Richmond Heights Redevelopment Area Back To Square One
The St. Louis suburb of Richmond Heights was back in the news this week:
The Richmond Heights City Council voted unanimously Monday night to seek new redevelopment proposals for the Hadley Township area.
The developer previously selected for this area, Michelson Commercial Realty and Development, missed the January deadline to give Hadley Township homeowners notices to close, as required in its redevelopment agreement with the city. (Source: St. Louis Business Journal)
Not good news for the residents who were expecting buyouts. Another casualty of our current economic situation.
Was this inevitable?
With big developments come big risk. These massive redevelopment projects are harder and harder to finance. Good. I never liked the selected proposal anyway. More boring big box crap that we have too much of already.
We need to learn how to revamp aging areas without assembling ever larger parcels of land. We need to learn how to look at major streets like Hanley and envision how, over time, the individual parcels along the street would be developed. Land-use regulations (aka zoning) can be used to set in place the regulatory framework to see a vision realized naturally over time.
The slow process of remaking areas parcel by parcel requires great vision & patience — qualities lacking in our local elected officials in the City of St. Louis as well as suburban municipalities like Richmond Heights.
Now once again seeking redevelopment proposals this farce continues to drag on. I attended meetings in January 2006 where proposals were last submitted. Over three years ago! People have moved. The once stable area is no longer.
Richmond Heights officials do have vision. They want the Hadley Township area to resemble the adjacent sprawl wasteland in Maplewood. They see future tax revenues over current residents. Very shortsighted.
The state of Missouri took over our failing city school system. Maybe the state should take over the region and consolidate hundreds of seperate small units of government into one whole. That might put the brakes on the destruction of areas in the sales tax chase game.
Click here for my post on Hadley Township from October 2008 — which includes links to posts dating back to January 2006 as well as other resources.
I agree with everything you said Steve, except for one thing; I think this project was not the victim of the economy, but of stupid, poor planning that started years before the economic downturn. They’ve been messing around for three years, at least. It’s scary what can be done to your neighborhood if it doesn’t fit your local government’s “vision” of what your city should be like.
Mega dittos, Steve.
Did you see the article on Sunday in the PD about the vacant big boxes? These stores are built with an expected three year useful life? Wal-Mart just keeps moving down the road. So, so shortsighted.
This story is a perfect example of how near sighted planning by poorly led municipalities leads to our mutual downfall. The story really began over eight years ago when the Council put the neighborhood in play (and without notice to residents) as the Maplewood Walmart development was on the drawing board. Your stories on these self destructive designs and redesign of public assets (streets and sidewalks) began in 2004 and probably turned out worse than even you imagined as your initial entries were on Maplewood alone.
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This story though involves more than just two municipalities as both StL County and MoDOT have joined in the destruction of the area for residents in favor of stores to boost local tax revenues. The design of the New 64 and making Hanley Rd more like Manchester-141 area are significant parts of this grand plan. And local leadership wonders why depopulation continues? In the last 20 years, the number of residents living in Richmond Heights is down by by approximately 36%. Thus the NEED for more sales tax revenues increases with each decision. This story is the perfect example of what is wrong with the region and how low we can go with talent diluted by divided government.
This project chillingly recalls the Urban Renewal projects of the 1950s-1970s. The destruction of McRee Town in the City of St. Louis is another very recent example of the whole-scale removal of African American neighborhoods for “redevelopment” purposes. Smart redevelopment does not have to destroy the urban and social fabric of a community to bring tax revenues and new residents to a struggling area. For positive examples of how renewal can work to better neighborhoods and increase tax rolls, one need only look across the River to the Emerson Park Neighborhood. This transit-oriented development left existing homes while building East St. Louis’ first new development in at least 20 years. The mostly elderly, mostly African American homeowners, saw their neighborhood radically improved and benefited from the investment. McCormick Baron and the Emerson Park Neighborhood Development Corporation (among others) worked hard to make this happen. There are other good examples of positive urban renewal here in the City of St. Louis.
Maybe the leaders in Richmond Heights could learn a few things from across the river…
While I agree the Parsons Place project in Emerson Park is a fine example of a good redevelopment, it is hardly comparable to efforts in Richmond Heights.
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Richmond Heights leaders see new employment opportunities and tax revenues for their community stemming from the commercial redevelopment of the Hadley area. Such potential was never in the cards at Emerson Park.
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The debate is over highest and best use. At least that’s what I thought. Dumb me.
Dumb Me,
I think all we’re saying is that you shouldn’t have to worry about losing your home if you don’t wrack up serious tax dollars for the city you live in. How dare the residents of Hadley Township think they deserve to live there when a Wal-Mart could generate more tax dollars for the city? Aren’t they team players?
“The debate is over highest and best use. At least that’s what I thought. Dumb me.” No, the debate is whether you have a right to keep your home where you’ve lived for decades without having to worry about the government taking it away from you and giving it to another private entity.
From the news reports I’ve seen, it appeared the owners mostly were looking forward to being bought out at prices exceeding the market value of their homes.
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Case in point: The old lady bought out at the Loughborough Commons, the one in the news who was the last to sell, was paid over $300,000 for her three or four room, flat roof, brick bungalow.
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I’d have taken that deal. Who wouldn’t?
The problem here was the economy went in the toilet and the developer simply couldn’t deliver on his promises to buy the properties / arrange adequate financing in a timely manner! Bigger picture, not every property can or should be “improved”, i.e. converted from residential or industrial to retail uses. There are only so many dollars that can be spent in the region, and just building a new shopping center doesn’t guarantee more and sustained sales tax revenues, nor does it increase the number of “good-paying” jobs out there. Put simply, IF there’s a proven need for retail or other type of redevelopment, most any developer can find financing for a project, without any government assistance.
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Locally, and unfortunately, we’ve evolved into a development model where local government accedes way too readily to every developers’ arguments / pleas that they “need” government participation to be “successful”. Investors are much less likely to believe that hype – the numbers either “work” or they don’t (and here, given the current economy, they obviously don’t). The take away from all this should be that just because you want more tax revenues, sometimes redevelopment simply doesn’t make economic sense – you simply have too many other local competitors / opportunities, and “build it and they will come” just won’t happen for the simple reason that the market is already saturated!
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Aside from all the urban design issues, one of my big concerns is an evolving government mindset that it’s better to tax non-residents than to tax residents. I get the basic argument – no one likes to pay taxes and no politician wants to get tagged as someone who raised taxes, especially on their own constituents. The reality remains, however, that government needs taxes and fees to deliver their services. And while it seems like free money to get funding from somewhere or someone else, as consumers of government services, ultimately we each should either be willing to pay for our fair share OR we should be willing to receive fewer services from fewer government employees receiving lower wages.
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That said, I’m conflicted about the thought of “Maybe the state should take over the region and consolidate hundreds of seperate small units of government into one whole.” One, politically, there’s little will, so why waste the time pursuing it? Two, the issue isn’t so much fine-grained representation, it’s the simple reality is that our leaders haven’t learned how to “play nice” together – it’s apparent that it’s too easy to rely on retail developments and sales taxes to fund an ever-increasing portion of too many local government budgets. A better “solution” may be a state cap, and potentially, even a state-mandated rollback, on the rates any city can charge for local sales taxes – simply eliminate the incentive! That, and eliminate the possibility for using TIF’s for retail redevelopment – let them pay their own way! And how would these “lost” revenues be replaced? The old-fashioned way, through increased property taxes.
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I know, I know, it’s not “fair” to expect a retired couple to pay ever-increasing property taxes on the home they paid off years ago. Well then, expand the homestead exemption and create a two-tiered property tax system, where commercial properties pay higher rates than residential ones (the anti-TIF answer). It took a citizen-led initiative in Colorado (the 1982 Gallagher amendment, http://www.coloradobudget.com/gallagher_101.cfm) to make it happen, but it sure hasn’t slowed down growth or redevelopment out there. But it’s also not fair for people with a valuable asset not to contribute their fair share, even a reduced one, to a community’s budget – for every exemption, be it a TIF or a homestead exemption, someone else is having to pay more. If you’re old and/or “poor”, especially if you own an asset that’s continuing to increase in value, you have no “right” to a relatively better place in the world – if the taxes become too much of a burden, cash out and find a place you CAN afford! Or, get involved in the budget process, and eliminate some of those “unnecessary”, expensive programs, like good schools and a well-paid police force. Either way, we all need to remember that there never, ever is such a thing as a “free” lunch!
Hey Steve,
I’m a new reader and have been reading up for lost time… This is very refreshing and enlightening stuff…
You said:
“Maybe the state should take over the region and consolidate hundreds of separate small units of government into one whole. That might put the brakes on the destruction of areas in the sales tax chase game.”
This seems to explain the fractured every-neighborhood-for-itself mentality in the city, and eerily close to one of the main thrusts of the book “Mapping Urban Decline” (I got to attend the panel discussion a few months ago…. really good stuff). Would you say this is pretty accurate? It looks like many of the tax abatements offered for rehabilitation in individual neighborhoods (i.e. what is going on in parts of Benton Park West right now) has turned into a race to push out those who can’t afford rising home prices or rent payments. Is that accurate, or am I operating on more anecdotal evidence?
Poignant that the topic of yesterday’s Dianne Rehm show on NPR was the Kelo vs. New London Decision. http://wamu.org/programs/dr/09/02/03.php#24807
What a travesty.
The observation on the show, though, was the supreme court ruling, while against the individual, has prompted a backlash around the country and actually strengthened the fight against eminent domain abuse on local and state levels. While many Hadley Township property owners gladly accepted the buyout early, I suspect many more saw no other choice but to go along.
Tax abatements are simply used as an incentive to attract investment. It is to be used as an incentive to redevelop blighted properties.
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For rental developments, it is a reduction in operating expenses, allowing greater debt leveraging. For ownership properties, it lowers the total housing expense.
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Do not confuse tax abatement with tax increment financing (“TIF”), for they are two completely opposite things. Tax abatement reduces property taxes altogether. TIF redirects tax revenues into the development budget. At least that’s what I thought. Dumb me.
Dumb me, how are the prices on those homes looking now? And who is responsible for the hit these homeowners have taken while they waited in limbo for the developer to get his act together?
Also: “highest and best use” … what a crock. Use as someone’s home — which they may have lived in for decades, while not quantifiable per se, is left out of the equation. If I lived in Richmond Heights but not in this “underutilized” area, I would gladly forgo the extra big-box revenue in order to protect the fabric of our community.
Most of the homes in Hadley were selling between $60-100,000 before the buyout five years ago. The average homeowner expected to receive between $180-220,000 per property or about $30-35 per square foot of yard space, a fraction of what is typically paid for commercial developments. The deal was made complex to allow for broad generalizations and widen the Council’s options. The area also contains commercial properties and many acres of empty land (owned by Richmond Heights) which created conflicts of interest, even a Council member bought five properties before the deal was announced.
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Drive through the area now and you’ll see many homes have been properly maintained but a growing number have been allowed to deteriorate dramatically and many are empty. The commercial property owners, many who were in favor of the buyout premium, now can’t rent their properties as who wants to sign a lease and improve property that can be so easily taken over by eminent domain? But of course ED abuse is rampant in the StL region and we wonder why outsiders don’t want to invest in the region.
Development projects are messy and involve risk. There is no guarantee of success. The property owners agreeing to sell out were taking a risk. High prices for sharing risk.
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Now that the project has apparently fallen apart, the property owners are back to square one. They shouldn’t be looking to anyone else to cover their costs.
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In terms of neighborhood fabric, isn’t that also a bit of a crock? Was their organized opposition from within the neighborhood to oppose this project? Or were property owners lining up in support of the developer in order to make a profit?
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This is America, where there is a relationship between risk and reward. Well, at least to the point where we started bailing out huge banks for making bad loans. Dumb me.
The core problem is what we know as fiscalization of land-use. Land use decisions are being almost totally driven by the fiscal requirements of the host local government, rather than a desire to build a sustainable healthy community. As long as sales tax is the principal revenue source for local governments, this pattern of development will continue. Even though we believe that we have made the case (see http://www.ewgateway.org/pdffiles/library/regdev/tifrpt-012609.pdf) that retail development produces no new revenue for the region and no new jobs, there are those, including many municipal officials and people in the development industry, who simply can’t accept the fact that the current pattern of development is unproductive, unsustainable and ultimately harmful.
Margie, the homeowners in Hadley have a bit of looking in the mirror to do. While they can’t be blamed for the entirety of the situation, they deserve some of the blame. The RH city council meeting minutes show that the Michelson proposal was favored by Hadley residents over other proposals. Why? I don’t think it’s a coincidence that Michelson offered Hadley residents the most money for their houses. Anyway, the Hadley folks and the city council chose the developer who said they would pay the most, even though Michelson has never done a project like the one they proposed in RH.
And as the years went by and it became increasingly apparent that Michelson couldn’t do the deal, especially in the last year, Hadley residents continued to lobby the council to stick with Michelson. Why? Again, I don’t think it’s a coincidence that Michelson kept promising the residents more and more money in lieu of closing.
Michelson can blame “the economy” all it wants, but what I think it really means is that the days when any company could obtain financing to do a large scale real estate development even if they lacked experience doing so are over. These days, thankfully, a developer has to have some sort of track record and experience to get financing. A project in this area will get done and this time the council will chose a company with experience.
Wow. Deja vu all over and over and over again. If you want to see what the end of this kind of flawed city-led redevelopment scheme looks like, check out the history of a spectacular failure…
…here (http://tinyurl.com/b9rwg5)…and
…here (http://markmaynard.com/?p=750)…and
…here (http://tinyurl.com/clza34)…and finally
…here (http://www.stopcityincometax.com/myths.html).
It’s actually not really “the end” because, although the city income tax was defeated, we residents are still on the hook for a debt that will easily surpass $30 Million – with nothing but 38 acres of city-owned land and a bunch of formerly occupied and now completely derelict buildings.
Upon further review, my rant yesterday was driven by a fundamental American value, no taxation without representation! The imposition of a local sales tax, especially as it occurs in St. Louis County, is an egregious case of this value being diminished, on two important levels. First, in many, many cases, be it Maplewood Commons, St. Louis Mills, Gravois Bluffs or a strip club on the east side, the majority of the “taxpayers” (based on both the actual number of customers and on the percentage of revenue generated) live outside the boundaries of the taxing entity, and thus have no representation. Yes, I know we can vote with our feet. The problem is twofold – one, knowing where all the political boundary lines are drawn, and two, actually finding the store/product you want in a city you want to support with your taxes.
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Secondly, because the actual residents are contributing relatively little to the overall tax stream, they tend to become less involved politically and are less likely to hold their elected officials accountable for their fiscal choices. When your property taxes go up, the school board hears about it. When the sales tax goes up by ½% or 1%, it rarely causes much discussion, especially if it’s wrapped in the cloak of an “improvement district”. It starts to become much different when the sales tax is imposed at the county or state level – the bigger geographic area, the more likely the taxpayer will also live (and be able to vote) in the area imposing the tax.
Why is it that whenever stories like this are reported, the news people never cover it from the angle of the greedy homeowners looking to cash in on the sale of their houses?
Instead, they always make developers and city officials look stupid. Why is that? Dumb me.
“greedy homeowners”?! Yes and no – we all invest in our homes in hopes that they will go up in value. If they didn’t (until recently) generally do that, we’d be much better off just renting. So if I try to get top dollar when I choose to sell or when I’m forced to sell (and who wouldn’t), I guess I could be defined as “greedy”.
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Bigger picture, most homeowners in redevelopment areas would rather just be left alone. But when push comes to shove, a homeowner is better off pushing for top dollar from the developer than waiting for a court to determine their “fair” value through a condemnation proceeding. Yes, some are more than willing “to cash in on the sale of their houses” – in every neighborhood a certain minority are looking to make a change now or in the immediate future, for whatever personal reason – that’s why we have a real estate industry.
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Bigger picture still, a large, “assermbled” parcel, especially in established areas, is generally worth more than the sum of its parts – it’s in the developer’s and the city’s best interest to pay top dollar, even above existing market rates, for the residential properties, since doing so will result in a higher value than the total actual dollars paid to the homeowners, and especially if ther assembled parcel is rezoned from residential to commercial uses – duh!
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Rarely do the media stories make the developers “look stupid”, either. Arrogant, deceptive, conniving and/or slippery, yes. But stupid, no. The media does, many times, and rightfully so, make the “city officials look stupid”. Unfortunately, too many of our elected officials (and their staffs) are afflicted with a combination of a too-big-budget / not enough revenue, hubris (look it up) and not enough cynicism in dealing with the professional development community. The professionals do this to make money. Most of them have a lot of experience. Most of them also come from a sales background, so they’re adept at spinning the truth and the selective application of any available data. And when it comes to development of any kind, we’re relying on fuzzy science – if we actually could see the future clearly, we’d all be rich. So, dumb me, I have to disagree, “the greedy homeowners” are least at fault here – the fault lies squarely with the elected officials who put too much faith in the promises of the one developer.
Jimmy Z echoes the Elliot Davis, anti-government line that it’s squarely the elected officials’ fault here. How? The homeowners and property owners drove the process to select the developer that was chosen. the developer came up with plans and lobbied property owners and the city government. The city officials had the counsel of city employees responsible for development and zoning. Obviously, only the council members had votes, but they cast them amid a circus of complict actions.
Blaming government officials is easy and often fun, especially when one arrogantly assumes that our representatives in government aren’t as intelligent or as educated as we armchair planners. Guess what? We the people, even the well-educated professional planners and architects, elect government officials. Perhaps we aren’t doing enough to educate fellow voters ahead of elections. Taking cheap shots well after the fact is not very productive, but it’s the American way of civic involvement.
The homeowners, property owners put the neighborhood in play, choose the developer and pressured Council members “amid a circus of complicit actions”? Did the Council abdicate their responsibilities and place the powers of Eminent Domain in the hands of property owners? Did the Council secure good faith escrow payments from the developer day one as most selling agents would require? The idea that property owners are responsible for foolish managerial decisions is more absurd than a President claiming “Mission Accomplished” years before any official is democratically elected. Attempting to rewrite history does lead to some funny stories though and it is the Council, not homeowners, who are legally responsible for these decisions.
Having done some time myself as an elected official, yes, the people elected do have to rely on their staff for technical expertise. But part of being an elected official is more than just good intentions. It requires either expertise or a willingness to say “I don’t know” and to become educated, BEFORE taking action (which does include saying “No!”). Another critical part of being elected is, guess what, accountability. If you make or support a decision, YOU are accountable for its outcome, good or bad. I don’t consider it “fun” to be calling out incompetence. I’d much rather say (and have said) “Yes, you did a great job!” But, for better or worse, hindsight IS 20/20.
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I doubt that any one person can be a true expert in public finance, urban design, real estate law, recreation, welfare payments, police tactics AND political science, so I have to assume that most elected officials have their weaknesses as well as their strengths. The people I don’t expect to have a lot of expertise are most constituents. It’s not that I’m “superior”, it’s just reality. There are a lot of good plumbers and bus drivers and stockbrokers and cops and teachers out there – few of them, however, claim to be developers. And when it comes to redevelopment proposals, the only people they can or usually expect to rely on are their elected officials and the city’s professional staff. Government should be there to protect them, not to steal their homes!
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I’ll repeat – my comments have acknowledged that many elected officials struggle with budgets that are inadequate for what they want to do. For whatever reason, it appears that locally-preferred answer to this challenge has evolved into finding “new” sales taxes, not property taxes or income taxes, but sales taxes – non-residents will come to town, leave their taxes and demand little in the way of services. In contrast, those demanding consituents, who elected you, will vote you out in a heartbeat if they think you’re raising “their” taxes in any way. Plus, they’ll never “understand” if you need to reduce services.
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This would be less of an issue if our units of government in the county weren’t so small. In many places, you can drive a mile and be in 3 or 4 or more different jurisdictions, and each one of them wants to be sure they get whatever sales tax might be spent. Little picture, I get it. Bigger picture, the development community just keeps the shell game going. The real losers are the local residents who get “displaced” in the name of “redevelopment”. There is no such thing as a free lunch. For every dollar that gets shifted, there’s one less dollar somewhere else.