UPDATED: Heer’s developer, city ready to talk incentives

Matt Wagner, SBJ ReporterHeer’s developer Kevin McGowan said he’ll soon have a better idea of the local incentives needed to close the financing gap between a government-backed loan and historic preservation tax credits.

This morning I posted a blog item that word was circulating through downtown that McGowan, president and CEO of St. Louis-based Blue Urban, would be in Springfield to announce the preliminary approval of an $11.8 million loan guaranteed by the U.S. Department of Housing and Urban Development. He did just that this afternoon and took a few minutes to talk with me about the next big hurdle: City Council approval of his requested incentive package.

In addition to the HUD loan, McGowan said he’ll seek state and historic preservation tax credits to offset the cost – between $20 million and $25 million – of redeveloping the former department store as 61 loft apartments above a Mike Shannon’s Steaks and Seafood Restaurant. Missouri law allows a tax credit equal to 25 percent of qualified expenditures associated with a historic redevelopment project, and the federal program offers a 20 percent tax credit.

McGowan said he’ll also seek New Market tax credits, which are available for redevelopment projects in low-income census tracts, and he’s previously expressed interest in establishing a tax-increment financing district for Heer’s.

In the coming weeks, McGowan and Economic Development Director Mary Lilly Smith will review the available incentives in hopes of submitting formal requests to council by Labor Day. Smith told me the council, which has almost entirely turned over since approving the original Heer’s redevelopment agreement with McGowan two years ago, would have to consider each requested incentive separately.

McGowan said he’s already talked at length with newly elected Mayor Jim O’Neal about the Heer’s project, which has miraculously maintained its forward momentum through the recession. Without the city’s commitment and the HUD-backed loan, McGowan said the project would likely have been in jeopardy.

“It’s just a lousy time to do development,” he said.

Blue Urban, though, is playing the hand it’s been dealt. Here’s a recent story in The Star about how the firm has adapted to the changing real estate market in Kansas City.

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