Town Hall Meeting March 20, 2013 at White Cliff rec. center, 7:00 PM. Come and hear plan X, Y, or Z from Centrum Properties.
Yes indeed folks, were going to be treated to a magic show put on by the good folks from Chicago, Centrum Properties. Did I say a magic show? Well yes I did because it is going to take that and more for Centrum to come up with a viable working plan that does not include them paying themselves back $17 Million that they put out, and then "flip" the property leaving us with zero!
Can they do it? Will we hear the real story minus the smoke and mirrors? Will they have at least ONE prospective tenant to hang their hat on? Answer, minus a whole lot of money from us and the school district, I really doubt it, and so should you.
Please remember that if these ideas are a sure thing, they would be doing them on their own without OUR money now wouldn't they. When you listen to all the wonderful things they are going to do, remember that they are bailing out of projects in Florida, and Chicago, so why won't they do it to Crestwood? (Don't believe me? Look it up on Google.)
This is one meeting that I will try my best to attend as I haven't seen a magic show in over 60 years, and I do so want to see the rabbit come out of the hat again, they do have a rabbit, don't they?
Tom Ford
NO. 1098
posted by Crestwood Independent at 04:37
66 Comments:
http://www.ci.st-joseph.mo.us/planning/EconDev/tifsample.pdf
Please read section 24 (restrictions on sale/transfer) and section 31 (rights upon default/breach).
Assuming Crestwood receives competent legal and financial advice, there are ways to structure a TIF contract with a developer that ensure that a city does not get taken for a ride.
Centrum won't do anything until the have a BOA that is united and behind them 100%..'the first rule of tifs'
So .. is it going to be a show again and retell.. night of fun?or just an attempt to stall until after the elections?
12:04 PM Blogger: You do know that there would be a TIF commission set up for this project right?
Sections can be, and are modified every day to suit the agenda, so I want a bit more than that please.
Tom Ford
1:06 PM Blogger: Centrum CAN'T do anything on their own, and that's the problem, isn't it.
We must understand the real idea behind this so called meeting, and that is to set up this City for a huge bail out of Centrum.
If you don't believe me, look up Centrum in Chicago and Florida, see what their record is lately, and come to the meeting.
While your at the meeting, ask them if they would sign a contract with the City that stipulates "no selling of the property prior to 50% completion of construction."
Also ask them for a "prospectus tranent list" for the new Court's while your at it, you will be amazed, (back to the magic show!)
Tom Ford
"prospectus tranent list"
Please clarify what this means?
9:11 AM Blogger: Was
"prospectus tranent list"
Should have been:
"prospectus tenant list" (major typo)
It's a list of prospective tenants signed by the developer that is non binding.
Tom Ford
Are you aware of the synonym SSDD? Well if not that is what the Centrum kids put on last night at the "usual suspects" show over at White Cliff Park.
Yes indeed we saw the same proposal, and the same cheer leaders at the podium imploring the great unwashed to "move it forward!"
You gotta wonder if the good folks that sang the praise on high, and the rest would "move forward" the same way if it was THEIR household funds that were in play here? Alas, we will never know.
Oh, and SSDD? Well Thar stands for "same stuff, different day."
Tom Ford
Your household only pays for the development if you shop there and pay the sales taxes. Otherwise it looks like the funding will come from 60 million (or so) in cash from Centrum, and 50 million or so from a construction loan. The rest of the funds are the property tax increments which would not exist unless the development is done.
If this development doesn't move forward though, I imagine most households in Crestwood should get ready to pay double their current property tax rate.
What is the harm in letting the TIF Commission vet Centrum's numbers? If the TIF Commission recommends the project go forward, then the BOA still gets the final say. If the TIF Commission votes it down, then it would be a very tall order for the BOA to approve it (would take 6 votes).
http://www.armstrongteasdale.com/files/Uploads/Documents/Summary%20of%20MO%20Real%20Property-8992445-1.PDF
and if Centrum gets tired of the games here in Crestwood, they throw their hands up and leave, and then what? They raze the property, fence it off, and then it's zoned as undeveloped, and taxes we get go down even further. OR, we go ahead with the development, support, it, and get Crestwood on its feet the rest of the way.
12:15 PM Blogger: And that tells me you and your family will not shop there because it (the 10+% tax) will come out of your household funds.
Well so much for shop Crestwood First.
What is the harm? well you really need to vett this developer for yourself,m you have a computer, use it, look up Centrum in Illinois, Florida, and California.
Do that and tell me this is the sort of developer we want in Crestwood!
Tom Ford
5:22 PM Blogger: Fear not, they cant afford to "raise the property by themselves! The cost of asbestos remediation alone will floor them.
I have been in the parts of that structure you normally do not see, and I will tell you that it's full of asbestos, and that spells a lot of money that they will have to pay out alone.
Furthermore, you assume we sit on our hands and do nothing right? No my friend, we play hardball with this developer and get our code enforcement officer up there to write some code violations, NOW!
If Roseann can't find them, I will go walking and point them out (I still teach County Codes as well as life/safety codes to HVAC contractors.)
They sent down a "pretty boy" to dazzle the masses, and there is no reason on earth to buy any of the snake oil he was selling as WE have the upper hand on this, and they know it!
Tom Ford
Centrum bought the property in 2007, and as of today, have not signed a single tenant.
Martha Duchild
No developer bats 1.000. Two failed developments out of dozens, and both happened during the credit freeze and the worst economic downturn since the great depression? And both involved condominium developments, which were some of the hardest hit part of the real estate market (and remain severely depressed today). The number of individuals and companies that lost staggering amounts of money in the Florida condo meltdown is numerous.
I assume your constant references on this blog to Centrum's problems refer to the Roosevelt development in Chicago and the condo developments specified in this article? http://www.bizjournals.com/southflorida/stories/2009/10/26/daily63.html?page=all
If so, it is an area to be explored by the TIF commission. However, each real estate development succeeds or fails on its own, and oftentimes they are structured where the failure of one project will not affect the company overall (look at the way the Florida deals in particular were structured).
A TIF cannot be approved unless there is funding in place to complete construction. They will have to show their financial wherewithal and their financing is sufficient. If its not, the TIF commission shoots their proposal down. I assume their numbers for asbestos remediation are based on actual bids they have already received. If not, that is something the TIF commission will call them on.
The TIF Commission (and especially the Lindbergh appointees) have every reason to put Centrum through the paces and make sure their numbers add up. Lindbergh is the one that really takes the hit if Centrum can't come through.
Assuming they can get the site developed and the buildings erected (and they will have to prove they can), the ultimate question becomes whether they can lease those buildings out. Based on a pretty good track record nationwide, condo developments notwithstanding, I see no reason why they wouldn't be able to. While leases aren't signed yet, I think its a safe assumption AMC is a part of the project, since AMC is in several Centrum projects and has longstanding ties to Crestwood. Lucky Strike and Howl at the Moon seem pretty sure bets too. No project is risk free; nothing ventured nothing gained though.
Bets are for gambling boats, casinos, and Vegas.
Any letters of intent from any of the prospective tenants? Or any type of commitment from these prospective tenants made to Centrum?
"Safe assumptions" and "sure bets" are descriptions that make one uneasy when describing a potential development.
and if Centrum gets tired of the games here in Crestwood, they throw their hands up and leave, and then what? They raze the property, fence it off, and then it's zoned as undeveloped, and taxes we get go down even further. OR, we go ahead with the development, support, it, and get Crestwood on its feet the rest of the way.
5:22 PM, March 21, 2013
Ahem! Speaking of assumptions! You're assuming the worst and you're assuming the best.
"Centrum bought the property in 2007, and as of today, have not signed a single tenant. "
My understanding is that there have been more than one, but they pulled out because they felt they were being jerked around.
10;42 PM Blogger: Can you say OVEREXTENDED?
Yom Ford
55:08 AM Blogger: Jerked around? By whom, the developer?
Quit listening to their bravo sierra abd LOOK THEM UP, I too would pull out if I read their recient track record.
Tom Ford
ok, you hate Centrum, I get that. What is your ideal here?
@11:36
While moving forward with the project is a risk, inaction also carries with it risks. Not moving forward is a bet that something better will come along. That either Centrum will develop another proposal, or that they will sell to another developer who will have a better idea. The property obviously won't sit stagnant forever, but it could sit that way a while.
Also, if leveling the mall, cleaning up asbestos, and leveling the terrain costs $17 million, each and every developer that comes to the city is going to want TIF. I don't see that changing.
Worst case scenario...instead of a pile of old crumbling buildings .. we end up with a pile of new crumbling buildings.
7:41 AM Blogger: Now why would I HATE Centrum ? I do not hate them, I dislike what they want to do with our once famous mall.
I dislike the prospect of them getting their 17 Million back and then flipping the property.
I dislike the idea that something must be done right now! Why is that, so they can recoup their losses?
Stand fast people, don't get involved emotionally, wait for the right proposal to come along and then we shall see.
Tom Ford
8:20 AM Blogger: And we have a great place for Crestwood children to injure themselves playing on the rocks!''It will happen, you know it will happen, and then what would we say to the parents, "we wanted to move forward?"
Tom Ford
5:08 AM March 22
"Toby Kieth's" did not pull out because they felt "jerked around." St. Charles was always their first choice for a location, and that's what they worked to get.
I've seen the terms "playing games" and "jerked around" used to describe the BOA. The BOA has an obligation to residents to perform their due diligence; it would be an abnegation of their fiduciary responsibility to just accept whatever information Centrum provides and allow the plan to move forward.
Centrum wants to go into business with the taxpayers of the city, and there is no reason why the BOA should be made to feel wrong for thoroughly vetting a potential business partner. Part of that vetting process includes examining the developer's finances, their ability to obtain commercial loans, their track record with similar development projects, whether the proposed concept is a good fit for the city, and what impact the project has on stakeholders (residents, the school district, and area businesses).
All of these questions need to be answered to the BOA's satisfaction before the project can move forward.
Martha Duchild
@9:18
"Centrum wants to go into business with the taxpayers of the city, and there is no reason why the BOA should be made to feel wrong for thoroughly vetting a potential business partner. Part of that vetting process includes examining the developer's finances, their ability to obtain commercial loans, their track record with similar development projects, whether the proposed concept is a good fit for the city, and what impact the project has on stakeholders (residents, the school district, and area businesses)."
Completely agree with you. However, has the BOA been doing these things? No, they are coasting. They have not selected a planner since they rejected PGAV, they have not selected legal counsel to negotiate for them and advise them, etc. Do they feel qualified to do these things on their own? That seems fairly arrogant if that's the case. It is time for the city to either shut this thing down, or select its advisors, and convene the TIF commission. If the TIF commission review process reveals concerns with Centrum's plan (or Centrum itself), the BOA can address those concerns and proceed with the project, or can reject the final proposal. Continuing to sit on their hands at this point is tantamount to a rejection of the proposal though.
Finally, the BOA does not need to examine Centrum's ability to obtain commercial loans. The Redevelopment plan has to include, among other things, "evidence of the commitments to finance the project costs". That is state law.
McKee's North Side proposal was shot down because he failed to have evidence of the commitments to finance the project costs.
This comment has been removed by a blog administrator.
the board of aldermen fiddle while Rome burns
I use the Call a great deal about voting. I read about who they endorse, then vote for the other guy.
WHO provided the information to the Times?
@12:43
Not that it matters, but I was wondering that myself. Opposing candidate? St. Louis County? Crestwood? The pregnant woman who got beat up?
Or maybe the Times does background checks on all of the candidates?
Usually people commit the felonies after they get elected
1:01 PM, March 22, 2013
There is a possibility that you missed.
1:02 - LOL!
SIGN YOUR REAL NAME, OR BTY By!
TOM FORD
12:43 PM Blogger: Exactly, WHO has the most to gain here?
Methinks there is a bit of skulduggery here that I have not seen in the 44 years I have lived in Crestwood.
Tom Ford
@2:38
Pray tell
RE: TIP and Centrum. What seems to be missing in the discussion are some timelines.
First, all of the new sales tax dollars above the current level being received from the property the day the TIF goes into place, go to pay off the TIF Bonds.
Second, TIF Bonds can take up to 23 years to be paid off.
What this means is the City would have to wait for 23 years to receive one extra sales tax dollar over the amount they are getting now, before the City would start to get the new stream of sales tax revenue.
That's a twenty three years, before the new development starts to pay the City for the increased cost of Police and Fire services it would expect to receive. It's twenty three years to become obsolete again and to start going into decline. It's 23 years of increased traffic on our streets while getting the same amount of sales tax dollars as we are today.
I strongly suggest you who want Centrum to have their way with us to ask your self this question. The longest term US Savings Bond you can buy today is for 30 years. And after 30 years you are 99.9% sure the investment you expect will be there for you. After 23 years when the TIF is paid off, can you be 99.9% sure the much needed sales tax dollars will be there for us?
@4:08
You have been misinformed.
Crestwood starts receiving its portion of 50% of the sales taxes the day that the developments opens. It is the property taxes that are frozen at current levels until the TIF money is paid back, or after 23 years, whichever is shorter.
The developer estimates Crestwood's share of sales taxes in the first year open would be $788,000, and there would be an additional $250,000 extra received in personal property taxes and commercial surcharges. Even if those numbers are wildly optimistic, the city should stand to get hundreds of thousands of extra dollars.
Asking for clarification...
Let's start with the basics. If you know the answers or have any information to the questions I pose, please provide. Thank you in advance.
Does Centrum have any potential tenant signed?
Has any potential tenant:
1. Signed a lease?
2. Signed a letter of intent?
3. Signed a letter of interest?
4. Signed or committed themselves in some way not mentioned here?
Anonymous said.. 4:34 PM, March 22, 2013
Your sources please.
@5:11
Those are in the ballpark of the figures that Centrum presented at the town hall meeting. I am not privy to how those numbers were calculated, other than their using models of dollars/square foot for restaurants, a movie theater, and other projected tenants.
5:16 PM Blogger:
"Those are in the ballpark of the figures that Centrum presented"
My grandfather once told me that "figures don't lie, BUT liars can figure!"
(Thomas Charles Ford the second)
Tom Ford
(Or if you would like to be more formal, Thomas Charles Ford the third!)
Anonymous @
5:16 PM, March 22, 2013
4:34 PM, March 22, 2013
I want your source for your claim that: "Crestwood starts receiving its portion of 50% of the sales taxes the day that the developments opens. It is the property taxes that are frozen at current levels until the TIF money is paid back, or after 23 years, whichever is shorter."
4:37 PM Blogger: None,zip,zero,nope!
Tom Ford
@6:50
http://www.moga.mo.gov/statutes/C000-099/0990000845.HTM
third section
@7:22
Oftentimes tenants are disclosed for the first time to the TIF Commission after a city has convened one. That is when Northwest Plaza's developer announced that Menard's would anchor the development.
I fail to see the harm in convening the TIF commission. If Centrum can't identify viable tenants at the end of that process, then don't move forward. Doesn't cost the city anything to kick the tires.
Bill Schelinski is a convicted felon?
4:34 March 22nd
You're forgetting one important detail: the businesses Centrum has proposed for the project compete directly with existing businesses located in Crestwood.
So the "hundreds of thousands" the city stands to gain (according to the developer) would likely be offset by the shift of sales tax revenues away from existing businesses to the new development; there is no net gain. The problem with Centrum's proposal is that there is nothing unique about it.
Martha Duchild
@12:54
I need to find out where the other movie theater is in Crestwood.
And I'm not familiar with any other bars in the city other than Pints and Rails (which is in the annexed or pool part of the city and so Crestwood does not get a huge benefit from sales taxes from them).
As for restaurants, I remember Crestwood being more vibrant when Houlihans, St. Louis Bread Company, Pasta House, and Chevy's were in the mall.
I'll grant you the grocer, depending on the tenant, is a big concern so far as competition goes. There is no reason the city couldn't specify in the agreement tenants that would not be permitted there (i.e. walmart). I think the city explicitly restricted the tenants that could go in the Grewe development with Ace Hardware (no Big Lots, etc.).
I think the proposal is unique. I think PGAV said that it was hard to gauge the success because nothing like this has been tried in St. Louis before. What would you want to see? Another Target/Lowe's/Home Depot/Walmart? That would sure be unique.
So what happened to Houlihan's, Bread Co., Chevy's, and the others? Why did they leave? If everything was so vibrant, why did they leave?
You're not quite right about PGAV's analysis. In fact, PGAV did not endorse the plann nor did they endorse Centrum's approach to the how the property was to be developed (in two stages). This is why they said it would be a challenge.
I've said it before: trying to use the old footprint of the mall is building to the past, not the future. The aldermen are not sitting on their hands. They told Centrum they want signed leases, proof that a bank will provide them with construction loans, and new ideas about a different mix of tenants. In response to these requests (made a while ago at a BOA meeting) Centrum announced at the recent town hall meeting that there were no changes to their plans, and no signed leases.
Martha Duchild
so, doesn't this keep us in a tail chasing mode? They can't sign tenants until they break ground, and we won't let them break ground until they sign tenants. It sounds like an unmanageable set of impossible standards.
Tom as said he wants the city to site them for every violation they can find, further alienating them and "playing hardball". What do you think should happen?
@12:28
They have to show proof of a construction loan (or other funds) as a part of the redevelopment plan.
As for signed leases, they should be disclosing those to the TIF commission. One would hope that the BOA giving the green light to convene the TIF commission would assure some tenants of the reality of this project, and get some public commitments. If the TIF commission convenes, and Centrum is still unable to show proof of viable tenants, then the BOA can vote the project down (and I assume the TIF commission would also vote not to recommend the project).
Centrum obviously has faith in this project and their ability to secure tenants, or they wouldn't be putting 100 million of their own money into it (cash and construction loan proceeds). I think if someone is willing to invest 100 million into a project in the city, the city should at least see what the TIF commission has to say.
@12:28
http://www.ci.crestwood.mo.us/s-admin/plugins/events/uploads/Board%20of%20Aldermen/11-08-12%20Work%20Session%20Re%20Crestwood%20Court%20Redevelop.pdf
Mr. Brancaglione w/ PGAV:
"The redevelopment scenario which relies heavily on entertainment and restaurants is
unique and there is not a direct model in which to compare at least not to his knowledge."
....
"Mr. Brancaglione explained that he does not believe
the sophisticated high end users are willing to sign a lease at this point for a variety of reasons,
including Centrum not being able to deliver a pad ready site or building unless they can cover some of
the cost. The tenants would be willing to sign a lease or provide a letter of commitment if they knew
the amount of rent and were given a date to occupy a building or the pad is ready to be built. He
further explained if the date cannot be met, the penalties are huge."
....
"He stated his opinion that the Board should begin considering the TIF
process and, at the same time, begin the process of a redevelopment agreement. Mr. Brancaglione
stated once the process has begun, a message will be sent to the tenants that the Board is serious in
getting this done and to the redevelopment community that the Board is serious about redevelopment."
At the first town hall meeting, Sol Barket said that Centrum had enough money to redevelop the mall property without a TIF, but also that the project could not move forward without a TIF.
The reason he said this is because the property's majority investor, Angelo Gordon & Sons, expects a specific rate of return on their investment. Without the TIF, the likelihood of generating that ROI decreases.
The question for the city is this: Is it the city's responsibility to divert incremental revenues from all the taxing agencies for up to 23 years to enure that Angelo Gordon & Sons' investors are more likely to get a better rate of return on their investment?
Martha Duchild
@12:26
I think essentially the same thing was said at the second town hall meeting. If Centrum developed teh property without a TIF, the ROI was around 5%, but with the TIF it was 9% or so. The claim was developers aim for 10%. While they in theory could develop the property without TIF, they wouldn't because the risk was too great for the potential reward (which would fulfill the "but-for" TIF test).
If Centrum and Angelo Gordon are putting up 100 million for a project that everyone agrees carries a decent amount of risk for them, I would question whether they would be willing to proceed where they would only recoup 5% if everything breaks their way.
It is obviously not the city's responsibility to ensure that Centrum/Angelo get a good return, but it seems like something that the city might be interested in because it would be a win-win. The city gets a development, sales taxes, licensing fees, and Centrum gets a nice profit. Structure the deal where the school district gets some extra payments above and beyond the frozen property tax rates, and everyone walks away happy.
That's where we disagree. It's not a win-win if the project isn't successful, nor is it a win-win if the developer flips the property. In this case, both situations are very real risks and as much as you say these things can be worked out in a contract, we all know that contracts can be amended (as has been done on past TIF's).
It's an ill-conceived concept that brings with it too many risks, including the risk that Centrum cannot see the project through to completion.
If the plan is no good, there is no use talking about TIF.
Martha Duchild
P.S. In the interest of transparency, why not sign your name to your posts?
"It's an ill-conceived concept"
"If the plan is no good, there is no use talking about TIF"
Everyone is obviously entitled to their own opinion, but they are willing to bet 100 million that the concept can be successful, and they are in the business of real estate development. I would think the board would deem it wise to utilize professionals to judge the plan instead of relying on their personal views or tastes. Does any member of the board have experience with development/market research? Assuming even for a moment that the board members have their finger on the pulse of Crestwood to the extent that they can judge the viability of the concept as to the people of Crestwood, that still doesn't take into account that the development isn't meant to just appeal to the people in Crestwood--it is supposed to be a draw for the population within several miles of Crestwood, which includes a very wide diversity of ages and incomes. Everyone in Crestwood seems to think that they have the real estate acumen of Stan Kroenke, and know exactly what project would work there and what wouldn't work there.
Do you have reason to doubt Centrum's assertion that they have talked to various national retailers, and that there is no interest in a regional mall or big box strip mall there? Assuming that is true, what is the alternative plan? Senior housing? Ask Webster Groves how well that worked out with Bethesda, or ask Kirkwood how well that worked out with Aberdeen.
I have not heard one viable alternative to Centrum's plan proposed. They are in the business of creating developments. If the board is going to decide that they know more about real estate development than a real estate developer, I wish they would reach out to some of Centrum's peers like THF, Sansone, and Pace, and see if any other developer can put together a better plan.
Yes, everyone is entitled to an opinion, and I've given mine, but more than that, I've signed my name to it.
I know what I think should happen with the property, and it's not what Centrum is proposing.
Martha Duchild
Martha,
I strongly agree with your comment about names!
I used to post on here a lot, but it became a pain because you could not tell who was responding to who. It seems that all but a select few are ashamed to post under their real (or any) name.
It is hard to address a response when almost everyone is "anonymous".
Thank you Martha, for your very good posts!
John Morrissette
Thank you for your kind comments, John. I have always signed my name because there is no reason not to, and I believe in transparency.
Martha Duchild
Crestwood ends 2012 with an $80,000.00 surplus!
http://www.callnewspapers.com/Articles-Our-Town-i-2013-03-20-265952.112112-Crestwood-ends-2012-with-80000-surplus.html
Now why in God's name do we have to rush into anything with Centrum?
Tom Ford
Then why all the closed door meetings on the last city administrator meetings? And the sealed agreement Martha....? We lost 80,000 on that piece of transparency .
Give credit where credit is due...Paul and Darryl both voted against the settlement with Petree
@5:36
Good news but that will be the last surplus for a while. 2013-2017 projections from the city show a combined almost 1.7 million dollar shortfall in the general fund (and that assumes the city's projections are correct). So far, the sales taxes received in 2013 have been short of the city's projections every single month.
To 6:53 AM March 26
Your quarrel isn't with me. I did not vote on going into closed session nor did I vote on the settlement.
Thanks to the previous poster for pointing out that Aldermen Duchild and Wallach deserve credit for their vote on the matter.
Martha Duchild
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