Do the Math: Kirkwood, MO

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If this kind of analysis excites you, it’s similar to what a firm called Urban3 out of Asheville, NC led by Joe Minicozzi does. We’re trying to get them to do an analysis of St. Louis. That takes considerable funding. If that’s something you’re interested in helping with please email me at richard at nextstl.com

Let’s continue our tour of the region. We saw how on West Florissant the hopelessly low-productivity development pattern sucks wealth away from individuals and the city of Ferguson. Maplewood’s traditional downtown is much more productive. We saw in Crestwood despite much higher median household incomes, its auto-oriented commercial corridor on Watson was lower-yielding than Maplewood’s- a hidden tax on its citizens (and the county/region as a whole). Next let’s take a look at Kirkwood. Let’s do the math!

{Downtown Kirkwood along Kirkwood Rd (Elsewhere known as Lindbergh). The Amtrak station is in the center.}

Kirkwood is a rock star. Several parcels go well beyond the top of the scale. The study area covers 55.77 acres with total assessed value of $30.7M or $550,000 per acre. That’s 67% higher than Maplewood, 182% higher than Crestwood, and 437% higher than West Florissant. Kirkwood’s median household income is also the highest of the four study areas, but as we saw in Maplewood, whose median household income is 55% less than Kirkwood’s, that’s not what is driving value in their commercial corridors. Those incomes are further buoyed by lower transportation costs since downtown is a very short drive/bike/walk from surrounding residential areas.

{Some of Kirkwood’s most productive buildings. The modest building in the center clocks in at $2.58M in assessed value per acre.}

Kirkwood is blessed with a street grid and a traditionally built downtown thanks to its ancestors. Without market perturbing policies from the regional, state, and federal governments, they had to build a place that was productive and resilient which turns out to be a human-scaled efficient-land-using one. Luckily for them it hasn’t all been torn down.

As Kirkwood considers what to do with the land at Manchester and Kirkwood Roads, they should examine which land uses are productive and wealth generating just down the street.

{Some of the least productive parcels have a lot of parking}

What about sales taxes? An obvious question. The Walmart Supercenter down the road comes in at $252,179 of assessed value per acre. Let’s set the rock star bar at $1.2M per acre. At 1.114 (0.654 general + 0.46 SBD) per $100 assessed value for general revenue property taxes it would need to generate $10,558 per acre in sales taxes or at 1.25% for general revenue sales taxes that’s $844,700 per acre or $11.3M for the site, which it probably does. But those rock star sites downtown generate sales taxes as well, so the big box has to match that too. And the kicker here is that the Walmart is in the Meacham Park section of Kirkwood. Annexed in 1991 this part of Kirkwood is in the sales tax pool. The pooled taxes are redistributed per capita so for this section of Kirkwood only 6.4% of the 1% sales tax revenue goes to Kirkwood. We see why some cities want out of the pool. Kirkwood has the 0.50% Capital Improvement and 0.50% Parks/Recreation Capital Improvement optional sales taxes. But again those apply to downtown too. Without more data a comparison isn’t possible, but assuming the big box outpaces downtown due to sales taxes isn’t a good bet.

Kirkwood is a wealthy place thanks in part to its wealth generating downtown. Each year it throws off considerably more property taxes per acre than the other places we’ve examined, which translates into less infrastructure to maintain per dollar of economic activity. The city (and school district, etc) can plow it back into making Kirkwood a better place to live. A positive feedback loop that everyone in the region should strive for.

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  • STL_CS

    Richard – your analysis is very flawed. Just take a look at Lockwood in Webster Groves, property is very valuable however the property taxes are sky high because there is very little sales tax revenue generated. Webster and Kirkwood are very similar communities except for the fact that Kirkwood has a much larger sales tax base. Without incorporating sales tax you are not comparing apples to apples. Until you are able to incorporate this information you should stop comparing West Florissant to Maplewood to Kirkwood. Value per acre is low for large retailers because of the parking, but without the parking they would not be able to serve their customers to generate sales tax revenue. Additionally one of your highest valued properties in Maplewood is the corner lot which currently has a vacancy because the business that have gone into there (Jump Jive and Wail and Jumpin Jupiter) are unable to pay their rent because it is so high.

    • Nathan Bookhout

      Second paragraph from the end for sales tax. You would also have to look at comparable businesses put out by the larger competitor. Does the sales tax generated offset the smaller scaled/higher assessed local alternative?

    • Rob

      Couldn’t agree more! Richard has no real knowledge of commerical property and it was obvious after he thought Kirkwood actually got the sales tax from the Walmart & Target. Maybe Nextstl should leave the analysis up to professional developers, real estate lawyers and tax accountants that actually know what their talking about.

      • rgbose

        Kirkwood gets 1.25% out of them. They’re in the 1% pool. Downtown isn’t, so 2.25% goes to the city, which makes my case better.

      • rgbose

        Kirkwood gets 1.25% out of them. They’re in the 1% pool. Downtown isn’t, so 2.25% goes to the city, which makes my case better.

      • Alex Ihnen

        Some great conversations and the larger debate locally regarding development patterns is starting to happen with Richard’s analyses. I’m excited for this conversation and happy to post his work here. Yes, it’s just a start – not an attempt to reach a conclusion in a 400 word blog post. Behind the scenes, Richard and others are doing the heavy lifting required to produce a more high level economic survey of the region – something more and more people are calling for in part due to posts like this one.

    • rgbose

      Do you know where I can get sales tax data on a parcel basis? I will gladly incorporate it. The Assessor doesn’t care how much a parcel/building generates. While levies vary across the county assessment policy doesn’t.

      Blind Tiger didn’t make it either at Manchester and Sutton. If they want tenants to last they might have to lower their rent. What will Kirkwood et al do when a big box relocates? If cities want to be wealthy they should build in a traditional manner and minimize parking and large one story buildings rather than chase them. They require too much infrastructure and don’t return in kind.

  • STLEnginerd

    To do a fair comparison you’d need to add in the sales tax revenue generated per acre as well. In that case I’d think Walmart down the street becomes very valuable per acre as well. Preserving downtown Kirkwood is critical to the appeal of Kirkwood as a whole but I doubt that’s where the lions share of their operating revenue comes from.

    • rgbose

      I’d love to get access to and add sales tax data. Do you know how to get it?

      In examples done by Urban3 even including sales taxes it’s no contest.

      • Michael

        I don’t think Kirkwood receives sales tax revenue (or its full share of it) from Kirkwood Commons. I thought that was part of the deal when annexing Meacham Park years ago.

        • rgbose

          There aren’t any TIFs in Kirkwood and they are a point-of-sale city. They have a Kirkwood Station TDD for an extra 1%

          City of Kirkwood Sales Tax Rate

          8.363

          KIRKWOOD TAX BREAKDOWN 2.25
          1.00 General Sales Tax
          .50 Capital Improvement
          .50 Parks/Recreation Capital Improvement
          .25 Local Option

          MISSOURI TAX BREAKDOWN 4.225
          4.000 State of Missouri
          .125 Conservation
          .100 Parks & Trails

          COUNTY TAX BREAKDOWN 1.888
          .50 Transportation
          .25 Mass Transit
          .10 Parks
          .25 Children’s Fund
          .10 E-911
          .50 Metro
          .188 Metro Parks/Arch

          • Rob

            Wrong, Michael is somewhat correct. State law mandates annexed areas to remain B sales tax pool status, so Kirkwood gets about 1/10 of every dollar of Kirkwood Commons sales taxes.

          • rgbose
          • onecity

            By a quick web search, Wal Mart does about $400B in sales a year, or an average of about $93M sales per store per year. It looks like the Kwood store is 11-12 acres with parking and buffers, $9M per acre in sales. How does that factor into the analysis?

          • rgbose

            That sounds really high. According to the sales tax pool study from 2010 the Meacham Park businesses (those on the east side of Kirkwood Rd) generated $342k in sales tax revenue from the 0.25% option which translates into $136.8M of sales

            I’ve added a paragraph about sales taxes.

          • rgbose

            Shrewsbury has 1.5% sales tax. That implies $66M in sales. Assuming the Kirkwood store does equal times 1% then 6.4$ due tot he sales tax pool, the city gets $42,624. Plus the 0.25% option and 1% of the other optional taxes and it’s at $875,000 or $65,500 per acre.

            “The board and Mayor Felicity Buckley often have expressed hopes that the big store will bring an equally big boost to the city’s sales tax revenue. When the project was under consideration, consultants’ projections ran to about $600,000 a year after the store opens and up to $1 million a year by the time the TIF expires in about 2036.”

            http://www.websterkirkwoodtimes.com/Articles-Shrewsbury-i-2015-02-20-194631.114137-Board-Gives-OK-To-Kenrick-Plaza-Site-Plan.html

          • onecity

            I don’t want to fill in the gaps and misinterpret your comment. What does that make the total per-acre property plus sales tax impact of the Wal Mart?

          • rgbose

            Alright I have the Walmart producing $876,438 in sales taxes assuming $66.7M in sales and $22,017 in property taxes based on assessed value of $3,366,590. Total $898,455 for Kirkwood. At 13.35 acres that’s $67,300 per acre. It’s a disaster for the school district, though it doesn’t enroll kids, but neither does downtown.

            109 N Kirkwood Rd, a two-story building, which has a Racanelli’s, don’t know what’s upstairs, is assessed at $230,140 or $2,564 in property taxes and assuming $300,000 in sales per year, $6,750 in sales taxes for total of $9,314 to Kirkwood. On 0.11 acres that’s $84,672 per acre.

          • STLEnginerd

            Very nice. You definitely make a compelling case. Can’t say with certainty which generates more revenue for Kirkwood, but I can say for certain which one I’d rather live next to.

          • onecity

            Another interesting angle is this: When we invite a Wal Mart or other big box into our town or our neighbor’s town, assuming people will spend what they will spend no matter what…the money that might otherwise be spent at 100+ local businesses that don’t enjoy TIF status and aren’t necessarily price-competitive with a Wal Mart or other such biz, would go into the pockets of 100 local owners, reinvested into the community through non-discounted taxes, and the wealth effects of the owners of those businesses. Also, since local biz does not necessarily enjoy the benefits of TIF financing, towns are actually subsidizing an outside entity’s ability to undercut their own livelihoods. That may be phrased badly, hope you get the gist.

          • Alex Ihnen
          • onecity

            ^ That should be brought front and center every time a national retailer comes to town demanding special treatment. Also, there are something like 110 employees in an average Wal Mart, based on about 450k total store employees in 4300 US locations. I’d be interested in 1) how that number of employee hours compares with the employee hours in 100 or so local businesses, and how the median pay compares, as well as the top quartile or quintile of pay in both scenarios. These businesses quietly do a lot of harm, made visible in closed storefronts, lack of funds for civic investment and maintenance (and lack of private wealth to direct into civic ventures), and reduced opportunities for entrepreneurship, etc.

          • Alex Ihnen

            Raise your hand if you think Walmart will still occupy this building in 2036.

          • STLEnginerd

            Wow. Didn’t know about that little asterix. If Walmart revenues goes to the pool it definitely neutralizes it as a factor. Then again seeing the revenue it generates and getting so little of it must sting a bit and might be enough to sway some to attempt to recreate some of it in an area that won’t contribute to the pool.

  • Rob

    This is great! So a walkable, dense, Main Street USA, less auto oriented downtown is what Crestwood should strive for?

  • SnakePlissken

    Love the analysis! Keep it up. That is all. Snake out.

    • Dblarsen314

      Jake?