Base Motives

Well-heeled cities and developers keep TIF reform at bay

Citizens of St. Louis County, unite -- all you have to lose is your tax-increment financing.

As a rallying cry, it's not exactly "Liberté, egalité, fraternité," but we're talking retail here. A TIF these days is what passes for economic development. And if economics is the dull science, then TIF talk serves as Nyquil for anyone but the most serious drone of a policy wonk.

Tedious as TIFs may be, emotional suburban skirmishes have broken out over them in Olivette, Hazelwood, Brentwood, Rock Hill and elsewhere in the region. Olivette residents organized to block a Wal-Mart. Evans Place in Brentwood was obliterated for a Target, a PetSmart and other sales-tax traps. A Chesterfield floodplain was transformed into a Wal-Mart complex so that refugees to St. Charles County might stop and drop some dough before crossing the wide Missouri. In each of these cases, TIFs were fundamental.

The hubbub has spurred halting efforts to tweak the state legislation governing TIFs so that the device would be confined to distressed areas where a tax break might mean the difference between carrying out a project and letting a site remain unused. But with the current use of TIFs, money is changing hands on several levels, so don't look for county-government types to urge the part-timers in Jefferson City to change the rules of the game. Developers contribute to the campaigns of elected officials, jurisdictions scramble to collect sales-tax dollars from TIF projects and folks in economically distraught areas -- well, where's the money there?

Even anti-sprawl Tim Fischesser, of the St. Louis County Municipal League, says, "TIFs are a good thing." He stands a previous argument on its head to argue that TIFs work against sprawl: "Since we don't have growth management and we're so out of control with sprawl, we end up doing things like this that normally wouldn't make sense but actually do make sense for the tax base."

One example of what "spooked" Fischesser and County Executive Buzz Westfall's office with regard to recent TIF-reform bills is that they were too restrictive. With the use of objective income and development measures, Fischesser says, last year's bill would have allowed a TIF in Jefferson County near Interstate 55 because mobile-home parks were nearby but would have prevented a TIF for South County Center because its neighborhood was spiffier. Yes, that's what the argument has come down to: saving malls and keeping sales-tax dollars from crossing the county line.

Blair Forlaw, director of policy and programming for the East-West Gateway Coordinating Council, sees that view of TIFs as the problem. "That is not economic development," she says. "Economic development is a net regional increase in good jobs that pay good wages with benefits and grow our region's economy. The way tax-increment financing is being used now, we're merely shifting retail development, which is not characterized by good-paying, full-time jobs that pay good wages and grow wealth within our economy. We're just shifting one location to the next for the purpose of capturing sales-tax revenue."

State Sen. Wayne Goode(D-Normandy) sponsored a TIF-reform bill that passed the Senate last year but died in the House after Westfall withdrew his support. In the Senate, Westfall's staff testified for the bill; in the House, they testified against it. Westfall aide Ron Watermon says the main gripe over last year's bill was that it wouldn't be applied statewide. This year, Goode's bill never made it out of the Senate. A similar bill in the House, offered by Rep. Tim Green (D-Spanish Lake), went nowhere.

Goode and Green represent inner-ring suburban districts, areas that, Goode says, "need TIFs the most." To give those areas an edge, the reform bills included "statistically based screening criteria" such as area income levels that would have to be met for a project to qualify for a TIF.

"Basically, the bill's opponents wanted to use TIFs in areas that I would argue don't need to be TIF-ed," says Goode. Because virtually any locale can get a TIF, even West County Center in Des Peres or a Chesterfield floodplain, distressed areas are even at a bigger disadvantage than before the advent of TIFs, Goode contends. "In some cases, it does make it worse than if you had no subsidy at all," he notes. "You're not only up against a more desirable location, you're up against a more desirable location with a TIF."

Fischesser was part of a "working group" that submitted a report on TIF legislative revisions to Westfall in March. Fischesser opposed current reform bills, with his main reform recommendation being to ban TIFs in "greenfields," meaning farms and vacant lands. But even that modest revision had no chance of passage this session.

Those backing the status quo stress that many of the county's TIF projects have to share their sales-tax revenue by kicking it into the county's sales-tax pool. Half of each TIF's new sales-tax revenue is plowed back into the project. In 2000, 53 percent of remaining TIF money, $1.8 million, was shared. That meant $1.7 million stayed in the municipalities where the TIFs were granted. Many of the county's 91 municipalities share their taxes at different rates.

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