Owners seek tax breaks for 7 projects to renovate historic Joplin buildings

Nov. 17—Seven of Joplin's downtown historic buildings that are or will be renovated involve a $34 million investment in Joplin.

In order to keep the investments financially viable, the owners have asked to freeze property taxes at the current level involving a commonly used tool in the reinvigoration of downtown called the Chapter 353 Tax Abatement established by state law.

Jeff Neal, of The Neal Group Construction and developer of the projects, obtained approval this week from the city's 353 Commission, also operating as the Joplin Redevelopment Corp., for the waivers that keep property taxes the same for specified periods of time.

The requests were made for the Olivia Apartments, 320 S. Moffet Ave., and the Jesse Starr House and Carriage House located next to the Olivia that will become part of the apartments redevelopment; and the Pearl Brothers Building at 615-617 S. Main St. Those are all owned by Blue Haven Investments, a family owned and operated company that has renovated rental houses in the Joplin-Webb City area and also is renovating the former Downtown Joplin Y building at 510 S. Wall Ave. for lofts and retail spaces. The Y also is being renovated by the Neal Group and Robison Construction.

Requests also were made for properties owned by the Neal Group which include the Pennington Drug Co. Building, 512-518 S. Virginia Ave.; and the Christman Building, 501 S. Main St., and Christman Annex, 506-508 S. Virginia Ave.; and the A.C. Webb Automotive Building, 204-204 S. Joplin Ave.

A seventh property in the request is the Hollcroft and Stults Buildings at 401-411 S. Virginia Ave., formerly known as the Hertz Rental Car location. It is owned by a local couple, Ryan and Jennifer Longnecker, the 353 Commission was told.

Most of the spaces in the buildings will be made into lofts or luxury condos, and some will include retail spaces or events centers.

State law

Troy Bolander, planning and development director for the city of Joplin, told the Globe the waivers are granted under the state of Missouri's "Urban Redevelopment Corporation Law," also known as Chapter 353 Tax Abatements. The City Council is required to approve the redevelopment plans for the proposed tax waivers to be allowed on the renovations made to properties.

In addition to those approvals, the properties have to be classified as blighted or located within a City Council — designated blighted area. Once finalized, the 353 law allows tax breaks of 100% for 10 years and 50% for 15 years.

Neal said a better description of the action is a tax freeze because the 353 designation holds tax bills at the level they are currently assessed at because they are unimproved. The freeze is only available to corporations engaged in urban redevelopment within locally designated blighted areas, according to the state requirements.

Neal said that no local taxing entities such as the school district will lose any revenue because the taxes collected on the properties now will continue at the same rate for 10 years. Bolander said that a hearing was held for all the taxing bodies earlier this year and members raised no objections to granting the waivers.

"Once these new buildings are in their 10th year, the owners will pay more in the 11th year in taxes than in the previous 10 years all together," Neal said.

The council designated a 16-square-block area in downtown a blighted area in 2006 to make the first 353 waiver available for redevelopment of the Frisco Building at 605 S. Main St. Since then, there have been 19 other waivers approved by city officials.

Blighted districts

Two other areas of Joplin were declared blighted districts that year as well.

One included the former King Press property at 13th Street, or Junge Boulevard, and the east side of Maiden Lane in what was named the Boulevard Crossing Redevelopment District. That district also encompassed abandoned concrete plants and the Ruth Yard, a switching and storage yard for the Burlington Northern Santa Fe Railway, on the west side of Maiden Lane.

Another was an area of west Joplin bounded by Maiden Lane on the east, Tyler Avenue on the west, Fourth Street to the north and 10th Street to the south. It was named the West Joplin Redevelopment District and the designation led to projects that filled some large but empty retail buildings along Maiden Lane between Fourth and 10th streets.

One reason the state adopted a law that would hold taxes down for blighted areas with old buildings is they "are costly to rehab to meet modern building codes," Neal told the 353 Commission.

Another advantage of the tax breaks is to aid in rehabilitation of buildings that have long stood empty. "These vacant buildings don't help anyone," Neal said in a Globe interview.

But once renovated, the taxable value goes up for future tax revenue and boosts the values of surrounding buildings.

It also can trim or prevent costs to the city because untended, deteriorating buildings require monitoring by the city, and become a financial burden and a public safety concern.

"If these old buildings aren't saved, it costs to demolish them," Neal said.

Bolander said that many of the projects that use the property tax incentive include older historic properties that are in disrepair or dilapidated.

"They typically are a public safety concern or are a health hazard to the community," he said. "If left vacant or in disrepair for too long, sometimes it can become the city's and taxpayers' responsibility for demolishing the building to immediately mitigate the public health and safety concern.

"Plus, the community loses that historic asset forever if the building is demolished. Many times, these existing buildings don't financially make sense on paper to rehabilitate because of the extraordinary costs it takes to rehabilitate older buildings especially when the buildings are required to meet modern safety and building codes.

"The money saved through the abatement on the improvements is reinvested into the project and is often combined with other incentives such as historic tax credits to make the project feasible to do and more favorable for a private lender to invest in the project as well."

Demolition was necessary with one of the Christman buildings that formerly stood at 508 Virginia Ave., next to the Christman Annex. The chief building official of the city, Bryan Wicklund, frequently checked that building because of its deterioration from a leaking roof. In May 2008 he discovered an interior ceiling and roof collapse there.

Costs to the city to demolish the building and make enough repairs to the neighboring annex building so that it would not become a dangerous building cost more than $500,000.

Civic pride

Neal said the tax benefits also do not solely benefit the district such as the downtown where the project is located.

Contractors provide jobs and wages to their laborers and buy materials and supplies from other businesses, he said. That means that the money circulates through the local economy and is not confined to one area.

Last year, the 353 Commission and the City Council approved a request for the incentives for construction of the first new building to be built in the downtown in decades, the Moss-DeGraff building at 912 and 914 Main St.

Bolander said the tax incentives apply only to the real estate.

"Equipment and machinery are not abated, and the taxing entities may receive new revenue on the value of the new equipment and machinery that is purchased," Bolander said.

After 10 years from the beginning of the incentive authorization, the property is reassessed and 50% of the new value is placed on the books and collected by the taxing entities. After 15 additional years, the full assessed value is collected.

"This is an example how a public-private partnership can be used to change what could potentially be a cost burden to the taxpayer to having a fully functional rehabilitated property on the books paying full taxes," Bolander said.

Another benefit of historic renovation made financially possible by tax incentives is community pride, Neal said.

"There was a time when people did not drive through downtown," he said. "Now they do drive through downtown with pride, and that will help us bring more families to town."