the process of developing a STAR Bond district
is extensive and cumbersome. It begins with the village
determining that the area is eligible to be a STAR Bond district,
defining the boundaries and naming a master developer.
Next, the Illinois Department of Revenue, in consultation with
the Department of Commerce and Economic Opportunity, must approve
it after determining it will create at least 1,000 jobs, have $300
million in capital investment and produce $300 million in annual
gross revenue.
Once the district is established, each project in the STAR Bond
district must go through a series of five steps before the final
step of issuing the bonds for each one. This last step requires
the approval of both the village and the Department of Revenue.
Trustees also heard from Keith Moran whose Moran Economic
Development company has been hired by the village to perform the
first step of the process, determining if the site is eligible to
become a STAR Bond district.
Holland said his team has worked long and hard to make the plan
work. He said they are willing to meet with smaller groups in
town hall type meetings to further discuss the project.
Orr said the project presents several positives. First the
Department of Revenue must be satisfied that 1,000 jobs will be
created. Second, the state requires that construction begin
within three years of the approval of the STAR Bond district.
Third, she said, is that it provides for fire and police
protection because the village should not be burdened with the
cost of providing additional security. Finally, she said neither
the residents nor the village of Glen Carbon will bear any of the
costs of the project.
Mayor Robert Jackstadt opened the floor for questions from the
board. Trustee Ron Slemer asked how a village the size of Glen
Carbon could deal with such an extraordinary development with its
limited resources.
“What about inspections and things like that?”
Both Holland and Orr reiterated that salaries or portions of
salaries could be financed with the STAR Bonds if additional
staff is needed, including firefighters and police officers.
Slemer wanted to know exactly which taxing bodies would be
affected by the STAR Bonds. Holland said it would just be the
municipal and state taxes. He said three taxing bodies would
still receive their share of the sales taxes: Madison County
Transit, Madison County Parks and Recreation, and the levee
district. He said as the district is developed, all three would
receive larger amounts of money as the area produces sales taxes.
Trustee Bob Buehler asked if the school district would be
affected.
Superintendent Ed Hightower was in the audience and said the
school district would not be adversely or negatively affected. In
fact, he said, the project would be a benefit to the school
district which would receive its share of the increased property
taxes.
The village would also continue to collect the hotel/motel tax.
The bond term would be 23 years, but could be extended to 35
years for repayment. LaSala said the bonds for Village West will
be paid off several years earlier than the time limit.
UTC Development announced this week that Tim Lowe has joined the
organization as chief development officer. Lowe, a senior level
real estate executive, has 24 years of experience in the
acquisition and development of major retail facilities. Some of
his accomplishments include the redevelopment of West County
Center in Des Peres, Mo., and the Chesterfield Mall. He also led
the team that assessed, valued, bid, negotiated and acquired the
retail lease on the World Trade Center.
Lowe predicted that retail markets will work themselves out
within the next five years. He said the type of distinctive
tenants UTC would attract have not been hurt by the poor economy,
but rather are looking to expand.
Jackstadt asked what “destination” center means. Lowe
said a good example is the Mall of America in Minneapolis. He
said people go to Minneapolisto go to the Mall of America
Jackstadt said even if nothing were to happen with the project,
the village would not have any obligation to pay anything ever.
“It seems too good to be true,” he said.
Lowe said the developer has all the risks. The organization will
not collect from the STAR Bond issue until the first tenant is
installed and making money.
Glen Carbon resident Karen O’Koniewski said she has mixed
feelings about the development.
“I can see its benefits, especially for the school district,
but I moved to Glen Carbon because I wanted to live in a small
town.”
Richard