Urban Redevelopment Corporations
Chapter 353 RSMo.; Springfield City Code
Within an approved redevelopment area, an Urban Redevelopment Corporation may undertake the following types of activities:
- Building construction and rehabilitation
- Blight removal activities
- Land acquisition
- Land disposition
An Urban Redevelopment Corporation operating pursuant to a redevelopment agreement with a municipality for a particular redevelopment area may exercise the power of eminent domain provided the agreement was executed prior to December 31, 2006.
The statute defines "blighted area" as "that portion of the city within which the legislative authority of such city determines that by reason of age, obsolescence, inadequate or outmoded design or physical deterioration have become economic and social liabilities, and that such conditions are conducive to ill health, transmission of disease, crime or inability to pay reasonable taxes."
Property Tax Abatement
100% of the taxes on the increase in assessed value of the land and 100% of the taxes on the value of the improvements for 10 years and 50% of the taxes on the increase in assessed value of the land and improvements for the next 15 years.
Under this program, real property taxes can be abated for a period up to 25 years. During the first 10 years of tax abatement, the property owner continues to pay property taxes during this period based on the assessed value of the land only (exclusive of improvements) during the year preceding the Urban Redevelopment Corporation obtaining title of the property.
During the last 15 years of tax abatement, 50% of real property taxes on the land and improvements may be abated. The city has the authorization to provide up to 100% abatement in the 15 year period; however, most Chapter 353 projects in Springfield receive 50% abatement.
Payments in lieu of taxes (PILOTS) may be imposed on the Urban Redevelopment Corporation by contract with the city. They are paid on an annual basis to offset a portion of the taxes that are abated. The City of Springfield typically imposes PILOTS during the initial 10 year abatement period to offset any loss of tax revenue on existing improvements that has been abated.
Procedure for Obtaining Tax Abatement
Pursuant to Chapter 353 RSMo., real property tax abatement may only be offered within blighted areas. In order to obtain tax abatement, an Urban Redevelopment Corporation must be created in accordance with the general corporations laws of Missouri and obtain title to the blighted property.
In addition, the Urban Redevelopment Corporation must prepare a Blight Report, Tax Impact Statement and a Development Plan. For site-specific redevelopment plans, the applicant must submit the site plan for the project to the City for review through the pre-application process prior to submitting it to the LCRA for review. The Blight Study is reviewed by the Land Clearance for Redevelopment Authority which makes a recommendation to City Council regarding blight. The Development Plan is reviewed by the Planning and Zoning Commission for consistency with the Comprehensive Plan. All documents, including a city-prepared Redevelopment Agreement, are then forwarded to the City Council which conducts a public hearing, followed by adoption of an ordinance declaring the redevelopment area blighted, approving the Development Plan and Redevelopment Agreement and authorizing real property tax abatement.
This document must be sufficient to prove blight pursuant to Section 353.020(2) RSMo.
Tax Impact Statement
This is a written statement of the impact on ad valorem taxes the proposed tax abatement will have on the taxing jurisdictions. At a minimum, the statement must include an estimate of the amount of ad valorem tax revenues of each jurisdiction that will be affected by the abatement.
This document identifies the proposed redevelopment area, the redevelopment projects, the program to be implemented in order to remove blighting influences, and the estimated project costs.
This document outlines the Urban Redevelopment Corporation's obligations for implementing the Development Plan. It typically includes the following:
- Procedures for acquiring property
- Payments in lieu of taxes
- The period for which the tax abatement will be provided
- The time period in which the Urban Redevelopment Corporation will operate
- Procedures for the corporation to transfer title to property in the redevelopment area
After the abatement period starts, the property may be transferred from the Redevelopment Corporation to a development entity and the tax abatement will continue provided the developer complies with the contractual obligations on an ongoing basis.
Urban Redevelopment Corporation Policies
Real property tax abatement through Chapter 353 RSMo. may be considered for projects that meet the
- Proposed blight studies must be reviewed by the Land Clearance for Redevelopment Authority for their recommendation regarding blight.
- Proposed development plans must be reviewed by the Planning and Zoning Commission and found to be consistent with the City of Springfield Comprehensive Plan.
- Designation of redevelopment areas and adoption of development plans will be limited to urban core areas where blighting factors are most severe.
- Property tax abatement will typically be granted at a rate of 100% on improvements and on the incremental increase in land value for 10 years and 50% on land and improvements for the next 15 years, except in those cases where the development achieves a Silver rating or higher from the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program. Those projects may be granted a 25% bonus abatement in years 11 - 25 (total 75% abatement).
- Property taxes will not be reduced below the amount of tax on land and improvements paid in the year preceding the application for Chapter 353 abatement. During years 1 - 10, the city will require annual payments in lieu of taxes (PILOTS) equal to the property taxes paid for improvements during the year preceding when the corporation obtained title to the property within the redevelopment area.
- Proposals for development plans and property tax abatement pursuant to Chapter 353 RSMo. will be strongly discouraged in approved Tax Increment Financing districts because tax abatement conflicts with the intent of the TIF statute to capture the incremental increase of taxes to fund TIF improvements.
- Applicants for property tax abatement will be required to enter into a redevelopment agreement with the City of Springfield, covenanting that the property will continue to be used in a manner consistent with the redevelopment plan throughout the abatement period or the abatement will be subject to termination.
All projects will be reviewed for consistency with both the policies for the desired incentive as well as the general policies listed on the Overview and General Policies page.