Proposed TIF to be Backed by City’s General Revenues

Remember the first TIF project in the City of St. Louis? The failed St. Louis Marketplace on Manchester Road! Well, it was the only such project in the city to be backed by the city’s general revenue. That is, if it did not generate the necessary revenue to pay off the bonds the city would be stuck with the bill. Well, last year, this year and possibly next year that is over a million dollars annually. The city may well be on the hook until the TIF ends in 2011.

Enter John Steffen of Pyramid Construction. In a board bill before St. Louis Estimate & Apportionment Board (E&A) related to 600 Washington (aka St. Louis Centre) the city would be obligating their general “City Revenues” should revenues from the project prove insufficient to cover the annual debt payments for the $14,500,000 TIF. The maturity date is 23 years from approval, a long time to commit general revenue.

The E&A, consisting of Mayor Slay, President Shrewsbury, and Comptroller Green will meet at 2pm Wednesday in the Mayor’s office. The meeting is open to the public. I spoke with the Comptroller’s Public Information John Farrell about this issue, he indicated the Comptroller’s office has some concerns. Here is a list of their concerns distributed at last weeks HUDZ committee (Housing, Urban Development and Zoning) where board bills 313 & 314 were passed out of committee:

The redevelopment agreement and these two board bills are fundamentally flawed.

• The TIF borrowing uses the full faith and credit of the city.
• The building is overpriced at $26 million.
• Board Bill implies the city obligation is $14.5 million, but the term sheet indicates we are obligated for $28 million.
• The office building is not class A space. It must compete in a very crowded market.
• There are 85 TIF’s City-wide only one uses the general fund backing.
• Per the Term Sheet, it appears the city will agree to increase borrowing up to $28 million.
• The moral obligation backing is a pledge of the general fund.
• Using the general fund of the city for TIF bonds is against the city’s financial policy that is based on Best Practices.
• The general fund will be called on to pay $1.2 million per year for the new TIF debt.
• The only other general fund backed TIF is the Market Place TIF to which the general fund paid $1 million this year and last year.
• Using general fund backing sets a bad precedent and is very difficult to reverse.
• A $14 million debt will be added to the city’s balance sheet
• We have huge unmet costs facing the city in the near future. Some are:
• $73 million for past pension costs plus double what we currently pay annually into the foreseeable future.
• $30 million convention center improvements
• $10 to 15 million renovation of 1520 Market Street

I am by no means an expert on TIF financing but I know this much: if the project does not perform well over the life of the TIF bonds I don’t want the city to have to step in and make up the difference. If the project cannot stand on its own after substantial public assistance and the developer is unwilling to make up the difference should it come up short then maybe, just maybe, this is not the right project. Both bills were sponsored by Alderman Phyllis Young (D-7th Ward).
Mayor Slay’s office is in support of the TIF and apparently President Shrewsbury’s office is also leaning in favor as well. As indicated, the Comptroller’s office is not so keen on this TIF but it only take a 2 out of 3 vote to be approved. What do you think? Is the new project worth risking general funds to cover the debt for the next 23 years?

Should St. Louis Become a ‘Suburb’ in the Region?

You may have heard about the city’s infamous “Team Four” plan from the mid 1970’s. If not, read Antonio French’s report here. This comprehensive plan was in response to a series of research reports from the Rand Corporation on behalf of the National Science Foundation. I am in the process of reviewing these for a school project but I wanted to share part of it with you now.

From Rand Report #R-1353 St. Louis: A City and its Suburbs published August 1973:

The analysis suggests that, among the alternatives open to the city, promoting a new role for St. Louis as one of many large suburban centers of economic and residential life holds more promise than reviving the traditional central city functions.

This is not necessarily suggesting the city taken on a highly suburban form (streets & buildings) but the role of a supporting player in the region but not the core. The center, presumably, would fall to Clayton and the central corridor. In reality, our region and today’s society functions without a single core. Today many people have suburb to suburb commutes.

So what do you think of this idea of giving up on focusing on St. Louis as the core of the region and instead make it simply one of many economic and residential areas? What is the difference?

The first difference, in my mind, is transit. All the planning being done around future transit is focused on trying to reclaim St. Louis as the core from which everything else radiates. For example, the new North & South mass transit studies for the region are trying to connect via the city’s CBD to the county. It would seem to me that getting folks from the county into mass transit can be accomplished much easier by connecting to the end of the new line at Shrewsbury for south county and off the original line for those in north county. There are also several options for connecting the employment hub of Westport into the system.

People are often critical of my belief that neighborhood scale transit in the form of streetcars or guided trams (similar to a modern streetcar but with rubber tires and a single track to guide it) can help increase development and create dense and thus walkable neighborhoods. Perhaps they are right. But my belief in this idea is nothing compared to the utopian notion that by bringing light rail to a former major core we can somehow undo 50 years of change and sprawling development patterns in our region. I’m not convinced.

Would it be so bad for the city to concede that our downtown will never once again be the hub for commerce that it once was? That doesn’t mean it can’t be a great place. In fact, I’d argue that without the pressure to regain its role as the region’s major employment center and commerce hub that downtown and the city might actually be free to focus on creating great places where people want to live and work. This means enjoying out quick light rail connection to the east side, Clayton and the airport but focusing the balance of our transit attention on the neighborhood scale — not how to get more suburbanites into downtown for their day jobs. If anything is a ‘build it and they will come’ scenario it is the thinking light rail to downtown will return jobs downtown.

When the Rand reports were written in 1973 they looked at the population drops in the city, down to 600,000 in the most recent census. Today we are just under 350,000. All of our attention is focused on reclaiming the former glory of the region’s center but how has that worked for us over the last few decades? Sure, we’ve got more residents and investment in downtown but is that really shifting things? The U.S. population is trending back toward cities which may account for much of downtown’s rejuvenation of late. But what is the likelihood of reshaping our sprawling region back to a core with radial suburbs? Very slim in my eyes. I’d like to see us shift to making downtown not the core of the region but one of a number of business centers in the region — the most dynamic of them all. The city should focus on increasing population not by a thousand here and 500 there, but by tens of thousands.

With office parks spread out all over the region, a convention center in St. Charles and performance venues everywhere I just don’t know that we can successfully reverse the damage that has been done. Other regions, such as Chicago, never lost their place as the core. However, many industrial cities, like Detroit, did lose their place in the core. Does anyone know of an example where a former core city regained its place as the center of commerce in a region?

So what do you think? Should we “stay the course” with attempting to maintain St. Louis as the core or accept that in the auto-centric times a region may no longer have a true core and simply work to make St. Louis a pedestrian-friendly urban “suburb” within the region?

Downtown Still Going Strong; Neighborhoods and Inner Suburbs Need Leadership

I got a call from developer Kevin McGowan on Saturday, you may recall the last time he called me was to defend himself over the pets issue in his own building (see post). So McGowan calls me all excited and thought I’d be interested in his news — super fast loft sales. I’m not in the business of acting as a free PR service to profitable downtown developers but as we talked I saw enough in this that it is more than a press release for his firm.

OK, here is the story. McGowan | Walsh has been unsure about what the composition should be for their three buildings at Cupples Station located to the due west of the ballpark (#s 7, 8 & 9). They’ve hung banners on all three for “Ballpark Lofts” but they’ve been looking at office use instead of residential or in addition to. They began to market lofts in the center building — #8 to test the market. They’d been taking deposits to get on a list. Saturday they asked potential buyers to firm up and pick their units — wanting to really see if the buyers would stick around or seek their deposit back. Well, McGowan reports they sold 57 out of 68 units — in just over an hour. Needless to say, he was ecstatic. This represents, he said, over $12 million in loft sales.

So I began to ask more questions. The selling prices were roughly $146K to $400K for square footage ranging from 750sf to roughly 1,500sf. Just a few years ago lofts were easily ranging from 1,200sf to over 2,000sf but we are seeing a shift to smaller units. McGowan confirmed the smaller and more affordable units are where the market it going. Still compared to other lofts downtown these prices seem on the low side but there is a good reason for that. Parking.

You see, McGowan | Walsh did what is called “unbundled” parking — a parking management technique discussed in Todd Litman’s book Parking Management Best Practices whereby a parking space is not included with the unit. Some rental units downtown have unbundled parking that costs extra each month but I don’t know of any other for sale loft downtown where this is the case, save for perhaps the Marquette building by The Lawrence Group. Anyway, buyers at McGowan’s Ballpark Lofts were given the option of purchasing a parking space for the tidy sum of $18,000. Parking is expensive to provide and it is good for people to see the real cost by not hiding it in the purchase price.

McGowan said that roughly 20-25% of the buyers decided against a parking space which, to me, is a very big deal. McGowan credits the MetroLink stop a block away for the buyers willingness to forgo parking and presumably a car. They do have a free scooter with each loft so perhaps these buyers are comfortable with transit and the occasional scoot.

While they are still undecided about the other two buildings this latest round of fast sales may push them toward residential and away from commercial office space. McGowan fully acknowledges the impact of the new Busch Stadium on the marketability of his lofts. He also gives credit to two unbuilt projects — the ballpark village and Chouteau’s Lake Greenway.

The area needs something because the most activity is the on and off ramps that intrude into the area. I’d like to see these simplified a bit so some of the land can be recovered for in-fill construction. Hopefully residents of these lofts will be open to walking, biking or scooting up to City Grocers, which will be moving to a bigger space in the Syndicate Building late next year (see Biz Journal story).

But we have a housing bubble right? Well, yes and no. The “Creative Class” have been seeking urban living options for a while now and downtown St. Louis is the only choice for such a lifestyle in the region. As such, downtown continues to see demand whereas tract homes in the hinterlands are stacking up unsold. The fact is nationally families are becoming a smaller and smaller segment. Singles and empty nesters are the norm, especially as the baby boomer generation ages. For many boomers there kids are long out of the house, they are divorced or have lost their spouse. They 4-bedroom ranch in St. Charles County just doesn’t appeal to them. But this doesn’t mean downtown developers can write their own checks. They are learning buyers have a ceiling they are willing to spend, unlike in the ‘burbs where many buyers will become house poor to own as big of place as they can get. No, urban dwellers want to enjoy life and need money for travel and other things often given up to afford the big house in the suburbs and the two (or three) cars in the garage. This is resulting in smaller living spaces — with residents getting out on the streets more often rather than go from the den to the living room to the family room to the sitting room to the media room when they feel restless.

Transit is a big factor, in my view, toward the choice to buy a loft without a parking space. This is also a factor for the conservative bankers to finance a project without a space per unit — McGowan said MetroLink was a key part of showing their bankers they did not need a space for every unit.. Sadly, we have very few places downtown where that remains a reasonable option. The development future of downtown is in the west area between 18th and Jefferson and into Midtown toward Grand. The near north side has great potential with the vacant Pruitt-Igoe and the largely vacant area between Washington Avenue and the emerging Old North St. Louis neighborhood. Getting a permanent transit option to these locations will enable developers to use vacant land not as parking lots for adjacent buildings but for new in-fill construction. We are at the key point in the development around the CBD and without good localized transit (aka streetcar or guided tram).

And of course the bulk of the city is not downtown yet it only gets passing attention. The inner-ring of suburbs in St. Louis County are as urban as much of St. Louis and deserve renewed focus as well to offset losses in population many of them are experiencing. Natural market forces are coming together downtown with the trick being keeping the “leaders” and their outdated zoning and thinking out of the way. The same simply doesn’t work outside the immediate downtown area — the neighborhoods of the city and adjacent inner-ring suburbs need strong leadership to bring good zoning to them. Unfortunately, with a few exceptions it is just not happening. Downtown will continue to strengthen while the rest of the region is going to suffer from our 1960s urban edge growth mentality. Meanwhile, other regions in the U.S. will continue to outpace our region in terms of population and job growth.

Valet Wrecks Car of Local Radio Personality

It seems a valet company working at a restaurant downtown managed to wreck the car of K-Hits morning show personality Jennifer Sparks. Sparks described the incident on air this morning, indicating she usually does not valet but was in a hurry. She indicated neither the valet nor the restaurant were apologetic.

It is my belief that if the valet companies were not taking away entire city blocks of parking people like Sparks could simply park their own car and walk a short distance to their destination, even if they are in a hurry. Essentially, these companies are forcing their patrons to use valet parking and taking away public space that should be available to patrons of other businesses that chose not to strong arm their customers into using the valet.

Sparks did not name any names but I do know of one downtown restaurant where the owner isn’t the most friendly. Several aldermen have confirmed they are cooperating on legislation to bring the valets under some sort of uniform guidelines. I just called Ald. Lyda Krewson who indicated they are making progress on the research and hope to schedule a meeting to solicit feedback. I’ll keep you posted. I wish Jen Sparks the best of luck getting the valet company’s insurance to cover the damage done to her car.

Cardinals Fans Fill Downtown St. Louis Streets to Celebrate World Series

As the 7th inning changed into the 8th friends said we needed to be downtown. They were right! As we parked near AT&T the Cardinals won the game. We walked quickly toward the stadium while asking ourselves “where are the fireworks?” The video explains the rest — taking you through the streets, into the stadium and then back out on the streets again. What a night.