Tuesday, November 28, 2017

Luxury Townhouses Would Owe Less Than $160/Year in Property Tax Under Vollmer Bill

Posted By on Tue, Nov 28, 2017 at 6:57 AM

click to enlarge Alderman Joseph Vollmer is asking for abatements for four townhouses under construction on the Hill. - SARAH FENSKE
  • SARAH FENSKE
  • Alderman Joseph Vollmer is asking for abatements for four townhouses under construction on the Hill.

In August 2016, when St. Louis Magazine published its bombshell report on the overuse of tax abatements in the city, writer Jeannette Cooperman used as her Exhibit A a trio of costly new homes in the Hill. The homes were valued well over $500,000, she wrote. Yet their owners were paying around $500 annually in property taxes, far less than city residents with comparatively modest homes. Thanks to the city's penchant for handing out 100 percent abatements on new construction or rehabs, the owners were able to enjoy ten years in their new mansions — locked into the tax bill assessed for the smaller homes that previously stood on site.

It was very, very troubling. But those tax breaks have nothing on the ones set for discussion this morning at the Board of Aldermen's Neighborhood Development Committee.

The Villas on the Hill, a quartet of "luxury townhomes," are currently under construction in the heart of the Hill, just across the street from Charlie Gitto's. A sign in front of the site promises that prices will begin in the "mid $400s." The developer — Charlie Gitto himself — has told the city that each of the four units will go on the market for $459,000.



Yet if Alderman Joseph Vollmer's abatement request is approved, the new homeowners won't pay the minimal taxes assessed to the two small homes that used to be on site — bad enough as that would be. No, in this case, they'd be paying the rate assessed on the vacant lot after those homes were bulldozed in late 2016. That's less than $160 a year in property taxes. Houses worth half as much in St. Louis pay ten times more.

You could chalk it up to calculation or to near-perfect timing, but it boils down to this: The request for abatement wasn't made until the old homes were demolished and the lots assessed as vacant. And so instead of locking in annual taxes of $758 and $907, respectively, the 100 percent abatement Vollmer is requesting would lock in taxes at $132 and $153 for five years.

In most tax abatements, the city is missing out only on what might have been, on the possibility of revenue. (That's one way supporters of such subsidies are able to justify them.) Vollmer's bill is more galling: After replacing one-story cottages with swanky residences, the city will actually be losing tax revenue.

Members of Team TIF, an activist group that crusades against such abatements, plan to be at this morning's meeting to push back against approval. Andrew Arkills, a volunteer with the group, notes the timing of the demolition and the reassessment in concluding that the deal smells a "little funky."

But it's not just Team TIF opposing this abatement. It's also the St. Louis Development Corporation, or SLDC.

The agency is supposedly the expert on incentive deals. In fact, in the St. Louis Magazine story, Alderman Vollmer claimed that he deferred to the SLDC on abatement details. "Those guys know more about numbers," he told Cooperman. "I’m just a saloonkeeper who got elected.”

So what did "those guys" say about these numbers? No tax break was necessary, the agency concluded, "based on the strength of the surrounding market."

In other words: The Hill is hot right now. You don't need to promise homeowners a big tax break to get them to consider spending $459,000 on new construction, not on Shaw Avenue. Yet Vollmer is proposing one anyway.

The alderman did not return our call seeking comment yesterday. Still, precedent is on his side. Most of the time, when St. Louis aldermen ask for a tax abatement in their ward, other members defer to them. Never mind what's best for the city as a whole; "aldermanic courtesy" holds sway.

And despite the SLDC's negative assessment, the project has already cleared one major hurdle. In September, it went before the city's Land Clearance and Reutilization Authority. And though that body agreed the project shouldn't get an abatement, the members declared it blighted anyway — which is, yes, the first step for getting an abatement. In their brief discussion, recorded by Team TIF, members suggested this could allow the developer to come back with a more worthy project.

He didn't. Instead, Vollmer introduced his bill in the Board of Aldermen going for a five-year, 100 percent abatement on the very project the SLDC opposed. Hey, it's blighted; why not? As Team TIF's Glenn Burleigh explained in a revealing op-ed for the RFT back in August, that's how these things go. Everybody just keeps doing their part to go with the flow until we've given away the whole damn farm.

The activists trying to stop this are frustrated. Arkills points to Vollmer's words last year about relying on the SLDC. The alderman can't have it both ways, Arkills says: "Either we're trusting people at the SLDC to run the numbers or not. The number crunchers he trusted up until last year, it seems like he's now ignoring."

We might ask the same question of the Board of Aldermen. Are they serious about trying to block the most unnecessary tax giveaway? Or are they only interested in stopping the ones that shame colleagues who've failed to toe the line? The experts have weighed in and said this project isn't worthy. Our elected officials — be they saloonkeepers or CPAs — might want to pay attention to that.

Sarah Fenske is the editor in chief of the Riverfront Times. Email her at sarah.fenske@riverfronttimes.com or follow her on Twitter @sarahfenske

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