Do The Math: West End Terrace Apartments in the City’s Central West End

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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

While surveying St. Louis City’s most prosperous neighborhood, the Central West End, a large relative cool spot stood out. No, it wasn’t one of the numerous tax-exempt properties in the central corridor, it is the West End Terrace Apartments- a 195-unit complex near Taylor and Pershing. Let’s take a closer look. Let’s do the math!

The West End Terrace Apartments occupies 6.41 acres and has an assessed value of $1,478,500 or $230,578 per acre. The complex was built in 1972 on the site of the Academy of the Sacred Heart-Barat Hall School razed in 1968. Thumbing its nose at the traditional development pattern on surrounding blocks that it uses to help acquire tenants, it followed the predominant pattern of the day: a scattering of nonengaging three-story buildings surrounded by parking, trees, and a fence.

West End Terrace{West End Terrace Apartments – Google Streetview}

Destination is Our Inspiration!

Are you tired of high-rise living? If so, then you will find exactly what you’ve been looking for at West End Terrace. We are located in the middle of everything, yet away from it all. When you come to West End Terrace Apartments, you will find garden-style living on beautiful landscape with the convenience of being within walking distance from shops and restaurants after a long day at work. Our spacious, unique floor plans will fit your every need. Come meet our award winning staff and see for yourself why so many call West End Terrace home!

Nearby blocks (excluding tax-exepmt properties) occupy 86.81 acres with total assessed value of $62,985,150 or $725,551 per acre. That’s over 3x that of the West End Terrace Apartments.

Had West End Terrace been built traditionally and met the average of the rest of the study area, it would be assessed at $4.65M. A yearly difference of $241k in total property taxes. This has amounted to a hidden subsidy every year- more infrastructure for low-valued property. Since the highly perturbed market of the day didn’t command building traditionally, might it have been wiser to subsidize a more productive land use (either denser, more valuable, mixed-use with jobs and sales) directly when it was built? The same number of units could have fit on a smaller footprint leaving land to develop for a productive use later, hopefully without subsidy.

Convent Gardens{Convent Gardens Apartments – Google Streetview}

The private sector has missed out too. The Convent Gardens Apartments across Pershing has 150 units occupying 0.95 acres ($441,052 assessed value per acre), over half being common space and surface parking. Rents there are on par with West End Terrace. 6.75 Convent Gardens would have fit on the West End Terrace site for five times the number of units. Five times the cash flow, five times the wealth contained within the buildings, five times the number of people to support the surrounding neighborhood.

In 1985 (the earliest I could get- thanks Assessor’s Office!) the West End Terrace Apts, then called Maryland Gardens, was assessed at $1,103,400 ($172,137 per acre). That’s a 34% appreciation in 30 years. Convent Gardens was at $212,500 ($223,684 per acre). That’s a 97% appreciation over 30 years. The traditionally built building has done far better both for its owners and for the city.

Welcome to Aventura at Forest Park – a new gated apartment community in the heart of St. Louis!

What does this foretell about our more recently-built apartment complexes? Our favorite whipping boy, Aventura, comes in well at the moment (though tax abated), at $2,966,720 on 4.84 acres or $612,830 per acre which is very good for FPSE. It follows the predominant apartment complex development style of today: nondescript three-story buildings (that they don’t highlight with a photo on the front page of the website) with lots of surface parking, trees, and a fence. Might it have been wise to leverage the tax abatement for a more productive use? Will it appreciate more slowly than its surroundings, so that in a few decades it will be the cool spot?

PS: Under current policy we won’t be able to track how Aventura is performing while under tax abatement because the Assessor’s Office doesn’t reassess until the abatement is almost over. The HUDZ committee is working on this and other incentive and development issues.

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  • JZ71

    If the only / primary goal is to maximize property tax revenue per acre, then focusing on metrics like these makes sense. But city living is way more complex than just maximizing revenues. If the goal is more $$$, a much simpler way to do so is to just increase the basic tax rate, citywide, to generate the desired revenues. Trying to use taxes, either punitively or persuasively, is colored by the whole assessment process, especially with unique properties, those that lack “comparables”. Even “identical” 3 bedroom, 1.5 bath homes on the same size lots are not worth exactly the same if they’re in north city or south city, backed up to a freeway or backed up to a park, on a busy street or on a quiet street, close to transit or close to shopping, next to a mansion or next to vacant burned-out shell. Bottom line, ANY property is only worth (and should be taxed at) what one person is willing to pay another person, today, period. Not last year, not ten years ago, not ten years from now, and not at some arbitrary maximum density. The best (and really only) way to see higher densities is to see higher land values, not arbitrary, randomly-higher taxes.

  • tbatts666

    Ever since reading “the high cost of free parking” I have been absolutely obsessed with the idea of hidden subsidies.

    Love the “do the math” series as it starts to get a better idea of how we systematically give certain people/places/uses benefits at costs to others.

    I have very much benefited from many of these hidden subsidies in my life. Does that make me an oppressor of those who don’t?

    • A.J.

      I don’t think one becomes an oppressor until you entrench that your subsidies are good and others are bad. Obviously a system built up over decades won’t change over-night. But as the saying goes, “When the tide goes out, you’ll see who’s naked.” When governments truly can’t keep subsidizing unproductive developments, there’s going to be fighting and those that sunk their money in investments based on bad information are going to get hurt by the market reset.

      • matimal

        You just described the U.S housing market since 2008.

        • A.J.

          [Points index finger to tip of nose] This is why I’m still a renter.

      • Alex Ihnen

        Yes. One (massive) challenge looming is the incredible political weight that is going to be marshaled to double down on bad investments. There’s so much money (private, public, pension fund investments via REITs, etc. etc. etc.) in bas investments that there will be heavy political pressure for “reinvestment” (continuing the Ponzi scheme) or bailouts.

  • matimal

    So, what’s the most realistic way to push for a tax or land use policy in St. Louis that incentives density? One that would mean that owners, developers, aldermen and women, and residents would all gain by supporting higher density.

    • Alex Ihnen

      First, we need more share information, a better view on the existing landscape, so that we may better understand existing policies and the places they mandate we build. We’re working to fund a large study that would identify where smart development is making economic sense. This is the argument that can and will appeal to city-boosting urbanites and suburban communities, especially as more and more places confront the Ponzi scheme that is incentivized retail development.

    • STLEnginerd

      You could remit a portion of the 1% resident income tax to the owner of the property where they live. It could come in the form of a property tax credit or something similar. Not saying this is a good idea (i haven’t contemplated the consequences enough yet) but it just occured to me and you asked.

    • JZ71

      Either create an enforceable urban growth boundary (limit supply) or make the city way more attractive to suburbanites and people from elsewhere in the country (increase demand), or both. The average home listing price in St. Louis (on trulia) is currently $258K, similar to those in Louisville ($222K), Little Rock ($271K) and Pittsburgh ($259K), all somewhat similar in size and “vibe” to St. Louis. Compare that to cities that are more “in demand”, more “hip”, more “desirable” (and currently seeing significant densification) – Chicago ($444K), Nashville ($442K), Portland ($523K) and Seattle ($750K). Money and population growth is driving denser developments, in those cities, not direct government intervention. Government can help steer and manage the changes, government can’t create more demand and higher land values on its own!

      • matimal

        A growth boundary is inconceivable in Missouri and Nashville is the most unurban and sprawling place I’ve ever been.
        Of course government can create demand and higher land values. Government’s do exactly that with every road it ever built. The construction of I-70 and I-64 literally ‘created’ demand for land in Chesterfield and St. Charles County. Every interstate exit creates demand for nearby land. Thousands of gas stations, walmarts, and motels in America are where they are because government created a demand for them at those locations by deciding where the interstate exit would be.
        Government can create demand for property in St. Louis city, too. It can build things people want to be near, parks, streetcar lines, special zoning districts that create demand for tax-free retail spaces, etc. Metrolink stations create demand, but giant parking prevents demand from being realized. Special zoning around metrolink stations would also create demand as Transit Oriented Developments that would increase demand to locate near them.