Well, it has been quite a while since my last post, and I apologize for the delay. A lot transpired between then and now, however, which precluded me from devoting my full attention to sourcing and writing. In the past 10 days, I was the subject in part of an inaccurate St. Louis Post-Dispatch online headline, I caught up with longtime friends and new acquaintances in New York City, and I received an armed escort out of St. Louis City Hall. This final event is what relates most directly to the subject of this post, Tax Increment Financing.
Huh? Is the imposition of force truly necessary to approve a TIF at a public hearing?
Alright, so I should probably offer some additional context to flesh out my critique of TIFs and to explain what precisely happened last night. As many of you are already aware, I am not shy about expressing my opinion on matters of concern to residents of St. Louis City. I have not been especially vocal until last night, though, about Paul McKee’s efforts to extort obscene amounts of State and Local taxpayer money to keep his company solvent.
Yes, I first called him a “politically connected extortionist” back in May, but by June I pretty much told his critics to put up or shut up. I mean, after McKee announced his “15-year, $5.4 billion plan for north St. Louis” in late May, who really cared if it would ultimately morph into an “$8 billion redevelopment plan for north St. Louis” with no strict timetables for construction and a demand for more than $400 million in City tax money? Come on, now, we all know that those recent large campaign contributions to Slay by McKee’s attorneys are simply goodwill gestures. The train left the station the moment that McKee uttered the magic words: DEVELOPMENT and JOBS.
Now, I sat through one of McKee’s “public meetings” during which he presented a PowerPoint of images and datasets–compiled by paid urban planning consultants at Civitas Inc.–that McKee rebranded as his “vision” for nearly 6% of the City of St. Louis’s land area. The whole time that I witnessed McKee’s performance at the meeting, I could not help but think that he would surely receive an A+ in any real estate development course at Cornell. McKee is a smooth operator who understands his audience well: everyone in St. Louis City wants development, and many tens of thousands of residents in St. Louis City (including me) seek paid employment yet cannot find it. As he purports to offer both, anyone standing in Paul McKee’s way must be crazy, stupid, or at least a curmudgeon. After all, isn’t Paul McKee’s vision “what TIF was really created for“?
That quote comes from William Laskowsky, Chief Development Officer for McEagle Properties.
It may come as a surprise to Mr. Laskowsky and his associates that I completely agree; Tax Increment Financing was created to do exactly what he says. Tax Increment Financing, according to an article in the Fall 1999 Washington University Law Quarterly entitled “In a TIF: Why Missouri Needs Tax Increment Financing Reform” by Julie A. Goshorn, is a response by states to the diminishing availability of Federal funding for urban renewal in the decades after World War II. California was the first state to enact a TIF Statute in 1952, and Missouri finally followed suit in 1982.
In the ensuing decades after the introduction of TIFs into the Missouri vernacular, changes made to our TIF statutes presumably added additional taxpayer protections to ensure that TIF projects would only support the redevelopment of “blighted” areas. The major TIF controversy that caused many to question this supposition, though, was the decision around the turn of the century by the City of Des Peres in St. Louis County to issue a TIF to the developers of the new West County Center Mall to replace the old West County Center Mall. At that time, it became apparent to many that allowable definitions of “blight” under Missouri law were so vague as to allow a community to declare its largest taxpaying parcel a “blight” requiring immediate redevelopment with public funds.
When we return to William Laskowsky’s assertion that McEagle’s proposed TIF in the City of St. Louis represents “what TIF was really created for,” we see that there is a strong factual basis for the statement. TIF is, indeed, intended to incentivize and facilitate large-scale urban redevelopment; TIF is not intended to create jobs.
What do I mean?
Well, if the unemployment statistics that I post at the beginning of each month are any indication, the City of St. Louis does not presently have any jobs to show for its excessive use of TIFs over the past decade. In fact, the City’s dire budget outlook illustrates the perils of a public financing mechanism for private real estate development that gives the public no equity in completed projects. In its January 2009 interim report on the “Effectiveness and Fiscal Impacts of the Use of Local Development Incentives in the St. Louis Region,” the East-West Gateway Council of Governments concluded:
As local governments come under increasing fiscal stress, the impacts of billions of dollars in foregone revenue will become increasingly apparent.
This was, of course, essentially the critique that I advanced last night during my allotted two minutes of testimony before the TIF Commission as it considered Paul McKee’s unprecedented request for $400 million in City money. I asserted before the Commission that I opposed the McKee TIF, because I oppose all TIFs. TIFs are not an appropriate vehicle for job creation, I said; rather, TIFs diminish our government’s ability to solve problems and meet resident needs while enriching a private interest.
Beyond its simple distortion of the marketplace for real estate development by stealing tenants away from projects that pay their fair share in taxes, Tax Increment Financing leads to a real and disastrous loss of revenue for local government services in the short term. The City of St. Louis’s Comprehensive Annual Financial Report from 2008 illustrates the magnitude of TIF revenue loss prior to the proposed McKee TIF:
2008 Comprehensive Annual Financial Report, St. Louis City, Page 97
As of the 2008 CAFR, the City of St. Louis had nearly $140 million in outstanding TIF bonds, which represents $140 million in monies ordinarily collected to fund public services that instead funded private improvements for private developments. Thank you to Julie A. Goshorn for alerting me in her law review article to the fact that TIF allocations are not subject to Missouri’s constitutional debt limitations for municipalities, except in cases where a municipality’s general fund revenues back the TIF bonds. Consider this narrative about St. Louis’s two general fund backed TIFs, St. Louis Marketplace and One City Center, in the City of St. Louis’s Fiscal Year 2010 Annual Operating Plan:
City of St. Louis Fiscal 2010 Operating Plan, A-9
These TIFs, in contrast to the dozens of other TIFs approved by the City, are general debt obligations that count against the City’s debt ceiling. In FY10, the City’s Legal Debt Margin is as follows:
City of St. Louis Fiscal 2010 Operating Plan, A-5
When Paul McKee and his associates ask for the City to “have some skin in the game” when it comes to the NorthSide Regeneration LLC TIF proposal, they are really asking for the City of St. Louis to max out its credit limit by assuming the McKee TIF bonds as a general obligation. Even if McKee were granted half of the $400 million that he requests the City support through its general tax revenues, then he would reduce the City’s ability to fund emergency expenditures and other unforeseeable debt obligations by $200 million of the constitutionally allowed $405 million!
Paul McKee doesn’t care about St. Louis City, because he lives in Huntleigh. Paul McKee will never be my redeveloper.
Tags: paul mckee, TIF
September 25, 2009 at 5:50 am |
Also of note: The first source jobs policy, which is standard, was actually waived in this case. Such a policy just states that a certain percentage of entry level jobs (Not even the overall jobs, McKee’s offensive comment about creating positions for “doctor, lawyer, and Indian chief” be damned) must be filled by residents of the TIF area. TIF Commissioner Sundy Whiteside pointedly questioned this as being unusual, but still voted for the TIF. She told me afterwards that she had been pressured (presumably by other members of the commission) not to ask critical questions.
Word around City Hall yesterday was that all those people in Paric JOBS JOBS JOBS t-shirts were paid to be there. I didn’t seek to confirm this (too many things going on to chase every thread) but will note that I heard it from multiple sources. Many in green shirts did not seem to know what the hearing was about. And the group came and left on a big bus. I almost hope they did get paid because that was the only JOBS JOBS JOBS that any of them will ever see from this TIF!
September 25, 2009 at 6:05 pm |
Look buddy, I had on a green shirt and I was not paid. Let’s stop dealing with emotions and RUMORS. I live on the north side and am 100 percent in favor of the plan. You, Mr. Duda, remind me of UBBER LIBERAL, white folks who continue to do more harm to minorities than good by being in favor of what’s not good for us and be against what is good for us.
If you were so DOWN with the cause, why don’t you move on the 2400 block of Sullivan or on Madison or on Glascow somewhere instead of living in the safe harbor of Holly Hills! Always good to hear the other side and see ignorance in action. Encourages me to fight for positive, far reaching change even more.
September 25, 2009 at 7:42 pm |
Kaylyn, I would really enjoy having an opportunity to meet in person, or if I recall correctly, we already did.
Now, I often struggle with the extent to which I should respond to each comment. If this blog had a wider readership, then there might come a time when it would simply be infeasible to respond to each and every comment; that time is not yet here. Racial animus is disgusting and quite anachronistic in many places of the U.S. In St. Louis, I recognize that the salience of race is unavoidable and its role in shaping our lives is quite profound. As I explained to you when we met, I am unemployed like 20,000 of my fellow residents of this City. I live in Holly Hills, because I am fortunate to have a supportive family who can assist with providing a temporary roof over my head. I am not moving anywhere at present, let alone anywhere you suggest, because I do not have the resources to pay even $100 a month for rent.
This may come as a surprise to you, but I identify as a minority as well; I am a sexual minority, for I am gay–not the majority orientation. I find resonance between my lived experience and the experiences of others who do not comprise a majority population. As minority-majority identities are context dependent, I find it curious that you are essentially calling me white and an oppressor. That’s fine. I have pretty thick skin, having dealt with my share of anti-gay remarks even at my private high school. See, Kaylyn, I recognize that all of these identifiers can serve to divide us from one another; I could choose to conceal any number of my identities, but instead I think that productive dialogue will only result from forthright and all encompassing communication.
Kaylyn, I think that the most significant difference between us is ideological. You can only peg me as an “UBBER LIBERAL” [sic] by choosing to ignore my strong libertarian impulse. When I say that we have an ideological disagreement, I mean that you are very much an advocate of using public money to enrich a private interest: Paul McKee. I, however, find such expenditures abhorrent and believe that the City of St. Louis will only create jobs through direct public expenditure, as the private market for employment is in market failure at present.
I think that our readership would find it instructive if you could please share with us more about your green shirt; there were at least two designs, and some specifically named McEagle Properties. Where did you acquire your green shirt? Who financed its printing? When were they printed?
I am not the only person who does not live in the footprint of the redevelopment area who has a stake in the development process. You, Kaylyn, to my knowledge live outside of the redevelopment area’s footprint as well.
Ordinarily I thank people for sharing comments, but I am not going to thank you. Please stop spewing hatred before commenting here again.
September 25, 2009 at 8:22 pm |
In response to your personal email…I saw a friend who had three t-shirts and I asked him for one and got it. To answer your comment, folks were not hired to wear shirts. Sad, that you UBBER LIBERALS think the only way African Americans would stand up for a cause would be to be paid.
Additionally, I said I lived NORTH to illustrate the point that this development impacts me far more than you. I can walk to the end of my block and be in the targeted area which ends at Glascow for me. Interesting what assumptions do. Again, the vast majority of NORTH St. Louis looks nothing like Hollly Hills.
Maybe by the time some phases of the development is done you will have a job and will continue to support the efforts and join us as a neighbor!
September 25, 2009 at 8:49 pm |
I assure you that I sent no personal email; Kaylyn, if I believed that Paul McKee’s development proposal was economically feasible, then this would be a very different discussion. Frankly, our ideological disagreement continues to be a strong thread in this discussion. I do not believe for a minute that all areas of St. Louis City should look like Holly Hills. If that is what residents in the redevelopment area desire, however, then their voices should prevail.
Thank you for the information about the shirts.
$400 million will put a gaping hole in the City’s budget for the next few decades, and I assure you that everyone in this City has a stake in this project.
Now, the question becomes why does my neighborhood look as it does? Access to resources is one. Politicization of public service delivery is another. If we distributed resources equitably and according to need, then north St. Louis would look as north St. Louis wanted to look. Unfortunately, the same people responsible for systematically decimating the physical and social fabric of certain areas of our community are the ones who created the McKee project.
Any job that McKee’s project “generates” will not be new to this town. The trends are downward for both population and employment. When a TIF goes into effect, it sucks economic activity away from surrounding non-TIF areas, destabilizing parts of our community that are currently stable.
I oppose the proposal, because it does not do what McKee says it will do. Furthermore, the TIF Commission apparently only approved TIF monies for sections of the redevelopment area located near the new Mississippi River Bridge touchdown and in downtown, not what we typically associate with “north St. Louis.”
Finally, I don’t know about you, but I see many areas of “north St. Louis” that look exactly as do areas in “south St. Louis.” I find it upsetting that you seek to perpetuate a narrative that half of our City is somehow inherently different. Separate, yes. Different, not always. Baden and Carondelet have similar building stock and similar concerns. The Boathouses in O’Fallon Park and Carondelet Park are nearly perfect copies. People throughout our City raise families, go to school, and go grocery shopping. People everywhere in our community look for work and cannot find it, far too many confront tragic realities of senseless violence, and too many in St. Louis have hope for a better tomorrow.
What are you really trying to say? I look different than you and have a different opinion of this project than you, so I should not have a voice?
See, I think that stifling the views and dreams of some ruins everything for all.
September 25, 2009 at 8:27 pm |
You’re a class act….thanks!
September 25, 2009 at 8:58 pm |
You are also quite VERBOSE. Don’t read what I did not say into what I wrote. I said, in another post….more neighborhoods should look as NICE AS HOLLY HILLS. Fact, NORTH St. Louis does not look as nice as Holly Hills, or perhaps I should take my rose colored glasses off.
Looking as nice as does not mean “cookie cutter” neighborhoods!
KISS…Keep It Simple Sally!
September 25, 2009 at 9:07 pm |
You are entertaining, funny and give quite a bit of comic relief! Thanks for the entertainment at the hearing. Always good to see someone swept away!!! Pleasure dialoging with you. Talk to you later…we will just agree to disagree agreeably!
September 25, 2009 at 10:19 pm |
Good, that’s all I was really hoping for here.
September 25, 2009 at 11:18 pm |
Keep on keepin’ on, Tom. I think you’ve explained yourself quite well. In the end, I guess there’s nothing you can do if certain residents want to support McKee…unfortunate, I know. And I don’t think you’re too verbose.
September 26, 2009 at 1:02 am |
Claire,
That’s the beauty of this great country of ours. We can all simple agree to disagree and have diverse opinions. I inded do look forward to Tom “keeping on keeping on” and providing us with more comic relief. You are succinct and Tom still remains verbose.
Since you all are so opposed to the much needed transformation on my dear North Side, I would ask, “What do you all suggest we do to impact positive, significant change” Change that’s going to take a huge investment. Have you seen any sink holes lately right around your corner smack dab in the middle of the street?
Anywho, Tom, so looking forward to the next installment of entertainment. On one thing we agree, keep on keeping on with the show stopping grand exits!
September 26, 2009 at 1:06 pm |
Tom and Claire,
What cowardice…I thought we were having a mature dialogue where IRON would SHARPEN IRON. Talk about stacking the deck…when I gave you solid research information as it related to INFRASTRUCTURE and third party substatiation of how dire our infrastructures are….from sewers, to grids, to streets, to lighting, to bridges, right down to the fact that MSD was sued by the Federal Government for non-compliance etc., you chose to bury, DELETE, vital information that would help citizens make an even better informed decision based on facts supported by a recent documentary to be rebroadcast on the History Channel October 6 or so.
Not only is there a CRUMBLING OF America’s Infrastructures, but there’s a CRUMBLING OF CHARACTER when open debate and discussion is controlled. You have become what you accuse some of our politicians of becoming. Sad…
Again, I told you all you were quite entertaining!