Good TIF, Bad TIF: Even When It “Works” We Lose

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The April 2-8 St. Louis Business Journal leads with a tale of two TIFs. For Brentwood's Promenade the STLBJ states "The city's bet paid off." For O'Fallon? A bad bet "costs O'Fallon $360,000." Presumably we're to believe that one TIF was successful, that there was a good outcome and another TIF was bad. The O'Fallon TIF may indeed have gone bad, but the bet that "paid off" did so for only one small municipality at the expense of everyone else in the St. Louis region.

 
What is presented as a windfall in tax revenue is simply the resumption of collecting taxes that were owed to the people of the St. Louis region for the past 13 years. But the Zoo, the schools, the community college and the firehouse didn't receive those taxes, they went to Target Corporation, Pet Smart, Inc., Bed, Bath and Beyond and others. Of course that statement is based on some assumptions, albeit assumptions shared by an authoritative study produced by East-West Gateway.
 
"Brentwood Promenade exemplifies how strong public-private partnerships can create lasting benefits for local municipalities," Brentwood Mayor Pat Kelly is quoted as saying. And he's right to an extent. The TIF that helped create the Brentwood Promenade has benefited Brentwood.
 
So Brentwood thinks it's on to something good. The story mentions that four additional TIF projects have been authorized by the city. "I think the public is general is misinformed and misunderstands the TIF process, so it is nice to see when one is done correctly what the results are and all the benefits it can provide," Anthony Sansone Sr. said. Sansone, Chairman and CEO of Sansone Group, co-developed the Promenade and insisted at the time that a TIF was necessary. "People see it as a money giveaway, which it is not. But for the TIF, there might not be a Brentwood Promenade or the other developments that followed on its heels."
The "but for" argument is often used to explain a TIF project. This project would not happen "but for" the tax incentive. When this argument is applied by one of the 90+ municipalities in the St. Louis region it always appears correct. Any single TIF project would likely not exist in its current form "but for" the TIF. Yet clearly this is an abuse of funding mechanism and its common test.
 
Mr Sansone Sr. and I certainly agree on one thing, that the public is in general misinformed and misunderstands the TIF process. The Promenade may not exist "but for" the TIF, but what would be the result? Would businesses simply choose not to serve Mid-County? Would consumers have fewer choices of where to buy shower curtains? It's possible. But more likely those businesses would be more or less where they are today, though maybe across the municipal line and in Maplewood, Clayton or Richmond Heights instead. Do you think the consumer particularly cares which side of Hanley road the Target is on and on which side the Walmart is located? Of course not. But municipalities care.

A recent study by East-West Gateway concluded that the extensive use of TIF in the St. Louis region, more than $2B over the past 15 years in retail development alone, has "primarily acted to redistribute spending and taxes." So, the St. Louis region has forfeited more than $2,000,000,000 in revenue to developers and corporations as municipalities have fought for local tax revenue.

Even a "good" retail development TIF is a bad thing for St. Louis.

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