A heaping tablespoon of TIFs makes the economic pie bigger, say supporters
This article first appeared in the St. Louis Beacon, Feb. 10, 2009 - T.R. Carr doesn't mince words about his opinion of East West Gateway's study of tax-increment financing in the region. The study concluded that the region gave $2.5 billion in tax breaks over 15 years but got little in return.
"They got it wrong," said the mayor of Hazelwood and a professor of public administration at Southern Illinois University at Edwardsville.
To bolster his argument, Carr points to the development of the St. Louis Mills mall in his city, a project that he said resulted from the Missouri Department of Transportation's improvements along Highway 370 from north St. Louis County into St. Charles.
He said that the interchange came first; then, the Mills corporation came to build its retail center, a project that Carr said led to 2,000 construction jobs, then 2,000 retail jobs and 950 non-retail jobs, with more coming.
The TIF notes were paid off quickly, he said, and the development helped improve the quality of life in north St. Louis County, with more jobs and improved retail traffic.
Asked about the contention by Sterman and others that such retail is really a zero-sum game -- in this case, moving sales from Northwest Plaza in St. Ann north to the Mills in Hazelwood -- Carr disputed that notion.
"Retail depends on reinvestment," he said. "Ask what kind of reinvestment was being made in Northwest Plaza to maintain it as a premier retail outlet in the region. The answer is none.
"People like to shop in attractive environments. Those kinds of reinvestments had not been made in that center by its owning corporation."
Tim Fischesser, executive director of the St. Louis County Municipal League, called the East-West Gateway study premature and biased, confirming a negative attitude toward TIFs that the agency already held.
"I think we are struggling in part because of the loss of tax base," he said. "What happens with these TIFs is that we try to grow the pie, or at least stop it from going down. You have to either grow the pie or increase the rates. The whole key to all this stuff is growing the pie."
With tax-increment financing, he added, improvements can be made in areas that need it without putting an added burden on residents.
"There is a very big disconnect between the report and what most officials view as a prudent way to fund things, as opposed to having a tax increase or a bond issue," Fischesser said. "We have to think of a way to close that gap and in the process determine if this new slice of the pie going toward development is too big.
"Is it a glass half full or a glass half empty? Most of us would say it's working pretty well because we have been able to keep tax revenue even with inflation. East-West Gateway says there is no growth, which has a lot of elected officials scratching their heads."
As far as the issue of redefining blight goes, Fischesser said you have to look at what the blighting law was originally intended to do.
"Some people want to rewrite history and say blight was meant to be for poor areas," he said. "Blight was not meant to be for poor areas. It's not a question of low or moderate income.
"You can't wait for an area to be poor to use TIF. Then, I think, the vestiges of sprawl would be a lot worse. When you look at the larger picture, it's crystal clear to us that we can't sit on our hands and watch assets go through St. Louis County to outer areas. If you snooze, you lose."
For Carr, who has looked at the issue both as a mayor and as a professor, the answer remains the same: Municipalities have used TIFs wisely, and the area has benefited
"My view as mayor comes because of my view as an academic," he said. "I can read spreadsheets, and I understand the importance of accountability and credibility.
"It's not a cash cow for us. We're an economic engine for the region."
How do you make people care?
How well that engine runs remains the big question for people on both sides of the TIF discussion.
For state Sen. Tim Green, D-Spanish Lake, the chances of fine-tuning TIFs don't look good because too many people think they need the extra horsepower, and not just in the St. Louis area.
"In Kansas City," he says, "they are competing with businesses and municipalities in Kansas, and they don't even have a river dividing them. So it's pretty much one side of the street against the other. And there's also the Lake of the Ozarks."
For Tim Fischesser of the Municipal League, the problem is sprawl and the need to be able to spur further improvements in older suburban areas like Brentwood, Maplewood and the University City Loop. He says a tiered approach can work for everyone.
"If we have super help going to areas that are most at risk," he says, "and moderate help going to areas that are not so much at risk, then TIF is local people paying for local improvements."
And for Les Sterman, at East-West Gateway, TIF presents a puzzle. Changing what he considers to be an inefficient system should be an issue that appeals to a broad political spectrum, not to mention the tax-paying public, so what he says are vital reforms should be easy to accomplish.
"Conservatives don't like TIFs because it interferes with the free market, where government picks the winners and losers," he said. "Liberals don't like them because they are corporate welfare.
"One of my frustrations is not understanding why people aren't more indignant about this. It is so diffuse, with different projects in different places and an alphabet soup of incentives. But when you add it all up and see all those zeroes, we hope to raise more awareness about it. Somehow, we have got to get people focused on the fact that this is their tax money."