By Ray Downs
By Lindsay Toler
By Danny Wicentowski
By Lindsay Toler
By RFT Staff
By Lindsay Toler
By Allison Babka
By Lindsay Toler
In short, TIF has become a form of corporate welfare, pumping public money into private projects where subsidization is unwarranted. Moreover, it's a growth industry that provides not only lucrative business opportunities for developers but also further enriches the lawyers, consultants and construction contractors who do their bidding. Losers in the TIF game are the consumers, who are forced to subsidize the projects through sales taxes, and school districts, which are deprived of the increased tax revenues generated by TIF projects.
There are about 40 TIF proposals currently on the books in St. Louis County, according to the county planning department. They are spread across the map from Bel Ridge in the north to Valley Park in the south. Nearly half of these publicly subsidized projects are retail developments and several more fall into the mixed-use category, which includes a large percentage of retail space. Some projects have been completed, whereas others are yet to be approved (see chart on page 20). Although a few TIF projects deserve accolades for stimulating growth in economically depressed neighborhoods (see sidebar on page 22), economists, regional planners, politicians and lawyers interviewed for this story believe that TIF -- as it is now being applied -- is widely abused.
In part, the abuse of the law stems from its ambiguity. "The problem may well be the flexibility that the statute gives the municipalities," says Peter W. Salsich Jr., a law professor at St. Louis University. "The concept was that it was supposed to be used to restore blighted inner city and inner-ring suburbs. To me, the key question is (whether) the area is blighted and is in need of this kind of public support in order to get turned around. When people get carried away with these things, there is eventually going to be a backlash."
David Merriman, an economist at Loyola University in Chicago, estimates that more than half the states now use some form of TIF. "TIFs are almost always a bad idea," says Merriman, who has studied the effects of the law. "The research we did was on cities in the Chicago metropolitan area. Our conclusion was that cities that have TIF actually grew more slowly than cities that didn't have TIF. The reason we think that this happened is that by using TIF you are essentially stealing from the rest of the city to concentrate on a few areas that you're trying to develop. So it's actually costly to the city. You're moving development around in an inefficient way."
The Fenton Crossing project is being developed by Sansone Group, one of the most prominent TIF players in St. Louis County. Sansone built the Promenade on Brentwood with the help of TIF. The same developer is currently involved in controversial TIF projects or proposals in Hazelwood, Eureka, Rock Hill and Olivette.
Last year, the city of Fenton expanded its TIF district to include the hill on the other side of Highway 30. The plan also calls for the redevelopment of the existing Wal-Mart and Shop 'N Save stores in the old downtown section. Altogether, the Fenton proposal has ballooned to a projected cost of almost $193 million, with more than $50 million in public funds coming from the TIF designation.
PGAV Urban Consulting, a St. Louis-based firm specializing in TIF-related matters, prepared the redevelopment plan for the city of Fenton. PGAV and other consulting firms have honed the art of defining large tracts of land -- hillsides or already developed commercial areas -- as blighted or in danger of blight so the areas can be designated TIF districts. As mentioned, the Fenton TIF district calls for the redevelopment of the existing downtown section, and PGAV's study cited a deteriorating infrastructure -- including a cracked Taco Bell sign -- as sufficient indication that the area was drifting toward blight. That was deemed enough to justify a TIF-district designation, including the undeveloped hillside near the highway. The proposed plan allocates only about $4.5 million of the budgeted costs to spruce up the Olde Towne downtown section. More than $47 million in TIF, on the other hand, will go toward clearing the land to make way for the new developments on either side of the intersection of Highway 30 west of Route 141.
The Fenton redevelopment plan writes off the existing downtown area as obsolete, a throwback to the 19th century, and endorses enlarging the city's commercial strip through westward expansion. "In contemporary terms, attracting commercial and mixed-use development means that parcels of sufficient size with appropriate width and depth dimensions, appropriate site topography, and appropriate access must be available," according to PGAV's redevelopment plan. "Such parcels must be located along and have easy access to major roadways and have excellent visibility from these roadways."
G.J. Grewe is the other developer involved in the project. Similar to the Sansone's Dierbergs project, the opposite hillside will be blasted away to create a level area for another strip mall and parking lot. Ironically, the name of the new development is to be Gravois Bluffs.
James E. Mello, the attorney for Grewe, says that the use of TIF is appropriate in the Fenton development and elsewhere. "There has always been government participation in economic development. TIF doesn't change that," says Mello, a partner in the law firm of Armstrong, Teasdale, Schlafly and Davis. "It's always been there in one form or another. You had tax abatement. You had federal grants. Those programs don't exist anymore."