City Council - workshop

The first thing that we need to do is approval of the August 13th work session minutes. May I have a motion?

Going to be late.

So moved. Second. Thank you.

You're welcome.

Does anyone have any discussion on the minutes from August 13th? Justin's on the phone. Can he vote?

Yes, because it's a roll call vote. It's not a roll call, so he can participate.

Okay, great. Thank you. Okay, all in favor of approving the minutes, say aye. Aye. Opposed, nay. Okay. Okay, thank you. All right, the minutes pass. Now we are going to have a discussion about Chapter 100 from Gilmore and Bell. And I'm sorry, I've already forgotten your name. Thank you, Jason.

Good evening. Thank you for having me. I thought I would start with an overview of what Chapter 100 is, why we call it Chapter 100.

Can I ask what your credentials are? I appreciate your Jason, but I don't know anything else.

Oh, absolutely. My name is Jason Terry. I'm from Gilmore and Bell. I've been with the firm for 22 years. We are a public finance law firm. We have represented the city on many matters, maybe all matters, public finance related over the last, I'm going to say 30 years, but 25 to 30 years. Thank you. Yes, ma'am. And Chapter 100 is an economic development tool, probably the most widely used economic development tool here in Missouri. It is creatively named Chapter 100 because it is codified as Chapter 100 in the Missouri statutes. And if you knew bond attorneys, you would know that we're not very creative. So the tool is Chapter 100. It is used for typically for real and personal property tax abatement. Some of the advantages is that it can be used for real and personal property tax abatement, but also the term is negotiable for the abatement and the value of the exemption is negotiable. It also can be combined with a sales tax exemption on construction materials for particular projects. As I mentioned, economic development tools. So it's typically used for job creation, job retention, capital investment could be used for housing or to spur commercial development that might generate sales tax. These are the tax abatement through Chapter 100. It's facilitated through a bond issue that usually raises a lot of questions. So I am going to spend a little bit of time on the bonds. These are bonds that are that do not require voter approval, but they are no recourse bonds. So the city is not funding or repaying the bonds. And I'll explain the bond process in a little bit. In a typical transaction, the property that is being considered for abatement is transferred to the city. And that's how the transaction begins. And the reason that's vital is because in Missouri, as you probably are well aware, that city property is tax exempt. And so... the property is transferred to the city. And then once it's taken off the tax rolls, it is leased back to the company that initially owned the property. Under that lease, the occupant, the original owner of the site, agrees to maintain the property and the project, and maybe most importantly, fully indemnify the city for any actions related to the Chapter 100, to the site, or to the project. The lease back... is there are lease payments. This is where it gets a little difficult. The city will issue bonds payable from the revenues of the lease from the company, from the owner of the site. In almost all transactions, if not all transactions, the company buys the bonds the city sells. So picture you've got a company paying lease payments to the city. and then owning the bonds that those lease payments go to pay. So that creates what we call a right of set-off. So we don't actually require any payments to be made. The bond documents will typically allow for this right of set-off. So payments aren't made since you've got an obligor and an obligee being the same party okay and so so we don't use this term some folks may call this a paper transaction a paper bond issue um that's not necessarily how we refer to it but at the end of the day i'd like to be clear that the city is not issuing debt these are this is not debt of the city It is simply the mechanism the city has available to it under the Missouri law to effectuate tax abatement. It is a convoluted process. Other states have similar structures. Not all states have this structure, but this is the structure that Missouri has granted cities to use for tax abatement. And fortunately or unfortunately, it requires this bond issue. Since the city owns the property as part of the bond issue, it is 100% tax exempt. Now, as I mentioned earlier, that is negotiable. And so if a city were to determine that, well, we don't want to give 100% property tax abatement. We'd like to give 50%. I'm doing that for math because I'm an attorney. So if they would like to give 50% tax abatement to a company, then... the city and the company would enter into an agreement, a contractual agreement that the company would pay 50% in what we call a payment in lieu of tax or a pilot. And those pilots would be under state law distributed pro rata to the taxing jurisdictions as if they were taxes. So pilots are treated just like taxes. The difference is they are usually less than what taxes would be if the city didn't own the property. And so it's the city is not bound to do 100 percent abatement, even though the property is technically fully tax exempt. Those are contractual payments made under the bond documents. And in St. Louis County, the county usually facilitates that like they would any other tax bill. So they would collect the pilots and distribute it to the taxing jurisdictions. One other advantage that I mentioned of Chapter 100 is a sales tax exemption on construction materials. And so the city can lend, if you will, its exemption to sales tax. If the city were doing a project, it wouldn't pay sales tax on construction materials for its own project. Well, because of this municipal ownership, it can also offer that to companies. So a project, a developer can purchase construction materials only. So steel, wood, nails, not vehicles, not equipment, but construction materials you would use in building a facility. Those can be purchased. Exempt from sales tax. Okay. So that is chapter 100 very broadly. I was going to give a snapshot of the process of how chapter from the beginning to end of how a chapter 100 works and then answer any questions unless you'd like for me to take a quick break and answer any questions about chapter 100.

globally i i think that might be a good idea rather than to do the process to ask questions now if anyone has i i just had something you said that it would transfer to the city but if the city already owns it i'm not sure i understand how that sure great question if the if the city were to own property um it

What I would consider the cleanest method would be to, if there's going to be a sale of that property, let that sale occur and then have the Chapter 100 put in place. We could structure around that, but it would be cleanest to have that sale be it's, you know, be that transaction and then it could be immediate. Immediate is in the deed from the city to a company and then the company back to the city. It can all be immediate. But the sale should go through first and then the chapter 100 would be put in place.

Question.

Thank you. Okay, so first one. I'm trying to form a sentence here so I make it understandable. What's the benefit to the taxpayers for the tax abatement that you're proposing?

Well, I'm not proposing a tax abatement.

I heard those words.

Yes, sir. Yes, sir. I am explaining how Chapter 100 works. Any payment in lieu of tax that is made would be distributed to the taxing jurisdictions in proportion to their current tax levy.

So- Fire, police, library.

Yes.

Acceptability, acceptance.

Exactly. Since the city has fire and police, your principal taxing jurisdictions here would be, obviously, the school district has the largest property tax. So it's by amount of property tax. I'm sorry?

I was getting there. Go ahead.

Yep. So Kirkwood School District, Special School District, MSD has a property tax. The city. Everyone's on the bill. Yes, sir. Everyone that's on the bill. What is not abated are, and I don't believe this... I don't want to speak out of turn. I don't believe this is applicable here, but a property assessment. So for instance, if you were in a levy district, they assess a levy. It's not a property tax that is not abated. I don't think that's applicable here. I don't know that any of the property has an assessment, which is different from a tax.

Right. I'll have to have more explanation on that. Be very clear. And then you're also talking about a sales tax exemption for materials. Is that city, county, state, or federal, or is this for where?

It would be all sales tax at the site of the purchase.

I understand.

So it could be, so most likely, I'm sorry, I interrupted you.

No, no. So I understand it's for construction materials, roofing, all of it. I got it. And you were clear it's not for vehicles. Who doesn't get to collect the tax?

The... Where the materials are purchased is where the exemption occurs. So if, for instance, the city were going to build a new city hall and they went and bought construction materials outside the city of Kirkwood, because you might not be able to get steel in Kirkwood, the sales tax at the site is where you pay sales tax. So the site of the purchase of the construction materials. So most likely, if construction materials are purchased in the state, well, the state sales tax will certainly be exempt. Okay. If construction materials are purchased within the city of Kirkwood, then those would be exempt. But if, for instance, they're purchased in the city of Hazelwood, well, then those would be exempt, not the city of Kirkwood.

Because we're talking a substantial amount of money here if it's a $90 million project or something in that realm to build something with 200 units, I would think. I don't think that's an out-of-line number being $90 million. That's a lot of taxes that we're not collecting on. Am I correct?

Yes. I mean, if a project, if a project is 90 million.

I answered it. Okay. Thank you.

Well, I'm going to jump on that for a second. If it's $90 million, you have materials, you have labor, and you're going to have – so some of that labor is not going to be sales tax. I understand. And you're still paying taxes on the payroll tax.

Yep.

And the state – some of the product will be certainly purchased in-state. For sure. And some of the product will certainly be purchased out-of-state. Sure. So –

I'm sorry, sir. It's also a use tax exemption. So sale and use tax. I should have mentioned that.

So the state of Missouri will certainly be missing out on some sales tax.

Correct.

As well as most likely other states.

Correct. Well, I don't know enough about where construction materials are purchased, but I would assume you're correct.

If I purchase something in Oklahoma, materials in Oklahoma, they will accept our Chapter 100.

That's right. They would be exempt from the use tax in Missouri. Yes, sir.

i have some questions go ahead are you finished you're going to have to speak up too because i'm not seeing you down there does this work oh it works no i mean uh let me know when you want to oh gotcha i'll jump up or not um a quick question this is a new thing we've been talking about double eagle for a year and this has not been brought up to us so it's kind of a new learning curve So I've done some looking at it and looking at if they default from what I've read, if there's a default on pilot or any of the lease, we have to hand the asset over to the bondholders. Is that true? I mean, would we have a bondholder as the company we're doing this transaction with then defaults and they get it handed over to them? How does this work?

In a sense. Now, I would say that is more of a typical bond default. And here in this Chapter 100, if a company were not to make a payment in lieu of tax, the city would declare default and unwind the tax abatement, put the property back on the tax rolls, and then start taxing the property at 100%. The bond default is not a risk to the city because the city is not paying the bonds.

Right, but if they default on the bond, do they get the property back? So if the bonds aren't covered, the asset defers back to the bond holders, which is the company doing business with us.

Agreed. But I think the city wants that as a remedy because, again, the city's not paying these bonds. And if the company defaults, that... a payment default would look, it wouldn't be a bond payment default given the right of set-off. The default, the most likely default would be that they didn't pay their payment in lieu of tax, which is a contractual obligation.

But there is another default possibility scenario, correct?

if there are in the agree it will depend on the agreements if there's um you know if if you if there's a chapter 100 and the agreement is you have to create 200 jobs and you create 100 jobs then that would be a default and then in that case a city would unwind the chapter 100 return the property and start taxing it at 100%. Now, they still have a contractual claim to any amount not paid, which would only be one year of a pilot because the city wouldn't, you wouldn't allow a default for two years, most likely. But yes, the property would be returned because I think that's the most valuable remedy to the city. It becomes, it then becomes taxable again.

Mm-hmm. Okay, so there are other things in terms of risk to the city that we would have to consider if we move forward in this.

So the lease, the identification in the lease is incredibly broad. And so there is no payment risk to the city, particularly with respect to the bonds. These bonds are not payable by the city. They are, again, some refer to them as paper bonds. There is no payment on the bonds because of the dual ownership, because the company is the lessee and the owner of the bonds. Can there be other defaults? Sure. But that will depend on the agreements that if the city wants certain goalposts that are met. And again, it could be just using other examples. It could be job creation. It could be capital investment. It could be. units, if it's housing, if those aren't met, that could trigger a default and the abatement would unwind.

So there's additional legal considerations in the event something goes south?

Yes.

Okay. The other question, is there a sales tax exemption on these construction projects that is separate from Chapter 100?

It actually isn't in Chapter 100. It actually is in Chapter 144. But it piggybacks on the city's ownership of the project. So it's by virtue of the city's ownership that they can extend their sales tax exemption on these construction materials.

Okay, so to start off this a year ago, we had two separate conversations on the two things that are wound under this Chapter 100. So those both could operate, go forward separately. Could the sales tax exemption go separate from a Chapter 100?

So we can do a – we call it a Chapter 100 for sales tax exemption only and or we can do a Chapter 100 for property tax abatement. And so most projects combine the two into one Chapter 100. But for example, let's say you've got a city that wants to help a developer build a spec building. They don't have any tenants, so they don't have any jobs identified. Well, the city may be willing to do a Chapter 100 for sales tax only, but they don't want to give property tax abatement to that site because they don't have, maybe they haven't met some of the city's guidelines. So it can be divorced. You could have a Chapter 100 for property tax abatement, real and personal. and or sales tax exemption on construction materials.

And just to note, and not to have you explain it, but I find interesting in just taking in context, if a city wants to help a developer, so Chapter 100 is really a tool if a city wants to help a developer.

Or any company.

Any company.

Any company, yes. It's an economic development tool used, again, for could be any number of economic development goals, job creation, job retention, capital investment, sales tax.

Okay.

All right. Thank you. Any other questions? Yes, Sheila. So, help me understand if the, I kind of, I've been around for some of these things in the past, but when you have a property that I'm going to then sell pieces of it, right? So, we're talking about, in this case, a housing development with multiple properties.

I just want to remind the council that we're only talking about the Chapter 100 process generally, not any specific transaction or specific issue.

I'll reword my question for the council. If I am doing a project like this and I'm going to sell off parts of it to other people who normally would be the ones paying property tax... How does that work? So I build a complex and I sell off parts of it and I have a chapter 100 where there's property tax involved. In most cases, the property tax is paid by whoever owns the piece of the property, correct? So does it transfer to whoever buys the property? Is it transferable?

The bond documents will dictate that. And so it doesn't have to be or it can be non-transferable. It can't. It absolutely can be. So, for instance, if a company is purchased by another company, but all of the same goals are being met, then a city may have no issues. And as a matter of fact, they may preauthorize that. So I'm going to make up if. Company A has been in existence for 10 years, and they get bought by Company B. But if Company A is still meeting all their goals and doing everything, then the city may say, sure, Company B, that now owns Company A, can continue with the tax abatement for the remaining term. We can stipulate that if there's a transfer, excuse me, that there's a transfer of that site, that they have to come back to the city and ask for permission for that chapter 100 to continue. That's completely negotiable in the bond documents.

So in the state of Missouri, how many of these do you do a year?

I'll say dozens. It's not 100. Dozens a year. We've probably done hundreds over the last, I don't want to overspeak, over the last decade.

All in Missouri?

All in Missouri. We do them in other states, but Gilmore and Bell has represented many cities and counties in the state on Chapter 100s. Here in the area, I wouldn't dare say every city that does them, but we do the lion's share, and it's a very common economic development tool. In Missouri. St. Louis County does quite a few. Your neighboring cities. Cities in St. Louis County do them quite a bit.

And one final question. When we are giving the sales tax exemption. Mm-hmm. Is Kirkwood in any way tied to any purchase that a lien, we could be obligated for any purchase somebody has made?

That's a great question. If, for instance, the Missouri Department of Revenue wants to contest a purchase, say the company didn't use it correctly, they are absolutely 100% on the hook under the bond documents. They're on the hook for any penalty or any cost to the city for that. Now, that's the case for the sales tax. That's also the case for the city's municipal ownership of the site. If something happens, the city may be named, will immediately turn to the company and say, listen, we're owning the site for purposes of tax abatement only, so handle this. And the same goes for the sales tax exemptions.

So typically a deal would need to make sure those indemnifications include those types of any scenario of any liens, if they bought something, didn't make the payment, and a lien was coming against the property is really where I was trying to get to.

So just last year, the short answer is yes. The longer answer is just last year, the law was changed. And so in a typical situation, you cannot file a lien against the city. So if the city has municipal ownership, a subcontractor might be prevented from a remedy it normally has, a mechanics lien. That law has changed, and the city can permit liens be placed on the site it owns for Chapter 100 purposes. And most cities and counties think that's a good result because, again, you don't want to interfere with a subcontractor's rights, a contractor's rights. You're merely owning the site for purposes of tax abatement. So I think the long answer is the city is protected, but it also allows for that remedy to still exist.

Okay. Mayor, so we talked about default and you made it sound like we'd have to wait at least one year for default. Is that the normal?

Well, the default would occur, the most likely, not frequent, the most likely default is that a company does not pay its payment in lieu of taxes. And that's going to be due by the end of the year.

So it's a yearly payment, it's not a monthly payment?

No, it's just like taxes.

And if it's a paper bond, money doesn't move, how do we know they defaulted?

You'd know because the county will send out a tax bill and it won't have received it and it will notify.

The developer pays the county for the bond?

No, ma'am. The developer or the company pays the tax bill going to call a tax bill for simplicity it's technically a payment in lieu of tax because there's no taxes on city-owned property but the county the county is actually very good to work with they create a tax bill looks just like a tax bill but is a payment in lieu of tax and if they don't receive payment by december 31 like like any of us if we we have to pay our taxes by the end of the year the city will be notified and that's when the default would begin.

Thank you. Is Chapter 100 the only way to create tax exemptions?

No. There are limited other ways. Chapter 353, also creatively named, that requires a blight finding. Okay. Chapter 100 does not require a blight finding. Okay. There are other requirements of chapter 100. I took a break to answer questions, but it does not require a blight finding and chapter 353 does.

Okay. And then are there any other ways to give tax exemptions without going through chapter 100 or chapter 100 or chapter 353 or chapter something else has to be used?

Yes, there is not a mechanism for a city to grant tax abatement outside one of these economic development vehicles.

And then just my curiosity, so if St. Anne gave a Chapter 100 to one of their builders and that builder came down into Kirkwood to purchase their materials, then Kirkwood loses that revenue because St. Anne gave them a Chapter 100.

That is correct.

And that's just for every Chapter 100?

That's correct.

That affects whomever?

But it would be, yes, that is correct. But that would be the case if the city of Kirkwood or any city was building a municipal facility and couldn't buy the construction materials it needed within the city. Now, of course, you may look here first, but if you can't get steel, and again, I don't know. Right, no, I appreciate that. It seems like a big ask for Kirkwood, but if you have to get steel... you've got to go somewhere else. And so you're right. If St. Anne, if a company in St. Anne, you're absolutely right, yes. But that happens.

Because this is a state statute, can every municipality in Missouri issue a Chapter 100 bond without any state approval, authorization, so we could further strip Missouri's tax base out from under them as well?

Cities and counties in Missouri have the ability to issue Chapter 100, and villages, yeah.

And we don't require permission from anybody.

There is a process, but there's no permission.

Right, right. We go through the process, but there's nowhere along that process that somebody's going to say, hey, we've already got 372 of these this year. We're not letting you do this.

Correct. Now, that's not to say that... Taxing jurisdictions that are impacted will have a voice. Emergency service districts, again, won't impact Chapter 100 in the city of Kirkwood, but emergency service districts, so a county dispatch, an ambulance district, a fire protection district, they can choose to opt out of the abatement. And that came into law in 2018. And they can opt out.

Who else can opt out?

Just emergency service.

Okay. All right. So schools cannot, libraries cannot. Correct. So emergency services only, which doesn't apply to us because.

Because it's municipal.

It has its own police. Right. Different than the districts that I know some of the county houses will.

That's correct.

All right. So emergency only. Everybody else, it's like relying on us to take their support from them. Okay.

That's correct.

Thank you. Thank you, Mayor.

This ties into what I think you were just about to talk about in the process that you are saying that the school districts can weigh in. At some point in this process, those taxing jurisdictions are notified that we will be voting on this?

Absolutely correct.

Okay. Here's where I've got an issue with the statute. And tell me if I'm wrong, but in most of these situations, At the point that we're giving notification a city, more often than not, has gone under contract promising certain things under that contract to which those taxing jurisdictions have not been made aware and will not be made aware for some time right. So their ability to weigh in and give their opinion is, I mean, in process, you know, it looks like they're getting that opportunity. But in reality, the city or whoever it is, is under a purchase or development agreement that has promised certain things to this developer.

I would not say that is – that's an accurate statement, but I would say not all or maybe not even most Chapter 100s flow along that timeline. So some instances you do have a development agreement early on, but other instances you don't. And so that is a – honestly, that's a factual situation. But you are correct, but I would clarify that. Notified or not, in Missouri, taxing jurisdictions outside emergency service districts don't have a quote say, a vote in the matter. So whether they're notified early or late may not change the facts of the situation.

Certainly, but I would say that their ability to influence the process is negated a whole heck of a lot if they are notified at a point where a city is already under a development agreement. Absolutely.

And I don't want to speak out of turn, but the development agreement may be subject to, uh, or any incentives discussed in the development agreement may be subject to further city council approval and which is sure, which, uh, chapter 100 will be a, an additional or further city council approval.

And we know city council approval is never fully a given. So I understand that's, that's a theoretical, I think. I'm sorry.

go ahead well as you say as a matter of fact the the first legal step in this process for the city is what we call an inducement resolution and it states the city council's intent to move forward but it is subject to city council approval of the issuance of the chapter 100 bonds pursuant to an ordinance at a later date and so um again i don't want to speak about something i i haven't reviewed or seen but all development agreements or incentives promised

early on promises my word can very well be subject to later city council approval sure yeah i agree with you there so and this is um i think more um and i think it's in department of economic development guidelines that they encourage cities using this statute to engage with those jurisdictions and impacted parties early and often. There's no necessary requirements outside of the notification we're talking about. But again, I would just say that in certain instances, I think the statute, the notification is more or less, right? Like it's going through the motions and you don't have to, that's more my thing than yours.

I mean, I agree with you in my two cents is that a taxing jurisdiction, particularly one that is heavily impacted, shouldn't learn about a Chapter 100 from the notice. Agreed.

Okay. Yeah.

But that's not a state law requirement.

Last question, and I think – I mean this – you may have talked about it, and I apologize for coming in late. The costs – in this process are more often than not borne by the developer?

Absolutely. Almost always. I can think of maybe once or two instances where, for whatever reason, a city said, maybe we'll pay half the The next step that I was alluding to, this inducement resolution, we would also recommend a pre-funding agreement where a company and or developer promises to pay all costs to the city. So the city is not coming out of pocket for costs for the Chapel 100.

Exactly.

All right. Thank you. Thank you.

You want to go ahead with the second part?

Sure. I've started it. It's been alluded to. So the first step is this inducement resolution and funding agreement. And so the company will promise to pay the city's costs. The city will state its intent to move forward. And again, that's all that is, is the intent to move forward so the parties can start drafting the legal documents. The second step is this preparation of a plan and cost-benefit analysis. And this is the ultimate notice or official notice to the taxing jurisdictions. It describes the project. It describes the abatement. And it estimates, and I want to key in on that, it estimates that the impact of the abatement to the taxing jurisdictions. Now, that is based on assumptions as of today, assumptions of the value of the project when it's complete. Well, we have to make assumptions to calculate the cost and benefit of the project to the taxing jurisdictions. So that is prepared. and eventually sent to the taxing jurisdictions. They have that, and they will also have the official notice, if you will, of the time and place of approval by the city council. And we usually invite them to reach out beforehand. And so we'll probably put Darren on the hook for that and have him be – the contact, if any of the taxing jurisdictions have questions about the plan that is sent to them. State law requires that they have that at least 20 days before action by the city council. that interim period we're drafting the bond documents we're working with lewis rice we're working with a company companies council to negotiate the documents to final form once they're ready for final form they come before the city council two readings it's by ordinance after second reading we can effectively close the chapter 100 at any time after that um if there's a uh purchase or sale that needs to occur then then that would that time period between approval by the city council and closing may may be extended um that's fact specific but closing can occur after the ordinance is effective and by closing i would mean i mean that the the property would transfer from the company to the city that's kind of what we deem closing So that's the process. It can be done before October, or the train can slow down.

Do you use these before?

Yes. Do you use CAO? Well, my former position with the city of Washington used them. We probably had a half a dozen of them, I would say, that were active when I left. Only one was done for housing development, but most of them were done for industrial development. It's very common, like you said, I mean, to go ahead. It's probably the one thing that most industries or companies that are moving to a community, that's the first thing they ask for, especially if they're going to do the job creation. And we have had situations where, you know, like... Jason said where there's performance standards, for example, and if you've got an industry that you're moving in, you will go ahead and establish a certain number of jobs that they're going to create at a certain wage. And then if they don't hit those marks, there's even a formula in there to where they have to make an additional pilot payment. And we even had a company one time that couldn't hit those marks. They were given 50% abatement. They couldn't hit those marks. They had to pay an additional 30%. And so in reality, they only had a 20% abatement at the end of the day for a few years.

Is this considered job creation in asking a developer to come in and create housing?

Yeah, I mean, some communities would go ahead and look at that and treat that as job creation. I don't think it's as solid as probably ongoing permanent jobs where you have, like for an industry.

Right, right. Okay. You have more people in your, more sales tax. Justin?

Percentages probably all over the map is there kind of a sweet spot that you see more often than not in terms of percentages of abatements.

Great question. That is very deal-specific. It is all over the place. There are deals for 100% abatement, and there are deals that are 100% based on job creation. You create two quality jobs, whatever a city defines that to be, county average wage plus something. For every two, you get 1% abatement. And so a payment in lieu of tax is completely negotiable. There is no required formula. Most often it is a percent of what taxes would be because it's easy, somewhat easy to calculate. And again, the county, St. Louis County, they're the mechanism behind the tax bills. And so we try to stay away from some very convoluted formula. But It's all over the place. Yes.

Aaron, you kind of said you guys used the word for economic development. I think you used the same phrase. Obviously, if this was being used down for construction of housing, it's not necessarily economic, maybe some economics. But the developer's paying less for the land eventually because he's not paying property taxes. So his development costs are going to be less in the long run.

That's correct. Indirectly, any cash is fungible, but if you're not paying property tax, well, then you have more, maybe that's less money you have to borrow for the project. So, yes, that is, it is a, it's not a financing by the city. I don't want to make that clear, but it does create cash flow for the company.

which in turn is reducing his overall costs, which in theory then reduce, in our case, maybe make it a more affordable housing.

It could. I don't want to.

I'm not taking that leap, but that's a, I mean, theoretically.

Mark, you could establish that as part of our performance agreement that, you know, the median value of these units have to be at this rent or, or at this sales price. I haven't experienced that as a performance.

In theory, though, if you're paying less for the property, then your rents are going to be less for your overall prices. If you're selling, it's going to be less, which then is more favorable towards making affordable housing, in theory.

May I have one more? Payroll taxes don't in any capacity help Kirkwood. State, federal, and social security.

Payroll taxes are not at all involved in Chapter 100.

Thank you. Yeah, but neither does payroll taxes benefit a municipality.

St. Louis.

Correct. Only St. Louis and Kansas City. If they work in St. Louis, yeah. Right, only St. Louis and Kansas City. So you're correct, yes.

I'm there. Just a couple follow-ups. Again, the cost of the units will be variable regardless. Over time, there's nothing to guarantee somebody's rent's going to stay fixed. But looking, again, trying to investigate this a little bit, the state information really addresses, which I think it's not up to date, but it's industrial development, and they highlight warehouses, distribution facilities, office industries, agriculture. I mean, they highlight And so that may hit the job market, bringing jobs to your community, but it was really, it's an industrial development tool. I don't know when they added rental housing, but it looks like it's 2020-ish. I saw something from Louis Rice that said in 2020 it added, there was rental housing in there. So that's in the state is an update their website or the development website doesn't include that. So how did rental housing, is that what's been added to the industrial development?

I have not seen that added. The Missouri Constitution allows this Chapter 100 program for commercial facilities, and this is a commercial facility.

So the overview for industrial development doesn't include additional commercial opportunities for development within Chapter 100?

I'm sorry, I can't speak to what the state has on their website, but I can tell you with confidence that we have done other projects similar for rental units under the authority of the Missouri Constitution.

And that's been for a while?

Yes, that's not new.

Interesting. All right, thank you.

One more and then we're good.

Thank you. Yes, ma'am. Who's paying you? Is it the city of Kirkwood paying or is it the developer paying?

It will be a company. It will be the company or the developer. It will not be the city.

Okay. That's clarified.

However, we represent the city.

I understand that.

Okay. Some folks say, well, wait, you're being paid. Our fee is being paid. But nonetheless, when we enter into an agreement with the company, it clearly states you acknowledge that we represent the city even though you're paying our bill.

Wanted on the record.

Yep. So the city would not bear any cost related to the chapter 100.

Okay. Thank you very much. Appreciate you. All right. We need to go into closed session. May I have a motion, please?

Second. Thank you. Roll call. Read the motion.

Oh, yep. Somebody will read it off.

Oh, sorry.

Sure. Let me do that.

Okay.

Read the motion. Make a motion on this again. It's you to read it.

Okay. I lied. So motion to close the meeting pursuant to RSMO chapter 610-021 legal.

Thank you. Okay. Second roll call, please. Mayor Gibbons. Yes.

Council Member Arnold. Yes. Council Member Burkett. Yes. Council Member Jack Steadic.

Yes.

Council Member Lavender. Yes. Council Member McLean.

Yes.

Council Member Schaefer.

Yes.

Are we going downstairs just because...