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O’Fallon Approves Negotiations With LSL on Joint Development Of Menards Store

The council's approval will allow both cities to work an intergovernmental cooperation agreement.

The voted to approve negotiations on development of a joint property with Lake Saint Louis during Thursday night’s workshop.

As Patch previously reported, a developer with a contract on a piece of property south of Highway N has plans to build a Menards home improvement store.

The actual store would sit in O'Fallon, but the current site plan for the development shows a corner of the parking lot, as well as the store's outlots, in unincorporated St. Charles County.

Lake Saint Louis has plans to annex the land between Highway N and Old Highway N, either by an involuntary annexation on the April 3 ballot or by a voluntary annexation agreement with the owner.

Lake Saint Louis has proposed a 20/80 split of the sales tax revenues from the Menards store and the outlot businesses, with 20 percent going to Lake Saint Louis and 80 percent going to O'Fallon. The agreement would become void when revenues received from the outlot stores in Lake Saint Louis equal the amount they would receive from the Menards store.

At Thursday’s meeting, City Administrator Keith Riesberg presented the council with the proposed plan for the southwestern quadrant of O’Fallon, off of Highway N, South Outer Road and Old Highway N.

He said because the proposed development overlaps municipalities, from the staffs perspective, it make sense to review the entire project as one large development.

Riesberg added that each community would still retain jurisdictional control over their territories, which means they would have site planning, zoning and regulatory approval over their sections of property. They would also be responsible for providing police services to their areas.

He added that issues like storm water management, traffic and signage, are best viewed from a global level rather than having each city manage their own.

“There’s an opportunity for tradeoffs that result in a better overall project,” he said, using the example of the developer wanting to put the store sign closer to Highway N in Lake Saint Louis.

Staff from both cities public works and planning and zoning commissions discussed how to view the project as a large plan development and are starting to work through jurisdictional issues.

Riesberg said an intergovernmental agreement is key. This will spell out issues on split lots, and who will issue building permits, supervise and inspect site.

The city administrator said no formal agreement has been drafted between the cities, but O’Fallon staff is open to working with Lake Saint Louis.

At Monday’s Lake Saint Louis public work session, the plan drew mixed reactions from city officials. Some thought the proposed development may hurt Lake Saint Louis by pulling revenue from other businesses.

The shared sales tax revenue was also not a favored outcome among O’Fallon officials at Thursday’s meeting.

Ward 4 Councilman Jeff Schwentker said he didn’t agree that the shared revenue would hurt Lake Saint Louis businesses, but rather help by creating competition. 

Schwentker said while he agreed with an overall plan and cost sharing for roads and storm water, he was having trouble understanding the shared sales tax revenue.

“There’s nothing black and white for the money that comes in,” he said.

Mayor Bill Hennessy said one of his concerns, is that Lake Saint Louis could build office buildings on the outlots. This would bring in no sales tax revenue and cause O’Fallon to continue paying the 20 percent sales tax, without the opportunity for the agreement becoming void when revenues received from the outlots equal the amount Lake Saint Louis would receive from the store.

Both Riesberg and Lake Saint Louis Mayor Mike Potter, who was present at O’Fallon’s meeting Thursday, agreed it would be beneficial to have joint planning and zoning meetings regarding the project in April.

O’Fallon City Council voted unanimously with eight votes to approve the negotiation.

Ward 3 Councilman John Haman and Ward 4 Councilman Bob Howell were not present for the meeting.

The approval of the negotiation will allow city staff to work with Lake Saint Louis in the development of an intergovernmental cooperation agreement and move towards joint development on the project.

City Attorney Kevin O’Keefe said this will allow the cities to explore reasonable cost-sharing arrangements that can agreed on by both parties.

O’Fallon City Council agreed on discouraging staff from including revenue sharing as a part of the draft of the agreement—but not rule it out.

Mayor Hennessy said the sales tax revenue sharing is still open for negotiation.

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