Business & Tech

Chesterfield Government Lays Out Case for Developer Tax

City government documents and city council, mayor and staff describe the Community Improvement District for local outlet mall.

Developers for St. Louis Premium Outlet Mall on 50 acres along Highway 40 at the Boone Bridge, asked for the okay from Chesterfield City Council in February, to apply for a one percent tax increase at the future stores. 

Chesterfield City Council voted yes February 6, that developers could apply to the city for this finance mechanism under Missouri law called a Community Improvement District or CID.

The agreement between the city and developer is very specific, and the city has much control over it, Mayor Bruce Geiger has said in minutes from a Finance and Administration Committee meeting.

Interested in local real estate?Subscribe to Patch's new newsletter to be the first to know about open houses, new listings and more.

Initially, City Administration Michael Herring was named a non-voting member of the CID board, but was removed from that position in the May 7 council meeting.

Sign up for Chesterfield Patch free newsletter. Click here

Interested in local real estate?Subscribe to Patch's new newsletter to be the first to know about open houses, new listings and more.

An estimated $30 million in loans based on future tax revenue generated by the outlets would be available to developers in this first stage, based on gaining a CID designation.

Chesterfield Blue Valley, along with Simon properties, said the majority of the funding available as a result of the $30 milllion in loans would be used to provide "infrastructure" at the undeveloped farmland site for the outlet mall. Examples include sewers, water pipes, drainage.

Blue Valley owns some 190 acres at the Chesterfield Valley site, with this one-fourth designated for outlet mall development.

The bonds, or loans for the $30 million would be over a 20-year period—limited to 20 years by state law.

Mayor Geiger has said the outlets project would have a positive financial impact on the city, schools, county and state if the development is completed. He predicted $15 million with Phase 1 and $25-30million with Phase 2 completed.

Libbey Malberg-Tucker, the city's assistant city administrator for community services and economic development has pointed out "the city would have no monetary involvement in this process, nor would it have any risk:"

The CID, formed and controlled by the developer, would essentially impose a 1% retail sales tax on itself. The additional 1% sales tax would be charged to the sales made in their development only for a period of 20 years if the CID issues its own obligations, or for a longer term depending on how the bonds are structured and who issues them. 

Attorney Jim Mello, a special legal counsel to the city for development issues/proposals, has additionally spelled out aspects of the CID with Chesterfield Blue Valley.

The proposed 390,000-square-foot outlets mall developers include Simon Property Group and Woodmont Outlets/EWB Development LLC, with Blue Valley providing the property.

Of the $30 million cap on bonding for developers, no more than $10 million may be used for projects not directly part of the outlets. And the $10 million spending must include $1 million for street construction, $1.5 million for site work to complement the outlet mall, and another $1 million for community ammenities, such as Chestnut Tree Preservation. 

The approximately $3.5 million in spending must be in place before any other costs are reimbursed, according to Mello in a memo to the city.

The outlets must be "high-end retail" and at least $10 million must be invested upfront by developers, before the CID tax advantage kicks in.

If it does not happen by February 28, 2014, the CID would be terminated, according to the agreement.

The city's financial advisor Michele Bock would oversee some aspects of the CID timing and structure, but the city has "no obligation to issue any debt or make payments in connection with approving the CID."

The developers would reimburse the city for expenses related to the CID, starting with an advance of $50,000 so far.

Mello said he believes the CID agreement with developers "will provide the city council with the safeguards it sought on behalf of the community in connection with allowing the use of a CID for the development."

See other articles on the topic:

CID Public Hearing

Outlet Mall Wants Tax Help


Get more local news delivered straight to your inbox. Sign up for free Patch newsletters and alerts.

We’ve removed the ability to reply as we work to make improvements. Learn more here

More from Chesterfield