New ‘Downtown Economic Stimulus Authority’ to Benefit Ballpark Village?
Just when you thought we didn’t have enough authorities, boards and commissions the City of St. Louis has decided to add yet another: the Downtown Economic Stimulus Authority. This is authorized by the State of Missouri through the Missouri Downtown Economic Stimulus Act or MODESA for short.
Under the city we’ve got the Planning Commission, Preservation Board, Board of Adjustment, and probably a few others. Under the St. Louis Development Corporation board (SLDC) we have the Industrial Development Authority (IDA), St. Louis Local Development Company (LDC), Land Clearance for Redevelopment Authority (LCRA), Land Reutilization Authority (LRA), Planned Industrial Expansion Authority (PIEA), Tax Increment Financing Commission (TIF) and the St. Louis Port Authority. Trying to find out information on these is a challenge as with only one exception are the members names listed and agenda published online.
So do we really need another authority charged with economic development? Sadly, I think the answer is yes.
I attended the Board of Aldermen’s Housing, Urban Design & Zoning (HUDZ) committee meeting recently where Barb Geisman, the Deputy Mayor for Development, presented BB#6 to create the authority. The first thing I found interesting was the bill was sponsored by Fred Wessels, committee chair, rather than one of the aldermen representing most or some of downtown.
Ms. Geisman talked about the new state law allowing counties & cities to create this authority which can utilize state funds collected from two sources: state sales tax and state payroll taxes. She did a great job of explaining the complicated requirements and I’ll do my best to pass along how it will work as well as links to the legislation so you can play along at home.
The condensed idea is to attract new business to the downtown area as defined by the authority. If the development plan meets all the various criteria a portion of the state sales tax and earnings tax generated from new business can be applied toward development costs.
Defining new business is the tricky part. Moving the Hooters from Union Station to the old Mike Shannon’s site does not constitute new business. Even something like opening a new grocery store downtown may not count as the state will argue that it is not generating new state taxes — any sales would simply be at the expense of another grocer already located in Missouri.
In describing the process Geisman mentioned they were thinking of this authority for three “related” projects, St. Louis Center, the former Dillard’s building and Jefferson Arm’s. First, Jefferson Arm’s is only related to the other two because of the same developer, Pyramid Companies. Physically, the projects are a good 5+ blocks apart. But, that is not the issue. This Downtown Economic Stimulus Authority looks at projects generating state taxes — sales and payroll. The residential uses planned for St. Louis Center, Dillard’s and Jefferson Arms don’t even begin to meet the criteria. Sure, new businesses located at street-level may well qualify under the state’s terms but I can’t imagine that would generate much.
I think mentioning these projects was a bit of a smoke screen. My bet is this new authority is being put into place to help offset development costs for the Ballpark Village. You’ll recall recent flap over the developer, Cordish, seeking TIF financing and the city refusing to do so (see Biz Journal story). In all the years it took to get the new stadium deal put together and all the talk about the Ballpark Village I find it highly unlikely that TIF financing never came up in discussions until just recently. Does this mean a TIF is out? No, one of the tricks of the MODESA state law is that it must always accompany a TIF.
Mark my words — we’ll see the Ballpark Village get a TIF as well as help from this new Downtown Economic Stimulus Authority. I wouldn’t rule it out for other projects such as St. Louis Center and the Bottle District (aka Gateway Village).
Related links:
•
BB#6 (ignore summary as it is wrong but the PDF has the right bill)
•Missouri Development Finance Board/MODESA
• Missouri Revised Statutes, Chapter 99 (see 99.921 – 99.980)
– Steve
I would rather see tax incentives being apportioned to “average joe rehabber,” rather than these superprojects. The biggest gain comes from revitalizing our neighborhoods. St. Louis can do just fine without Ballpark Village and Bottleworks.
Mixed feelings . . .
If we can snag sales taxes from elewhere in the state, or keep them here instead of sending them out of the area, it can’t hurt.
Why the focus on attracting “new” businesses? Wouldn’t it be more productive to keep existing businesses happy and growing? It seems like St. Louis has lost more than it’s gained over the past few decades – how much could’ve been saved through aggressive retention efforts?
Double D wrote:
“The biggest gain comes from revitalizing our neighborhoods.”
Now, there’s a sweeping generalization…
The new stadium and Ballpark Village are projected to equal roughly $1 Billion in jobs, contruction, and entertainment, with 3,000,000 plus visitors to downtown per year.
Neighborhood projects are great, but without downtown serving as a regional draw, it’s harder for the neighborhoods to thrive.
Dollars available for entertainment are finite. Dollars spent in a BPV won’t be spent in West Port or Las Vegas or Union Station. If there’s money to be made, an entrepreneur will be there to make it, with or without city assistance.
Look at what’s happening in Illinois. A recently-enacted law takes 3% of their casino profits and reassigns (gives!) them to horse-racing tracks (because their revenues have declined as other places to gamble have come on line).
You can’t guarantee success. The best thing government can do is to provide a level playing field, not create artificial advantages for one business or area or class of citizen!
So it sounds like JZ is saying that historic rehab should not be incentivized with historic tax credits.
Look for his next post to argue for a flat rate consumption tax on retail sales, and that’s it.
Travel that road, and say goodbye to just about all the recovery made in STL in the last ten years.
“The new stadium and Ballpark Village are projected to equal roughly $1 Billion in jobs, contruction, and entertainment, with 3,000,000 plus visitors to downtown per year.
Neighborhood projects are great, but without downtown serving as a regional draw, it’s harder for the neighborhoods to thrive. ”
I am not saying that these superprojects are bad, but something comparable could be built in St. Charles… in fact it looks like this is already happening.
See:
http://urbanstl.com/viewtopic.php?t=2519
These superprojects could be done cheaper in St. Charles, thereby killing this regional draw. Result: Another St. Louis Centre. The Galleria killed the St. Louis Centre because of the parking, and closer distance for County residents. If these superprojects are duplicated in St. Charles, you can bet they won’t come downtown.
Rather than building superprojects, we need to reviltalize our neighborhoods that cannot be reproduced elsewhere. There is only one Hill, Dogtown, CWE, Soulard… There could easily be another Bottleworks, BPV, etc.
I fail to see how downtown helps other neighborhoods as well. One could said the tax revenue from DT helps, yet most DT projects have tax abatement or TIF’s. DT development is good, however I am skeptical when people say it benefits struggling neighborhoods. I also fail to see how tourists spending money downtown will create benefits for those neighborhoods. Once this superproject falls out of favor, all DT has is a lot of wasted land.
In order for St. Louis to continue its great recovery and become a top-rate city, which requires attracting quality businesses and residents, we need to further the progress being made downtown, such as the redevelopment of abandoned buildings into shops and lofts, as well as continue to restore our urban neighborhoods to their former glory.
Downtown is the heart of the city, and our neighborhoods are its soul. Focusing solely on one or the other addresses only half the issue.
If we can recapture some of our tax dollars going to Jefferson City, we must make every effort to do so, and apply them as best we are allowed to the continued improvement of our city.
Double D writes:
“I fail to see how downtown helps other neighborhoods as well.
Here’s how…
With upwards of 90,000 employees working downtown, DT generates the lion’s share of the city’s earning taxes.
Earnings taxes provide a huge share of the city’s operating budget, which funds city services to all of our neighborhoods.
Remove downtown workers from the equation, and you’ll see less money in the city budget to support basic public services.
“Earnings taxes provide a huge share of the city’s operating budget, which funds city services to all of our neighborhoods.”
What I am talking about is the blight in North St. Louis, and some areas of the south. Development at the core does not mean these areas are going to benefit. We cannot passively expect development to spill over into distressed areas. City services will do nothing for these areas if propertys are allowed to sit and rot. Hopefully Jim’s new ordinance will make a change.
My main point is that these superprojects are not going to solidify downtown. We should not spend our money on them. St. Louis needs to continue to “invest” in lofts, and extend this development outward.
The reason all the ‘alphabet soup’ agencies exist is because state law mandates these independent commissions. It’s never been really clear to me why those powers couldn’t have been given to pre-existing bodies, but that’s what state law specified. Most (LRA, LCRA, PIEA, IDA, etc.) were established initially in the 1960s and 70s. The TIF commission, of course, is newer; but any muni that issues TIFs has to have one.
Prior to the creation of SLDC during the latter part of the Schoemehl administration, each of the boards had their own independent staffs. So the current situation is a significant improvement.
You could certainly make the case that the Board of Adjustment – which mainly handles zoning variances – should be merged into or made a subcomittee of the Planning Commission. Both are city rather than state-created entities.
But to do that, you’d also need to merge the planning (PDA) and zoning (Building Division Zoning Section) functions.
Double D writes:
“City services will do nothing for these areas if propertys are allowed to sit and rot. Hopefully Jim’s new ordinance will make a change.”
City services include code enforcement. The cost for administering the city’s new code enforcement ordinance is paid for out of general revenue, ergo city earnings taxes.
Double D then writes:
“My main point is that these superprojects are not going to solidify downtown. We should not spend our money on them. St. Louis needs to continue to “invest” in lofts, and extend this development outward.”
Hmmm. What is the difference between a TIF and historic tax credit-aided loft project like the Merchandise Mart Lofts and an incentivized “superproject” like Ballpark Village? Or, say ten historic loft developments and one superproject like the new ballpark and BV?
They are all sponsored by huge financial interests, and all add to the good news of what’s happening in the city.
Here’s another way of looking at it…if my job wasn’t downtown, and the city wasn’t the focal point for the region’s cultural, sports, and entertainment attractions, we would have been a lot less likely to select a city neighborhood as our primary residence.
The “upwards of 90,000 employees working downtown” have little to gain from the success of BPV, but would be saddled with even higher taxes and/or reduced services if it fails. As I’ve said before, government is usually not very good at the develoment game. I don’t have a problem with government helping get needed infrastructure in place to support a new development (it was probably needed anyways), but I draw the line at participating financially in a private project. If the numbers “pencil out” and make sense financially, there are multiple funding sources available in the private sector. And if the numbers don’t make sense, why the hell should the city be participating, essentially as an investor of last resort?! The usual result is a project that starts out shaky and goes downhill, with the local taxpayers left to bail out the out-of-town bondholders!
I also seriously doubt that BPV will generate 3,000,000 NEW visitors to downtown. Half of this projection can be attributed to people just walking through the area on their way to a game at Busch Stadium. Another million are probably local folks (downtown workers, suburbanites) choosing to eat at the new ESPN Zone (or other chain restaurant) instead of spending their money at an existing local St. Louis restaurant on the Hill or in Union Station or at Laclede’s Landing. That leaves possibly 500,000 somewhat new visits, or less than 1400 a day! And probably half of those are folks being attracted from within the metro area (but from outside St. Louis City).
It’s essentially a zero-sum game. Much like convention centers or aquariums, St. Louis rests squarely in the second (or third?) tier. Sure, we get our share of tourists looking at the Arch and doing the A-B tour. But, we’re not Las Vegas or Orlando (or Washington or San Francisco), nor do most of us want to be. We might attract a convention away from Indianapolis or Memphis or Kansas City, but we’ll be sending a similar number of conventioneers to them in return. Money spent in a BPV will be money not spent on Broadway or Union Station. I support competition, especialy in the private sector, but I don’t support competition that creates disparities by using my taxes, especially with the track record on most publicly-funded ventures is not positive. If I want to make a stupid investment, I’d rather do it myself, not let a politician do it for me!
[REPLY – OMG Jim, I agree with you! So much of what is publically funded is zero sum gains. Look at the Old Post Office project and the garage that replaced the Century — tenants moving from other downtown locations. The Pasta House is new but that will just take away money spent at other eateries.
To get out of this game we must increase the population not just of the city but region. Otherwise we are just shifting the same tax money around. So will the BPV or other big project increase our region’s population? Doubtful. It may help attract attention to the region so that we’ll get an indirect increase but only slight. Can we afford to pay $1 million per new person moving to the region? – SLP]
JZ obviously wasn’t around when neighborhoods like Lafayette Square and Soulard were “shells” (pardon the pun) of their current selves.
Those celebrated neighborhoods received millions and millions of public help in the form of tax credits, government assisted loans, and outright grants, all assisted by elected officials.
25 years later, Soulard and Lafayette Square are mostly weaned off the public teet, even though they still qualify for historic tax credits.
Today, public resources are being targeted toward comeback areas like Old North St. Louis and Benton Park West.
Jim is right on one point-public participation in private development financing is made as a last resort, requiring a “but-for” test, and made at the absolute minimum amount necessary.
You’re right, I wasn’t around 25 years ago. I’m sure back then and there, incentives were both needed and appropriate in those historic residential neighborhoods. But BPV ain’t Soulard or Lafayette Square. It’s several contiguous city blocks of prime real estate under a single ownership strategically located between a proven, successful trip generator (Busch Stadium) and a resurgent downtown area with 90,000+ worker bees and a growing residential population. It doesn’t need a subsidy to succeed! Look at what’s happened/is happening around other retro ballparks in Denver, Cleveland, San Diego, Baltimore and Cincinnati. The private sector is aggressively meeting the need for complementary entertainment venues! Adding city money to the mix will either just make the developers richer or ham string the development to the point that it will be less agile and less able to respond to current economic and demographic trends . . .
So, to be clear…
You are withdrawing this statement:
“As I’ve said before, government is usually not very good at the develoment game. I don’t have a problem with government helping get needed infrastructure in place to support a new development (it was probably needed anyways), but I draw the line at participating financially in a private project. If the numbers “pencil out” and make sense financially, there are multiple funding sources available in the private sector. And if the numbers don’t make sense, why the hell should the city be participating, essentially as an investor of last resort?!”
…when it comes to neighborhood development projects in places like Old North St. Louis and Benton Park West?
“Hmmm. What is the difference between a TIF and historic tax credit-aided loft project like the Merchandise Mart Lofts and an incentivized “superproject” like Ballpark Village? Or, say ten historic loft developments and one superproject like the new ballpark and BV?”
The difference is that these entertainment districts are completely different than lofts, and have a greater chance of failure. If they fail, the City pays the price in both lost taxes and occupied real estate.
DD-
Don’t forget that BV is planned to have over 1,000 residential units.
It’s much more than an “entertainment district”.
My comments are focused primarily on BPV, the subject of this post. And I support appropriate efforts to help stabilize and revitalize residential neighborhoods (and yes, small business is a part of many neighborhoods).
I have continuing concerns about local governments’ growing appetite for sales tax revenues and the apparent self-destructive patterns that follow from many of these pursuits (with Sunset Hills and potentially Rock Hill being the most egregious recent examples). As much as any government “wishes” it, there’s only so much any local government to create a potent retail center. Both Gravois Bluffs and Chesterfield Commons succeed because of location and demographics, with government’s role being much less important and more a result of luck as a result of geography.
Redeveloping stressed areas like Old North St. Louis and Benton Park West requires much more than direct subsidies to developers. It requires things the city can control, like crime and code enforcement, as well as efforts to make the development process less onerous. It also requires intangibles that the city can’t control, like defining what is a cool area and how to encourage entrepreneurs to make investments in iffy areas (like Mancheter Road around the Atomic Cowboy).
St. Louis is both blessed and cursed by an incredible amount of solid but underused real estate. A major hurdle to residential growth is the perception that the public schools are to be avoided at all costs. That wasn’t a real issue to me moving here (no kids), and it’s not much of one to a kid fresh out of college. It IS a major hurdle to couples who have or are planning to have school-age kids. Better to fix the schools and to improve perceptions, than to build another St. Louis Marketplace (K-Mart on Manchester).
So, taking all this together, we go from downtown development being of no benefit to neighborhoods, to neighborhood revitalization being at the mercy of a bankrupt public school system. What does it all mean??
Well, speaking from the standpoint of a high property taxed, city parent parochially-school-educated teenager; having seen our two non-tax abated, city homes steadily increase in value over the past ten years (regardless of the presence of a woefully inadequate public school system), we can say that the overall experience of city living has been a very positive one.
^1. Downtown’s success IS good for neighborhoods. That doesn’t mean that every developer deserves a subsidy, and it certainly doesn’t mean that the city should guarantee all or part of their financing package. The city and its taxpayers have already leveraged development in the area by building a new stadium, making the adjacent land more valuable and drawing people to the area. I don’t blame the developer for asking, but I support the city’s position of saying no, enough is enough!
2. And speaking from the standpoint of a highly-property-taxed, non-parent, new resident, I find the overall experience of city living to be positive, as well (otherwise I’d be out in the County). That doesn’t mean that things can’t be improved. Taxes are relatively high for you and me because of the large number of TIF’s, property tax abatements, etc., etc. If more people were paying their true fair share, there’d be less disparity between the ones getting breaks and the ones who aren’t!
Finally, having to accept paying for parochial schools as well as supporting “a woefully inadequate public school system” seems to be a high price to pay for living in the city. Coming from another city (Denver) that admittedly has its share of challenges with public education, but still manages to continue to attract many of the “best and the brightest” in spite of their challenges, makes the reliance on parallel systems here seem like both double taxation and a problem desperately in search of an answer. I value efficiency in the delivery of government services, and if a system isn’t working, it should be fixed, not ignored (“if you’re not a part of the solution you’re a part of the problem”). And no, I don’t know how to fix the problems here. They didn’t happen overnight and they won’t be fixed quickly. But to walk away from the problem, essentially creating an underclass that can’t afford anything “better”, is wrong.
^1. First, the city hasn’t “guaranteed” a developer’s financing since the St. Louis Marketplace. They’ve been out of that business for a long time.
2. Doesn’t Denver have a totally different situation than St. Louis in that it is a huge sprawling city? St. Louis public school problems can largely traced to the fact that we are an island containing severe urban poverty. Those poverty stricken kids make up a high percentage of our public school enrollment.
3. Meanwhile, St. Louis has always been one of the top areas in the nation for parochial school attendance (maybe a corrollary to #2 above). So, it’s ironic to hear people say, “I’ll move in to the city when they fix the public schools”. City or county, there are tons of families enrolling their kids in private/parochial schools, regardless of their zip code.
“City or county, there are tons of families enrolling their kids in private/parochial schools, regardless of their zip code.”
Tons of middle class families. Alas, many families fall well below the income level needed to pay parochial or private school tuition.
While I don’t plan on having children, if I had one I could not afford to do anything but send him or her to public schools.
^1. How ’bout the convention center hotel financing?
2. Like St. Louis, Denver’s a combined City and County, cannot grow, and it’s surrounded by wealthier suburbs. Economically, it is doing better than St. Louis. It has very wealthy neighborhoods like the CWE and it has poor neighborhoods. The biggest difference is that it hasn’t lost 40% of its population and a large manufacturing base, like St. Louis has since WW II, and its poor areas don’t make up as large a proportion of the city.
My point is that citizens here seem more willing to fund a parallel school system (at not an insignificant cost) while readily acknowledging that the public system is failing. The issue doesn’t seem to be money or resources, just how those resources are being allocated. Both Missouri and Colorado are viewed as relatively low-tax states, so the public tax burdens are similar (but doesn’t include the hidden “tax” of parochial school tuition). I also understand the history of of the parochial schools (having attended both public and parochial schools growing up). The only real difference that I can see is that Denver’s predominant minority (actually the majority) is Hispanic, while here it’s African-American.
Much like St. Louis’ system, DPS is a typical urban school system, with many students from poor families, test scores that are below state standards, a strong teachers’ union and a poor graduation rate. Yet, in spite of this, they still manage to place two high schools at 125 & 308 on Newsweek’s recent ranking of the top 1,200 U.S. High Schools.
“From Wikipedia, the free encyclopedia:
Currently, DPS operates 73 elementary schools, 15 K-8 schools, 17 Middle Schools, 14 High Schools, and 19 Charter Schools. They also operate magnet programs and schools including the Denver School of the Arts, the Center for International Studies, the Emily Griffith Opportunity School, an International Baccalaureate program, a Highly Gifted and Talented Program, and others. DPS also operates the Balarat Program, an outdoor education, western history, and environmental studies program at a 720 acre site in the mountains northwest of Boulder [1].
In total, DPS educates approximately 73,000 students. The ethnic/racial composition of these students are:
American Indian: 1.2%
Asian: 3.1%
Black: 19.1%
Hispanic: 57.3%
White: 19.3%
The graduation rate of DPS students is 76.9% according to their website. Other sources however report far lower graduation rates, for example with a rate of 42.6% being reported for the year 2002. The difference is explained in that the numbers reported by DPS use a cohort sytem that tracks a specific group of students from 9th to 12th grade (including students that leave the district) whereas the other statistics only report students that graduate within DPS. Thus, 76.9% of DPS students graduate from high school, but only 42.6% of DPS students receive a diploma from DPS.
There are 13,452 employees of DPS, 4,061 are teachers.”
Bottom line, I think it’s a cop-out to both just “write off” the public school system (and assume that it can’t be fixed) and to assume that its continuing problems aren’t a disincentive to the revitalization of the city. Neighborhoods grow up around their institutions, both public (schools & parks) and private (grocery stores & coffee shops). And part of what makes a school successful are successful students. I’m pretty sure one big struggle St. Louis schools faces is simply a lack of middle-class students who can pull up the grade averages. It’s the old chicken or egg issue – if the stats say “bad”, you can’t attract “good” students, but it takes “good” students to improve the stats . . .
JZ asks:
^1. How ’bout the convention center hotel financing?
The way I understand the project, the city invested roughly $90,000,000 in a federally backed loan for the project, but most of the financing is made through bonds purchased by Kimberly Clark.
If there is a default on the Kimberly Clark bonds, the city’s $90,000,000 federally funded loan could be wiped out. However, the city is not on the hook to guarantee payment on the bonds owed to Kimberly Clark. That amount is up around $250,000,000.
We'r ed hardy outlet one of the most profession
of the coolest and latest ed hardy apparel, such as
ed hardy tee ,ed hardy bags,
ed hardy bathing suits, ed hardy shoes,
ed hardy board shorts ， don ed hardyt,ed hardy tank tops, ed hardy for women,
ed hardy swimwearand more,
ed hardy clothing. We offers a wide selection of fashion
cheap ed hardyproducts. Welcome to our shop or just enjoy browsing through our stunning collection available wholesale ed hardy in our shop.
our goal is to delight you with our distinctive collection of mindful ed hardy products while providing value and excellent service. Our goal is 100% customer satisfaction and we offer only 100% satisfacted service and ed hardy products. Please feel free to contact us at any time; we are committed to your 100% customer satisfaction. If you're looking for the best service and best selection, stay right where you are and continue shopping at here is your best online choice for the reasonable prices. So why not buy your ed hardy now, I am sure they we won’t let you down.