My finance view

HERCULANEUM — Local officials have eyed more than 70 undeveloped acres along busy Interstate 55 for the past several years, dreaming about the possibilities.

They hope to learn soon if those possibilities will become reality.

Two brothers, Curtis and Clayton Francois of St. Louis County, are partners in Herculaneum Development Co., which owns that prime undeveloped acreage near the northeast quadrant of the interchange of I-55 and McNutt Street.

They plan to develop the wooded site, which is just north and northeast of the current Herculaneum Hilltop Plaza, a commercial development of small stores.

The Francois brothers have been working for two years in a rugged economy to find stores, restaurants, and hotels or motels wanting to build along the growing Herculaneum I-55 corridor, about 30 miles south of St. Louis.

"There is pent-up demand to build," Curtis Francois said this week.

"We have more than 70 acres ready to be developed," he added. "It’s an ambitious project, but everybody involved with it thinks it’s got great potential."

Even so, Francois said that although more and more businesses have been making inquiries lately, he wasn’t ready to announce any tenants or potential tenants for the site.

"There’s nothing imminent yet," he said. "There’s been real pressure in the real estate sector, but we feel things will turn around soon, and we have a great location at Herculaneum."

Herculaneum Development Co. was given the go-ahead by the Board of Aldermen in 2007 to develop the site.

Officials blame the lack of progress since then on the poor economy.

In July 2007, the Board of Aldermen reactivated Herculaneum’s Tax Increment Financing Commission to help the Francois brothers. The brothers had just completed buying all parcels in the development site for a total of about $700,000.

In TIF financing, the new tax revenue generated by a development is used to help pay for the infrastructure and other improvements within the project boundaries.

Herculaneum City Administrator Jim Kasten said he would like the development along I-55 to include a "big box" anchor store, several smaller shops, three or more restaurants and at least two hotels or motels.

"Hotels, in my mind, bring people in off the road," Kasten said.

And the more I-55 travelers who stop at Herculaneum, the more revenue the city will get through its sales tax, he said.

He said the Francois brothers made a commitment in their TIF agreement with the city to level the development site and build retaining walls there as needed.

The city, in turn, will make road improvements for access to the site, Kasten said.

The Francois brothers have completed a year of their three-year TIF agreement with the city to start developing the site, Kasten said. The developers will have five years to finish the project after it has started, he said.

Kasten described the Francois brothers as "cautiously optimistic" that tenants would be found and work on the project could begin within a year or so.

Kasten and Curtis Francois both said they didn’t view the development plans as competing with I-55 corridor development proposals at nearby Pevely — just one interstate exit to the north of Herculaneum.

In Pevely, officials hope to put new commercial businesses around the I-55 and Highway Z interchange. Ready for development at Pevely are 36 acres at the northeast quadrant of that busy interchange, 11 acres at the southwest quadrant and 9 acres at the southeast quadrant.

Pevely officials have said they want a mix of retail stores, a large grocery and restaurants at their I-55 interchange.

Francois said the plans for Herculaneum are on a much larger scale than those for Pevely, and that the two communities weren’t seeking the same tenants.

"My thought is that whatever brings business in, off the interstate, is good for all of us," Kasten said.

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