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Monday, October 31, 2016

St. Louis Gave Away $950K in Tax Incentives For Every New Central Corridor Resident

Posted By on Mon, Oct 31, 2016 at 6:58 AM

St. Louis has been giving away tens of millions of dollars in tax incentives. So what's the payoff?

Andrew Arkills, a neighborhood activist in Tower Grove South and a number-cruncher by vocation, found himself wondering just that as he contemplated a May 2016 study showing that the city has given away $709.1 million in tax incentives and abatements over the last fifteen years. Such giveaways are often seen as necessary for shoring up city neighborhoods, attracting development and reversing decades of population loss. But have they done as promised?

Arkills found himself pondering a simple metric to attempt to answer that question: population gain (or, this being St. Louis, loss). To that end, he created a spreadsheet that showed the total incentives given per neighborhood from 2000 to 2014 next to the population shift in that neighborhood. Divide one by the other, and you get the per-person investment.

In his analysis, Arkills included everything — not just the $709 million noted in the previous report, but also tax credits and other state incentives — for a total of $5.8 billion in giveaways and tax discounts. (See page 58 of the city's report to see the data set he drew from.) He also broke down population changes by race and gender to get an even more detailed perspective.

Lined up this way, the numbers suggest that even billions of dollars in incentives have not resulted in significant population growth — and that the small bump in new residents in some neighborhoods is dwarfed by the tax deals given to land them. Looked at this way, the per-person cost of these incentives is staggering.

"The argument used by developers when they ask for these is that helps grow density and diversity," Arkills notes. "But that argument doesn't make sense when you look at the results."

Arkills took a particularly close look at the city's central corridor — Downtown, Midtown, the Central West End, Lafayette Square, Skinker-DeBaliviere and other neighborhoods between Delmar and Chouteau along the I-64 corridor. Those neighborhoods have been gifted with $219 million in tax abatements and $338 million in tax increment financing from 2000 to 2014, offering price breaks that encourage developers to build everything from infill single-family homes in city neighborhoods to that new Whole Foods in the Central West End.  That's money that doesn't go to schools or essential city services.

Yet the total population gain in the central corridor from 2000 to 2014 was just 4,499 people. All those tax rebates come out to $953,733 per new resident.

A lot of that action has been Downtown, which received $2.7 billion in tax breaks in the last fifteen years, with developers being offered incentives to create the kind of housing that will build an attractive population base. Yet for all that money, just 2,997 people have moved downtown. That's a subsidy of $915,837 per person.

Some neighborhoods have higher per capita totals, and some lower. But in no case do the incentives really seem to pencil out — especially because, as Arkills points out, many central corridor neighborhoods are the same ones developers would be interested in even without incentives. Lafayette Square chalked up $2.7 million in tax abatements, even though its housing stock is among the city's priciest. The Central West End garnered a combined $408 million in total incentives, even though no one could argue the neighborhood is blighted. (Well, OK, people have argued that. But it's downright laughable in light of the neighborhood's soaring real estate prices.)

Arkills hopes his calculations will challenge the conventional wisdom that these massive subsidies are a necessary evil. He's also interested in the racial impact — and kickstarting a conversation about what tax abatements and incentives mean in light of that.

And that's because of this: Even as the central corridor gained new residents, it lost black ones. Arkills' spreadsheets show a 1,049 net loss of black residents in those neighborhoods from 2000 to 2014. In essence, the city spent that $4.2 billion to gain a few white residents, but also to lose some black ones.

The numbers look even more troubling on a micro level.

In St. Louis, a tax increment financing subsidy often denotes a big development. That's why you see the biggest TIF numbers in Arkills' report in neighborhoods with office complexes and bigger projects, including downtown and the Central West End.

But tax abatement projects can be smaller. They can be given to developers building a house or two — filling formerly ravaged neighborhoods like Shaw and McRee Town (now Botanical Heights) with higher-end housing. Typically, the abatements help to attract well-heeled homebuyers who might need to be persuaded to take a chance on the city.

But the result in some neighborhoods is that black residents are increasingly being displaced for white ones.

According to Arkills' research:
  • In Botanical Heights, $3.49 million has been given in tax abatements — and in the same time period, there's been a 54 percent drop in black population.
  • In Shaw, $2.5 million has been given in tax abatements, with a 53.8 percent drop in black residents.
  • Tower Grove East has seen $1.4 million in tax abatements, with a 43.6 percent drop in black residents.
  • Forest Park Southeast (aka the Grove) has seen $2.6 million in abatements, with a 40.8 percent drop in black residents.
"You see all this money being invested, and you see how the racial makeup is changing," he says. "We need to ask ourselves, why are we paying this money — to make a playground for white people?"

Arkills has been building a website to share his data with the rest of the city. You can see his spreadsheets in a sortable format online at

We welcome tips and feedback. Email the author at [email protected]

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