McMillan Seeks TIF Financing for suburban-style Walgreen’s in City
Today the St. Louis Board of Aldermen approved three board bills relating to a proposed Walgreen’s at the NE corner of Grand & MLK. Last week I wrote about a fourth bill to rezone some of the property so the medium box and massive parking lot are in compliance with our suburban-oriented zoning codes dating back to 1947 (see post). You can tell how quickly change happens around here huh?
Here are the four bills related to the same project:
BB152, introduced 6/30/06; BB237 & BB238, both introduced on 10/6/06; and introduced a week ago, BB249. It was the last one, BB249, that I wrote about last week as it pertains to zoning.
BB152 relates to blighting the area while BB237 & BB238 both relate to the establishment of TIF financing in the amount of $1.2 million, from what I can discern from the wording. I’ll be the first to admit that I’m not very knowledgeable about the minutia of these various tax incentive agreements. But, I am learning out of necessity. Today I looked at BB237 and realized that “Attachment A” was not, in fact, attached online. I requested this document from Jim Shrewsbury’s office and I got it a shortly thereafter. The attachment was the TIF Agreement which contains the bulk of the details.
I’ve reviewed this document now and see nothing relating to any design standards, other than saying the project will meed state and local codes. It does not seem to reference the Federal American’s with Disabilities Act. Nor does the document seem to have any mention of other potential requirements such as provisions for bicycle parking (a 2-bike rack is a reasonable request don’t you think?). Requiring the new project to have street trees in the public right of way between curb and sidewalk would be nice — although this is potentially a city issue and outside the agreement. However, sidewalks from the public walk to the front door is certainly relevant to this agreement. Bike parking and clearly delineated sidewalk access to the new Walgreen’s is not pie in the sky kinda stuff. Sure, I’d prefer an urban corner but short of that we still need to provide basics for those not driving a car. It is these types of agreements where such requirements, minor costs in the big scheme of things, should be incorporated. Alas, it would take Aldermen that understand such issues and have a desire to provide something besides a self congratulating grand total of development project costs.
Note: In the interest of full disclosure, I am a very minor consult on the campaign of Pat Herod who is running against Ald. Mike McMillan in the November general election for the county position of License Collector. This post is unrelated to any consulting for that campaign.
The key to developing poor areas is to make it harder for pedestrian access to the stores. If we make them walk across large parking lots, maybe people without cars, or poor people, will move somewhere else. We can’t expect to attract suburban residents with your idea of “urban design!”
Why not?
Poor people and rich people simply don’t get a long! This whole idea of inclusionary zoning and integrated mixed-zoning is a joke! We all know that poor people don’t drive, so if we create autocentric environments, then they will move somewhere else. Besides Steve, suburban residents are not used to this concept of “urban design.” Finally Steve, you can’t impose your idea of “urban design” on everyone else! What about choice Steve! Some areas are urban and others are suburban.
St. Louis Marketplace and Southtown Center are clear examples of successful Economic Development! Steve there is a clear precedent for this wonderful suburban development!
OPEN YOUR EYES!
Tif Man, you better look around, youÂ’re the one who needs to open your eyes. We are in a different world. There are energy shortages, global warming, and wars over oil; serious problems lurk underneath the surface. Problems that could possibility even drag you into a war, if alternative action is not taken.
Urbanism is not some toy or fad. It is the development of human history from the time of mans first creation of villages and towns.
Southtown or any other development may be successful right now. But IÂ’m sure HitlerÂ’s Mein Kampf was also successful at the time. It does not mean it is right or the truth.
True urbanism will produce a socially integrated, energy efficient and desirable environment for daily living. Urbanism means a sustainable environment that the future can build upon.
The problem with the WalgreenÂ’s is not so much that one is being built, but the lack of leadership and foresight to set new standards on how it is built. The city can not or should not become another suburban style development, if it does, it will signal the failure of the political system to address the problems that face America and will portend the decline of the United States.
Simply stated, we cannot continue on the same path if we are to survive as a civilization.
i think TIF Man is just being extremely sarcastic … at least that’s how i interpreted it.
brady is right.
I am being completely scarcastic because the political leadership of St. Louis is, you guessed it….
COMPLETELY BLIND!
I wouldn’t worry about ADA requirments being written into the bill – they apply on any new project.
I do have some problems with a million-dollar TIF on this project. Essentially, this would give Walgreen’s a “free” store. While I like the idea of Walgreen’s “investing” in the neighborhood, I don’t like the idea of it happening on the backs of other voters and other existing businesses. Taxes foregone are lost revenues to the city. All that means is that other taxpayers have to pick up the slack. For residents, it means higher property and income taxes. More critically, it means higher taxes on existing businesses and an uneven playing field – existing businesses continue to pay taxes that “new” ones don’t (or, more precisely, the taxes the Walgreen’s would generate would go exclusivey to pay for the new store).
Yes, this is a poor and distressed area. That’s why I don’t question the “blighting” bills. And, yes, some financial assitance probably is in order to get the doors open. But to pay the full cost of constructing the building – that’s going too far. That’s how we got into trouble with the St. Louis Marketplace development. It don’t take no rocket scientist to figure out that if you have free rent, why shouldn’t you try operating at a location for a year or two or three? If it doesn’t work out, it’s not really your problem (and if it does, great, we’ll just stay and continue to make money)!
St. Louis is in a tough spot. There are many areas with “challenges”. A pattern has been established that we’ll try and do most anything to make a project happen, under the assumption that something is better than nothing / what’s not happening there now. Developers know this and have become adept at “playing the game”. Unfortunately, bigger picture, it makes little sense. We can’t continue to “Lose a little money on every project and to make it up on volume” – you’re still not making money! It takes taxes to run a government. But if development isn’t creating a growing, sustainable, long-term tax stream (and retail is notorious for being cyclical), we need to look at a better way of doing things. How many TIF projects promise a tax stream in 10-15-20 years, but aren’t/are no longer viable when that time rolls around?! Promises are cheap. TIF’s are like credit cards – you run up a lot of debt at the start, but it takes years to actually dig your way out.
Bottom line, whether it’s Ball Park Village or a Walgreen’s here, development needs to start to pay its own way. I don’t blame the developers for asking – hey, if you can get free money, why not? I do blame our “leaders” for rolling over and letting it (continue to) happen. If and when we draw a line in the sand, and say that no development gets a subsidy (corporate welfare) that exceeds 25% of the project’s value, we WILL see a drop in investment for several years. It won’t be pretty. But once we get past that, the economics will return to a more true supply-and-demand model, and projects will be built where the market damands them (based on rational business decisions), taxes will be paid on a more-equitable basis, and most importantly, the “new” taxes a new business generates will flow back to all St. Louis citizens, not just to pay off a pretty new building!
The Political Leadership believes that the suburbanization of St. Louis will attract residents from the County and improve the City’s fiscal situation. The wide body of evidence available, since these planning policies were implemented, shows quite the opposite. Not only will suburbanization eliminate our competitive advantage, which we have over our suburban municipalities in the County, it will drain our funds as well.
The various practices implemented in St. Louis, whether widening of streets, demolition of 10+ Historical Buildings Downtown for “Green Space” and Parking Garages, construction of suburban strip malls and shopping malls, and the disconnection of the street grid, have not produced population increases. Many of these practices have been paid for, or subsidized by the City of St. Louis, resulting in a loss of public funds which could be directed elsewhere.
The Slay Administration promotes Downtown Development, specifically the rehabilitation of lofts, as being the reason for the recent minor population increase. If the Slay Administration believes the rehab of historical buildings will draw residents Downtown, they why are they pursuing suburban development and urban demolition?
The explanation is that there is no continuity. They extol Downtown and CWE urban development yet they destroyed the Century Building and McRee Town. They promote Botanical Heights and the Hampton Village Target. The Hampton Village Target is a moderate success yet it is not unique enough to warrant 4 Million in tax abatement. The destruction of McRee Town only displaced the residents and crime into other communities. This is a policy which should not continue as rehab with infill can solve the problem.
The evidence shows that suburban development fails: St. Louis Marketplace, Southtown Center, St. Louis Centre, 14th Street Mall, and Cass Schnucks are some examples. We should not allow, or promote through subsidy, the construction of suburban development. Economic Development resources should be allocated towards the rehabilitation of our historical buildings downtown and across across the City. These are St. Louis’ natural resources which will provide population increases. Subsidy should be issued for truly unique urban development which will attract residents for years to come.
Suburbanization is both draining our fiscal resources, since we subsidize them and they fail, as well as destroying any other population increases like the ones seen Downtown. The idea that suburbanization will attract suburban residents is a false one. St. Louis has many unique aspects which allow us to compete with the suburbs for residents. Some are: historical buildings/architecture, street grid and walkable communities, local color and ethnic enclaves, and storefront retail. When we allow our historical buildings to deteriorate, or when we demolish them for Parking Garages, we are eliminating unique aspects of St. Louis which attract people from the County. When we eliminate the street grid and build suburban shopping malls we do not attract suburban residents because they already have them. For St. Louis to have population increases, the Administration must promote urban development which is unique for the region. St. Louis cannot compete by emulating the surrounding suburbs because we cannot do suburban as good as them. Moreover, suburbanization of St. Louis will alienate the urbanites who choose to live here.
St. Louis must have a comprehensive message of urban development and promoting of our natural aspects which will draw residents to the City. Suburban residents are moving Downtown due to the walkable lifestyle. If we promote that lifestyle throughout the City our population will rise. If this continues, St. Louis will never again be a Great City nor will reach its potential which is a Great City.
But as sarcastic as TIF was, he (or she) raises a point though: rich and poor do not get along. Statistically speaking, the more poor and more renters you have, the more crime you have. The more crime you have, the worse the neighborhood gets. It is a vicous circle.
Well Steve does push his urbanism, one of the problems that the city faces is that one city by itself can not easily force Walgreens (for example) to change design away from suburbanism. They have a set design that works well for them, that they know exactly down to the last bolt and nut how much it cost to build. They can (and will build) thousands of them. Unless citIES come together and demand change, it is very difficult to accomplish. Why would a business go through the hassels of design change for a few measily dollars in one city? Not that our dollars aren’t important, they just aren’t as important as the mega dollars they can get from places that allow them to plop a cut-out down.
I’m not a fan of suburban sprawl nor am I 100% in Steve’s corner, but I think the issues is extremely complex.
Praising Jennifer Florida… it must be getting cold somewhere that its never been cold before. As for TIF’s my understanding is that they cannot take money from the area. Instead if the parcel was generating $1000 a year for taxes that money cannot be touched. If the parcel was not contributing to the neighborhood thankfully Walgreens wants to develop it. I am not familar with the area so I dont have an opinion either way. I understand the need for good design and urban planning, and too believe that this just needs to be part of the process from the beginning. There needs to be more oversight of planning in general with regards to proposed projects. Developers will propose the most bland and economical project possible trying to get away with whatever they can. Its up to public hearings and the planning review process to call their bluff.
With a TIF, any additional sales taxes are dedicated to paying off the cost of the investments associated with a new project. The theory is that a) without a TIF, new development won’t happen, and b) after the TIF investments are paid off, there will be a new revenue generator for the city.
My experience with (and observations of) retail is that there seems to relatively limited lifespan for any retail investment. Big boxes are calculated with 12-15-20 year lifespans. Retailers like Walgreens seem to rebuild after 20 or 30 years. And retail sales tends to peak early in their “life”, then tend to trail off as the store gets older and less fashionable. Thus, the bulk of the “new” sales tax revenues get returned to the developer for the first 10-12 years (to directly pay for his or her development costs) and little or nothing goes to the city, while the city provides typical city services “for free” (on the backs of other taxpayers) during that period. It’s only after the developer gets paid in full, with interest, does the city see a small bump in tax revenues, and by then the cycle is starting all over again, with the retailer making noises about needing a new facility to stay competetive (or they’ll “move to a different location or a different city”).
And, unfortunately, the retailers that are best at playing these games successfully tend to be chain retailers. That means that local businesses end up having a non-level playing field. They rarely benefit directly from TIF’s (although their landlord may) AND the sales taxes they generate get used to provide city services to both them and their “free-loading” competitors! As a former business owner, I didn’t mind fighting for my “slice of the pie”. I did, and still do, object to my competitors receiving public assistance in their efforts to compete against me!
Bottom line, a TIF plan IS corporate welfare. Welfare, of any sort, is a public policy issue that needs public support. My take is that TIF’s are used too often here to benefit a minority of businesses that may or may not actually need the help to succeed (and improve the city). It all boils down to doing the minimum necessary to “prime the pump”, not doing everything possible to protect a private business’ investment. Being in business is all about taking risks, and the more the public guarantees, the more it loses when a business fails (and there are no sure things in business)!
In reference to the comments by Steve with regard to my posting: The fashionable CWE renter is mostly single or young familes with disposable incomes whereas other areas, and not necessarily the North, have higher levels of lower income, lower education levels, and higher crimes.
Are the crimes different? Yes. Opportunity crimes such as embezzlement or check forging don’t bring down entire neighborhoods. Rape, drugs, car thefts do. Minimizing those “just happen to be different crimes” is refusing to admit that poor people crimes are harder and more difficult than high people crimes. The whole issue of crime is very difficult. Concentrated poverty does bring on concentated crime which does bring on lower neighborhood values (besides just the financial values).
As for Walgreens. I used that business only as an example. But it and others like them will not build in cities that are too demanding. Yes, they need dollars to satisfy an ever growing demand by stockholders and because of that they will feed off the easy neighborhoods first before they have to address building to accoidate.
Can we make change? Yes, I believe we can, but we can’t do it one city at a time. When the area as a whole stands up and says with one voice: Hey, change that building, build more pedestrian friendly sites, use what is there first then destroy and rebuild. Only then will businesses listen. Until then, we have city against city, and neighborhood against neighborhood fighting to get a business to open up and giving away their future (through TIFs and other means). St. Louis is not the size of Chicago (not yet, but we will get there again some day). That is not an excuse, it just means that the St Louis region needs to work together as a whole for the better of everyone and not just their own pockets.
In the mean time, city officials for all communities need to plan for that day so it doesnt come up from behind and they can’t do anything about it.
I think the point Maurice is making is about low-rent and/or subsidized (section 8) developments and/or high concentrations of section 8 voucher usage.
We can’t and shouldn’t prevent landlords from offering their units to folks holding section 8 vouchers, but when there are hundreds of such units concentrated in a small area like in the Benton Park West/Gravois Park area, it can be an indicator of other problems that public policy is not handling well.
It’s basically just letting a (very distorted) “free” market take the place of public housing.
Except that the property is owned by absentee private owners instead of the absentee public housing authority. Some trade.
And it’s actually historic architecture, 100+ year old homes built to last by skilled craftspersons, unlike the crummy projects with skip-stop elevators like Pruitt-Igoe was.
We fundamentally need a MIX of homeownership, subsidized and unsubsidized rentals, etc.
I wish there was a way to change the laws to prevent certain landlords from EVER buying property in the City of St. Louis.
But of course the right to own property and do with it as you please (within limits) is one of the most cherished in the US Constitution. And rightly so.
Instead, cracking down on criminal activity should be part of the job of those landlords, not just the police. While folks who have records still deserve the chance for decent housing, folks who are actively committing crimes really do not need such slack. Federal public housing policy already says this, but somehow it doesn’t seem to work for privately-owned subsidized housing.
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