01/04/2013 - As the Crestwood Board of Aldermen faces an expected request for tax assistance to redevelop the vacant Crestwood Court mall, the board has ended public funding for the successful tax-assisted project at Watson Plaza.
Watson Plaza, shown at right, has closed on its tax assistance after eight years. TIF projects typically allow developers to take up to 23 years to repay costs.
photo by Diana Linsley (click for larger version)
The board on Dec. 11 terminated the Watson Plaza Redevelopment Area and dissolved the special allocation fund that helped pay for the completed project through tax increment financing.
"We are very proud of this and all of our developments," said Gary Grewe, a vice president of G.J. Grewe Inc., the developer of Watson Plaza. "These development tools are essential to success, especially when redeveloping tough and tired centers. This is a great example of how the right way is."
The redevelopment of Watson Plaza has been so successful that the TIF district officials have sought termination of the tax fund after eight years. In November 2004, G.J. Grewe Inc. was granted a $2 million TIF, to be repaid with sales tax income generated from purchases within the shopping center.
Through the TIF, the developer received money to fund the project through a combination of taxable and tax-exempt bonds. Payments in lieu of real estate taxes as well as 50 percent of all tax revenue were deposited in the Watson Plaza Special Allocation Fund to be used to pay redevelopment costs. The TIF did not require additional sales tax on purchases.
A Shop 'n' Save store anchors the plaza, which is fronted along Watson Road by U.S. Bank, Walgreens and Jack-in-the-Box branches.
The Dec. 11 board action terminated the designation of Watson Plaza as a "redevelopment area" and dissolved the special allocation fund that administrated the sales tax revenue. Watson Plaza TIF District officials recently notified the city that the tax revenues were now sufficient to pay all outstanding obligations.
After all project expenses are paid, the remainder of the funds in the account will be directed to the St. Louis County Collector to be distributed to the appropriate taxing districts, including the City of Crestwood and the Lindbergh School District. The amount of money available for taxing districts was unavailable at press time.
TIF projects typically allow developers to take up to 23 years to repay the project costs funded by deferred tax money. By September 2009, Watson Plaza's developer had already repaid nearly $875,000 and expected to retire the debt by November 2016.
In 2004, Watson Plaza, near the northwest corner of Sappington and Watson roads, had many empty spaces, including the 50,000-square-foot space that had been vacated long since by Service Merchandise.
G. J. Grewe, which owned the property, was the only respondent to a Request for Proposals issued by the city. The board of aldermen at that time balked at Grewe's proposal, as it had in early 2003, when Grewe owned only 90 percent of the property. But the board eventually did approve Grewe as the preferred developer in March 2004 and later that year approved the $2 million TIF agreement.
Shop 'n' Save opened in the former Service Merchandise space in 2006. Walgreens, which already had been located in Watson Plaza, moved into a new freestanding space in the plaza in November 2005. Other tenants include Edward Jones, Anytime Fitness, restaurants, and several small retail and office tenants.
As Watson Plaza celebrates success, the current Crestwood Board of Aldermen is in the early stages of negotiating a redevelopment project for the Crestwood Court mall, located east of the Watson/Sappington intersection. The property owner and designated developer, Centrum Partners, is proposing a $26.6 million TIF to help fund the $102 million project. Centrum Partners have been the sole owners of the property since 2007 and, like G.J. Grewe before them, was first rejected by the board as the preferred developer.
Another government-assisted project that repaid its tax funding early is Crestwood Point/Kohl's Department Store. That TIF note was paid in full in March 2010, 11 years early, and the TIF district was dissolved.
Conversely, the original developers of the newly constructed Sappington Square retail center at Watson and New Sappington roads, defaulted on their loan in 2009. The board of aldermen declined to extend the Sappington Square Community Improvement District to the default new owner and voted in July 2012 to discontinue the CID and abolish the special 1 percent sales tax that funded it. That center still has low occupancy.
Although the board's vote to dissolve the Watson Plaza TIF fund was unanimous, there was no fanfare and no discussion regarding the issue.