Pathological Community Development, Paid For By You, Me, and Me Again
I do my best thinking at night. At least, that is how I justified my late-night walk this week through downtown St. Louis, where I could not help but feel a sense of utter helplessness. It was not simply seeing “Space Available” signs on every corner that prompted my emotional response; rather, it was my understanding that the slack in the retail, housing, and office markets represents a striking illustration of government’s inability to intelligently deploy our limited public resources.
After all, the image above is representative of dozens of corners recalled to ‘life’” with public funds in what some term “a vital pillar of Missouri’s economy.”
At present, the above-pictured TIFed and tax credited property is home to a small chain retailer, thousands of vacant square feet, quite a few presumably sold condominiums, two dozen available condominium units ranging in price from $250,000 to more than $750,000, many presumably leased apartments, and some parking.
If this building and its appearance were solely the products of truly private investments, I would feel far less concerned about its future. However, given that the city of St. Louis is going to start making me pay for trash service, I get a little upset when passing empty corners like the one pictured above.
All levels of government irresponsibly allow private actors to externalize their risks and costs to the public. In times of austerity like those that we now confront, these long-term public debt obligations increasingly become a drain on our individual resources.
So, how much did the corner shown above cost Missouri taxpayers? More than $30 million. (And likely more than $40 million, assuming that it also utilized the 20-percent federal historic preservation tax credit.)
But it’s so aesthetically pleasing!
Comment by Christine Harbin — June 25, 2010 @ 3:57 p.m.
Socialize that risk and privatize the profits. It’s a well known business model here in Missouri.
Comment by Keith Marquard — June 25, 2010 @ 7:04 p.m.
Such delightful externalities, those aesthetics!
Comment by Thomas Duda — June 26, 2010 @ 11:02 a.m.
By now we should realize that in the face of overwhelming economic odds, such as those facing the core of a non-growing area that refuses to face sprawl, both the TIF process and even tax credits for historic preservation are helpless. Unless the building is a site of considerable historic significance, those tax credits should be awarded only when there is demand for the space.
Comment by Nancy Thompson — June 26, 2010 @ 4:35 p.m.
@Nancy – Or, y’know, we could scrap the whole idea of targeted tax benefits and instead create an inviting business climate by reducing the overall tax rate and decreasing the amount of red tape a business must cut through in order to open up shop.
Comment by Dave Roland — June 27, 2010 @ 2:22 p.m.
Are you kidding me? Why don’t you libertarians eliminate TIF abuse in affluent suburban ares before you knock financial mechanisms targeting distressed areas! Downtown was blighted since the 1970’s — for good reason. Even back then we had over 1,000,0000 square feet in vacant office space. Yes, we have issues in St. Louis City with TIF abuse, however the Syndicate Trust rehab wasn’t for Walgreen’s, Schnuck’s, or any large corporation. This was a building that was almost torn down by City Hall but instead rehabbed by Craig Heller, a local entrepreneur who took the downtown rehab plunge before almost anyone else. If Rex did that in 1998 then perhaps he would have standing to criticize those who took the highest risk before most others. How about you guys complain about STL Centre’s TIF bond under Slay or the Century Garage instead and leave the Syndicate alone? Will you attack the Chemical Building or Arcade next?
Comment by Douglas Duckworth — June 29, 2010 @ 11:09 a.m.
And why do we have someone being upset about paying user fees on a libertarian blog?
Comment by Douglas Duckworth — June 29, 2010 @ 11:13 a.m.
Douglas,
Thank you for your comment. I will remind you that “The views expressed by each contributor to this blog are those of that contributor alone, and do not necessarily represent the views of the Show-Me Institute.”
My concern about the trash user fee is that its enforcement rests in a coercive government mandate. I have a major problem with the fee, as its imposition does not yield a concomitant reduction in taxes. We are still paying taxes that formerly funded the Refuse Division, and now we are forced to pay the City for trash service as well.
Is this a libertarian blog? I thought this was a blog about “News and Views on Missouri Public Policy.”
I respect and admire those who “took the downtown rehab plunge.”
The crux of my critique stands directed at local government actors, who do not possess the proper mechanisms to price subsidies for development projects.
I invite you to share evidence of how TIF incidence in “distressed areas” benefits said areas. $100 million + says it doesn’t.
Comment by Thomas Duda — June 29, 2010 @ 12:04 p.m.
If the trash fee was a switch to a user fee offset by a decline in the tax levels previously used to fund trash pick-up, then Mr. Duckworth’s point would stand and nobody here would complain about it. But it is not a transfer, it is just a new fee imposed while maintaining the prior taxes at the same level. That is hardly above reproach…
Comment by David Stokes — June 29, 2010 @ 1:46 p.m.
Doug, Tom took you up on your excellent suggestion to “attack the Chemical Building” next. Check out:
http://www.showmedaily.org/2010/10/where-did-that-money-go-again.html
Comment by Mary Chism — November 4, 2010 @ 3:11 p.m.