On Wednesday, January 4, St. Louis city’s Tax Increment Finance (TIF) Commission approved about $42 million in TIF support for four mixed-use projects – all in the city’s central corridor. The combined project costs for all four is almost $313 million.
The projects include three new hotels – one near Saint Louis University, one within the Cortex research park and one downtown – and a pharmacy in the Delmar Loop.
The commission approved an $10.4 million TIF deal to renovate the Old Armory building, located near the Grand Avenue MetroLink stop. The developer, Green Street Development Group, said it is transforming the historic military building into a 135-room hotel with 160,400 square feet of office space and 75,000 square feet of retail/restaurant space. The project is valued at $83.4 million.
Out of all four projects, the Old Armory redevelopment received the most support during the public comment phase, as both the St. Louis City NAACP and Team TIF St. Louis spoke in favor of it.
“I’m worried about the lightning strike, because I think this is the first time we come here to actually support and endorse a project,” said Adolphus Pruitt, president of the St. Louis City NAACP. “We think the culture of this project should be a model for most of the ones that come before here.”
Team TIF is a newly formed group that supports incentives that move the city toward “a more racially equitable outcome,” according to its website.
“This is a project that integrates public transportation well,” Jessica Payne, of Team TIF, said of the Old Armory project. “It’s something that’s clearly very hard to develop. The use of historic redevelopment is great to see.”
In the past five years, Green Street has brought six projects to the TIF Commission. Now as part of the commission’s meeting, the St. Louis Development Corporation (SLDC) and the St. Louis Agency on Training and Employment (SLATE) present commissioners with information on how well the developers did at employing minority and women-owned businesses and boots on the ground on past projects.
SLDC’s Howard Hayes said on the six projects, Green Street has awarded 44 percent of their contract dollars to minority business enterprises (MBEs) and 23 percent to women business enterprises (WBEs) – outperforming goals set by the mayor’s executive order. SLATE Executive
Director Michael Holmes said that Green Street only has two projects that came after the mayor’s 2012 executive order on workforce – which requires all TIF projects aim for the city’s workforce goals of hiring 15 percent apprentices, 25 percent minorities, five percent women and 20 percent city residents. Green Street excelled in hiring minorities, but fell short slightly in hiring apprentices and local residents, Holmes said.
The Old Armory project includes a 10-year tax abatement, along with a Transportation Development District (TDD) tax and a Community Improvement District (CID) tax.
Former TIF Commissioner David Jackson Jr. made a statement meant to address all four projects.
“Tax abatement idle and hurt the Saint Louis Public School District and should not be included in any TIF proposal that contains other incentives, such as TIF, CID or TDD,” Jackson said.
The project passed with seven “yes” votes and one abstention.
Dubious ‘dead zone’
The project that received the most criticism during the public comment portion was the Northgate pharmacy/retail area that would replace the Circle K at Skinker and Delmar boulevards. Pace-Delmar Associates is the developer.
Pace-Delmar Associates requested $4.374 million in TIF support for the $25.9 million Northgate project, which is 16.8 percent of the total cost. The commission has a recommended 15 percent ceiling, and the higher ask angered some in the audience.
Circle K representatives also spoke against the project, saying that they would like to remain at that location. They also said the city’s blight study was flawed because they would be happy to renovate the area if given a chance. In order to be blighted, it has to pass the “but for” test, which means that no development would occur there but for the TIF support.
Jason Deem, a developer who has several projects on Cherokee Street, also argued that blighting an area in the most “successful commercial district” in the city was flawed. He questioned why the project’s representative, attorney David Richardson, had labeled the project area as a “dead zone.”
“The Loop is not a dead zone,” Deem said. “This is a dead parcel in a super successful district; that’s a great opportunity. This is a perfect example of something that would exist without public subsidy, should exist and works without public subsidy.”
As part of the meetings, SLDC also now shows a “scorecard” for how much revenue will go to the city and Saint Louis Public School District, along with the projected return on investment for the developer. Out of 40 points, the Northgate project scored 24 – and barely earned the necessary “three star” minimum to pass for approval.
“It may show that this is a small net benefit for the city, but I think the city can do a lot better,” Deem said. “Unless we start expecting better, we are going to get the minimum requirements, and that’s exactly what this is. It’s a minimum requirement proposal.”
The Northgate TIF passed with five “yes” votes, two abstentions and one “no” vote.
Cortex requested for the commission to unlock $9.5 million of the $167 million in TIF support that was already approved years ago. That will go towards building a research lab, office space, public event and conference hall and 150-room hotel – a $100-million project all together.
The commission also approved a $17.4 million TIF to transform the historic Jefferson Arms building, at 415 North Tucker Blvd., into a Marriott hotel, a project valued at $103.7 million. This fall, the project’s original announcement was met by protests, after developer Alterra International had said that it was discussing a partnership with the Donald Trump organization on the deal. Mayor Francis G. Slay tweeted on November 14 that the developer would not be working with Trump.
SLDC Director Otis Williams said that restoring the historic building was important to the city, and it’s taken a long time to find someone willing to take on the restoration project. The commission approved the TIF support with seven “yes” votes and one abstention.
Kwame Building Group will serve as the construction manager and work to ensure the project achieve the city’s minority participation targets.
“Our approach historically has been to treat those goals as a floor not a ceiling,” said Joshua Randall, Kwame’s president, “and so as we move forward on this project we intent to excel and achieve beyond the stated goals.”
