Easy Money

Developers like the Sansone Group are using a state law to rake in millions of tax dollars for retail projects in the burbs. Trouble is, the legislation was designed to help blighted inner cities.

Requesting TIF assistance has become a routine operating procedure for developers like Sansone. But there is a continuing debate over the efficacy of the law. As one St. Louis County municipal official put it: "I believe there have been abuses of TIF in St. Louis County. In this day and age, every developer comes to town with his or her hand out. They're looking for that subsidy that is known as tax-increment financing."

Supporters of TIF, on the other hand, argue that the law allows economic development in areas that would otherwise go begging. Zeid, for example, defends the Olivette TIF proposal on the grounds that the city has no other way of increasing its tax base because there is no room for it to expand further. "The city needs the money," he says. "The only way to do it is to get commercial in here."

The developers concur with Zeid, arguing that the expense of building shopping centers mandates governmental assistance. "If it were not for TIF," says Jim Lewis of THF, "these projects would never come close to happening. You can't buy 280 homes and make the numbers work for any type of a shopping-area development. You're subsidizing private development because the numbers would never work without a subsidy." Lewis' statements sound reasonable except for a crucial detail -- the TIF statute was designed to address blight, not to buy out perfectly livable residential property.

In attorney Mello's view, the rationale for defending TIF may change with the terrain or the clientele, but its rewards remain immutable. In Fenton, where he represents a developer's interests, the Armstrong-Teasdale lawyer asserts that the city needs to expand its borders to pursue its economic destiny. In Olivette, where he represents residents aching for a buyout, a neighborhood is worthy of condemnation to accommodate market forces. TIF can be equally exploited in both locations.

But critics maintain that suburban retail TIF developments don't really create new economic activity. Instead, they purloin a portion of the pre-existing tax base from neighboring cities. With municipalities throughout St. Louis County vying for their share of sales-tax revenue, TIF has become an incentive for competing cities to snatch a bigger piece of the pie.

To Lee Brotherton, an Olivette resident, TIF is a bane to the St. Louis-area economy. "It seems to me that the city of Olivette ought to pay a little more attention to the debate that's been going on in this region now for at least a decade about trying to eliminate the pointless, unproductive profit system between the municipalities, the simple tax grabs that don't benefit our community," Brotherton told the Olivette TIF Commission at a hearing in April.

Brotherton is a former aide to St. Louis County Executive George "Buzz" Westfall; he currently serves on the East-West Gateway Coordinating Council, the regional planning agency. "Where is this new revenue that is going to be captured coming from?" asks Brotherton. "Is it coming from Overland? In the long run, (this) is not going to be a benefit to the people of Olivette or to the people of the St. Louis area. It's bad public policy and it's bad government." Brotherton adds that there are ample shopping outlets within minutes of the proposed Olivette development, including the Target store in Brentwood -- another Sansone TIF development.

Following his public comments, Brotherton expanded on his criticism of the Olivette TIF proposal. "It's clear that the people running the city government decided long ago that they were going to have a TIF development," says Brotherton. "It is also clear that they made absolutely no effort to weigh whether or not this was good for the area in general. As an Olivette resident, I care about Overland and I care about the other surrounding communities, and this is short-term gain and long-term loss. It's really insulting to propose this development. I mean, we have the opportunity to have a Wal-Mart? Now a Wal-Mart by any other name is still a Wal-Mart. We don't need another big, ugly warehouse in our community. We need a stronger regional economy. That's the bottom line."

Whether cash-strapped cities see TIF as a panacea or a necessary evil, the results are the same: Established neighborhoods are being destroyed, falling prey to TIF subsidies, which allow Sansone, THF and other developers to buy out property owners at above market value.

To be decreed a TIF district, the law requires the area be designated an economic-redevelopment zone and be declared blighted or tending toward that end. Arrowhead Park falls in the latter category, having been defined under TIF to be a "conservation area." To qualify as a "conservation area" under the TIF statute, 50 percent of the housing stock within the TIF district must be 35 years of age or older. In the aging, inner-ring suburbs of St. Louis County, this criterion can be easily met. It is a loophole in the law large enough to drive a bulldozer through.

When a municipality becomes bent on pursuing a TIF project, the whole process becomes a self-fulfilling prophecy. All investments are put on hold. Home sales halt. Roofs are not replaced. Houses aren't painted. Additions aren't built. Normal life comes to a standstill. Years may pass.

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