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.

But available public records suggest that the Brentwood TIF was far from the popularly driven, egalitarian project that Mello describes. Instead, the plan appears to have evolved through the cooperation of business and political leaders in the municipality, with the profit-motivated decision making coming from the top down.

It happened more or less like this:
On Sept. 20, 1993, Mayor Mark Kurtz nominated eight members to the Brentwood Economic Development Council (BEDC), and his choices were duly approved by the Board of Aldermen. Among the Brentwood residents named to the board were Joseph Johnson III, the vice president of Westin Group, a Brentwood-based real-estate agent; Donald U. Beimdiek, an Armstrong-Teasdale attorney; and Charles Eisenkramer, the senior vice president of Magna Bank.

The group often met at the Magna Club, which is located in the Magna Bank building on Brentwood Boulevard. Unfortunately, no minutes of this publicly appointed group's meetings were kept, so it is impossible to ascertain the exact agendas of the meetings. This much, however, is known: Westin Group ended up obtaining the sales options on the Evans Place properties, Magna Bank handled Brentwood's TIF funds, and Armstrong-Teasdale became the law firm for the city on TIF-related issues.

Moreover, campaign-finance reports on file at the St. Louis County Election Commission show that attorney Beimdiek acted as Mayor Kurtz's campaign treasurer in 1997, after the city contracted with his law firm to act as special counsel in redevelopment matters. Contributors to Kurtz's 1997 campaign included Beimdiek's law partner Mello, who donated $200, and real-estate agent Johnson and his wife, who gave a total of $500. Both Johnson and Mello are involved now in negotiating the buyout of residents in Olivette's TIF project, another Sansone Group deal.

Aside from their proximity to the interstate highways, the common denominator in the location of the proposed Olivette project and the existing Brentwood shopping center seems to be income level. In both cases, the Sansone Group's retail TIF developments involve the elimination of the poorest neighborhoods in their respective municipalities.

For example, of the 1,691 people living below the poverty level in 1989 in the city of Olivette, 1,112 lived in the census tract that includes the proposed redevelopment area. Census data indicate that about 23 percent of the population within the tract lived below the poverty line. This figure represents almost twice the percentage of the city as a whole.

It is within this context that TIF is being used for "suburban renewal," and Sansone is helping it happen all over St. Louis County. Under the revised 1991 TIF statute, a conservation area is "an area not yet blighted ... but (nevertheless) detrimental to the public health, safety, morals or welfare" of the community. Olivette broadly interprets this clause as an endorsement to promote "economic welfare, public convenience and general prosperity."

City manager Tim Pickering contends that residents of Olivette are entitled to have multiple choices on where they spend their retail dollars just as their counterparts do in Ellisville, Chesterfield and Ballwin. "I think when an inner-ring suburb like Olivette attracts investment into its community, that is a good thing that we need in St. Louis County," says Pickering.

In his analysis, Pickering is skating around an issue that is central to the use of TIF for retail developments. Municipalities are tempted to implement retail TIF districts because they can use a portion of the sales tax generated from retail customers who live outside the town's city limits to pay off project expenses and add money to the city's coffers. With a host of St. Louis County towns qualified to collect their own portion of the state sales tax, the incentive to lure shoppers across municipal boundaries is great. Instead of Olivette residents shopping at the Grandpa's in University City, for example, University City residents will theoretically patronize the new Wal-Mart in Olivette.

Tom Curran, a planner for St. Louis County, says that any alleged benefits are outweighed by the undeniable costs. He contends that there is very little new housing development within a five-mile radius of Olivette's proposed Wal-Mart store. "If anything, you're taking away 200-plus homes in an area where there's not a lot of new development and then making the argument that sales are increasing."

As part of his position with the county, Curran sits on Olivette's TIF commission. The TIF law requires that six of the 12 commission members be appointed by the Olivette mayor. Two members are named from the school district -- in this case, Ladue. One member is appointed to represent other taxing districts, such as the Metropolitan Sewer District or the Junior College District, and three members of the commission come from St. Louis County government.

On April 14, the Olivette TIF commission called a public hearing at the Olivette Community Center to submit its TIF proposal. After hours of public comment, the commission decided to delay making any decision on the plan until this month because the proposal submitted by the city didn't contain all of the requirements of the law.

"I've been on TIF commissions for seven years, and I've never seen a TIF that was handled this way in all of my experiences in St. Louis County," says Curran. "To not have what is legally required by law and to go to a public meeting anyway -- I've never seen that happen."

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