Odles aim to set high building standard

Brothers Nathan and Jon Odle, the principals of Trittenbach Development, are best known for their medical office buildings in Columbia, but they’ve wanted to build a mixed-use structure downtown for years. Their goal: to elevate building standards as well the city center’s skyline.

The project wasn’t viable, they said, until last fall when the city formed a commission to consider using tax increment financing (TIF) to help fund the cost of redevelopment projects downtown.

“There’s a reason this type of project hasn’t been done before,” Nathan Odle said. “We had to wait until the TIF came along for the project to become financially feasible.”

The TIF commission, established to evaluate projects and provide recommendations to the City Council, will hold a public hearing on June 4 in the Daniel Boone Building. The commission is also evaluating a proposal to use the financing method to finish restoring the Tiger Hotel. The TIF commission must make its recommendations within 30 days following the public hearing.

The Odles spent several months conducting market research on the best design for the downtown development. The pair visited college towns similar to Columbia and some larger cities as well. “We’ve taken many trips to larger cities like Chicago, Kansas City, St. Louis and Portland,” Jon Odle said. “We also visited the college towns of Champaign, Iowa City and Lawrence.”

The Odles were particularly impressed with Iowa City, a town with 20,000 fewer residents than Columbia, but with a thriving, vibrant downtown area.

“A lot of people have in their minds a picture of what Columbia can be, but we are just finally starting to make tangible progress toward this goal,” Nathan Odle said. “To see this concept realized, like what they’ve done in Iowa City, is exciting – not just for downtown, but for the city as a whole.”

The property the Odles want to develop is at the southwest corner of Tenth and Locust streets where there are three deteriorating rental houses adjacent to a city parking lot and city parking garage. The building they want to erect has a “footprint” of only 15,000 square feet, but the eight floors will encompass more than 100,000 square feet. The plan envisions:

• 58 residential units with balconies,
• 27,000 square feet of office and retail space,
• a pool, a fitness center and rooftop recreation.

The project’s estimated cost is $17.2 million, and $3.2 million of that would be reimbursed from tax increment financing. Construction would begin near the end of 2009 and be finished in about one year.

“Our number one priority is to create the poster child project that will set a very high standard for all future TIF applications,” Nathan Odle said.
The Odles are counting on their reputation for quality and sustainability to help them negotiate the hurdles to a property tax break. “Our success relies on the city realizing they are dealing with a known factor with a good track record,” Nathan Odle said. “We hope all parties feel comfortable in entering into this long-term partnership.”

Their father, Bruce Odle, moved from Utah to Boone County 25 years ago when he and his two brothers were expanding their sporting goods business, Odle & Associates. Bruce began amassing rental properties, the bulk of which he turned over to his sons.

They formed Trittenbach, with Nathan as president and Jon as project manager, and expanded into commercial construction.

“We’re life-long residents and taxpayers. Like everybody else, we want the city to fund only quality projects,” Nathan Odle said “If you look at what we’ve built in Columbia, we’ve never built anything that’s not four sides of masonry. We build buildings to last.”

Trittenbach also retains ownership of the projects they develop. “We’re not looking to flip projects,” he said. “We’ve never sold a single building we built.”

Learning to manage as well as construct properties has given the Odle brothers the management experience they feel they need to launch the Tenth and Locust project. “There is a large residential component to our project, and managing apartments is an area we think we understand,” Jon Odle said.

The developers chose Peckham & Wright Architects to design the building, which would use environmentally friendly building standards.

“We are long-term developers; our interests are perfectly aligned with what the city wants from a sustainability perspective,” Nathan Odle said. “It’s a lot less resource-intensive to build a high-quality, durable building once than to build multiple disposable buildings.”

The Tenth and Locust Building meets the development goals of City Council members as well as the objectives of Trittenbach Development. “Downtown is a great location to operate in, but land prices and availability today force you to build up instead of out,” Jon Odle said.

The pay-off, according to Nathan Odle, is that all parties end up satisfied. “When you follow the philosophy of long-term development, the bonus is that the product is more marketable and desirable to the end user.”

Although the Tenth and Locust development represents a departure from the commercial buildings and rental complexes previously built by Trittenbach, Nathan Odle said there are fundamental similarities.

“Sure, the configuration is new, but the style is not. The style is consistent with what we’ve done in the past – using quality materials to construct buildings for long-term operation,” Nathan Odle said.

Trittenbach’s Key Points

• The TIF project would likely serve as a catalyst for future development by providing evidence for the feasibility of additional mixed-use development. Additional downtown residents would drive demand for goods and services in the area.
• The project would increase property values downtown. The company’s cost/benefit analysis found that the most recent assessed valuation of the property located in the Tenth and Locust redevelopment area is $57,950. After 23 years, the time period when property taxes would be used for project costs, the property’s assessed value would be $3.5 million.
• The equity contribution from the development company would be $2.9 million, or 17 percent of the total project cost.
• The proposal contemplates reimbursement of project costs from property tax diversion on a “pay-as-you-go” basis to ensure that no risk is assumed by the city.
• The development plan contemplates the creation of 25 permanent jobs, with an estimated payroll of $678,000, and about 100 temporary construction jobs.
• The apartments would be located near restaurants and entertainment and cultural venues. They would attract people seeking an urban lifestyle and fulfill a housing need for downtown without substantially impacting public services and facilities.

Trittenbach Projects

• University Physicians Keene Family Medical Clinic
• Columbia Medical Plaza
• Berrywood Professional Center
• University Physicians Smiley Lane Family Medical Clinic
• Brookside Townhomes
  (165-unit complex on Old Plank Road)

Tax Increment Financing 101*

The theory of tax increment financing is that, by encouraging redevelopment projects, the value of real property in a redevelopment area should increase.
When a TIF plan is adopted, the assessed value of real property in the redevelopment area is frozen for tax purposes at the current base level prior to construction of improvements. The owner of the property continues to pay property taxes at this base level.

As the property is improved, the assessed value of real property in the redevelopment area increases above the base level. By applying the tax rate of all taxing districts having taxing power within the redevelopment area to the increase in assessed valuation of the improved property over the base level, a “tax increment” is produced.

The tax increments, referred to as “payments in lieu of taxes,” are paid by the owner of the property in the same manner as regular property taxes. The payments in lieu of taxes are transferred by the collecting agency to the treasurer of the municipality and deposited in a special allocation fund. …A portion of the moneys in the fund are used to pay directly for redevelopment project costs or to retire bonds or other obligations issued to pay such costs.

The net effect of tax increment financing is to permit a developer to use a portion of property taxes that otherwise would be paid on the completed project to repay all or a portion of the development costs, thereby reducing the net annual debt service on the completed project (and thus increasing the rate of return on the project). In this manner, future tax increases are not abated, but rather are used to fund costs of the project.

TIF statutes typically require the municipality to make two key determinations prior to approving a TIF project.

The first is the “blight” test: the redevelopment area must be classified as a “blighted” area as defined in the applicable state statute; and second, the project must satisfy the “but-for” test: but for the adoption of the redevelopment plan, the redevelopment area would not reasonably be anticipated to be developed.

*From a report written by Mark Grimm, a St. Louis attorney representing Gilmore & Bell, a law firm advising the city.

In addition to blighted areas, statutes also allow for two other areas eligible for TIF redevelopment: conservation areas, which are regions in which at least half of the buildings are at least 35 years old, and economic development areas, locations deemed by local government to produce economic benefits to a community.