Current redevelopment projects in both Liberty and Grandview Missouri have one thing in common. They would not be possible if they had to be funded out of the taxpayer’s pocket.
Dan Lowe, CEO of Legacy Development, pointed to economic development tools that Missouri and Kansas have in place which allow his company to invest public money in projects that revitalize the communities they serve.
Tax Increment Financing or TIFs are a powerful tool that enable municipalities to self-finance its redevelopment programs. TIF funds can pay for public improvements and other economic development incentives using the increased property tax revenue the improvements generate.
Community Improvement Districts or CIDs employ sales tax funding designed to help improve the community by enhancing conditions for existing businesses and attracting new growth. They are used to make the communities safer, more beautiful places to live and work.
“They make it possible to take projects that have become stagnant and allow them to start generating tax revenue again,” Lowe told KMBZ. Liberty and Grandview requested bids from developers to redevelop certain properties and “get them back on the tax rolls. In both instances the municipalities offered Community Improvement District and Tax Increment Financing tools to get the properties rejuvenated,” he said.
Keaton Knott, the Executive Vice President in charge of development for Legacy, also in studio, addressed the common misconception that cities involved in these turnaround projects are subsidizing them out of general funds. “A lot of people think the municipalities are exposing tax payers to redevelopment of assets. It’s simply not true. The only public dollars invested are dollars that the projects themselves generate. They are funded from incremental increases in property and sales tax revenue that the new projects create,” he said. This allows the developer to take a troubled site and redevelop it so that it literally pays for itself.
Developers only qualify when they can prove that without the incentives from the city, development cannot take place. From a financial standpoint, the total collateral when bonds are issued to invest public financing in the project, collateral stays in the project. In the event of default, the risk lies solely with bondholders. “It doesn’t expose the city or taxpayers. Only qualified investors,” said Knott referring to institutional grade investors with 9 figure balance sheets.
Successful public private partnerships stimulate the local economy with no downside. He said Legacy Development’s projects using TIF and CID funds have all payed off ahead of schedule, reaping the full benefit of tax money generated early. “Where it’s done well it makes a huge difference. Public private partnership development is the life blood of a city. These are self-funding projects.”