University City citizens reviewing pages of projected tax tables considered by the City Council related to the proposed TIF development at I-170 and Olive Boulevard have found grave mistakes in projected income to the city.
The financial tables produced for the city by the city’s consultant, PGAV Planners, were incorrectly based on the city being a point-of-sale municipality. In fact, University City is a pool city and shares sales tax collected with other cities in the pool. That greatly dilutes the benefit of increased sales tax revenue from the proposed development.
Sales tax revenue from the project will be less than half of the amount estimated. The difference is more than $27 million. This amount is significant revenue we thought we would be getting from the project, and now we will not.
As a pool city, University City receives back about 4.7 percent of the countywide sales tax and about 11.5 percent of the capital improvement sales tax collected locally. The developer’s consultants assumed University City would keep 84.7 percent and 85 percent of those two taxes, respectively. The actual amount is about 8 percent total.
PGAV estimated these two taxes would bring us about $30 million over the life of the TIF. Actually, they will bring us about $2.5 million, a decrease of over $27 million.
This calculating tax mistake, and the resulting decrease in expected revenue, calls into serious question the economic benefit of the project.
A last-minute change in the draft development agreement also includes a 50 percent property tax abatement on what the new project would otherwise pay the city and other tax jurisdictions over the next 21 years.
The combination of errors in calculating future tax income to the city, along with a significant reduction in property taxes, means this project would provide little to no financial gain to the city coffers.
It’s time for the City Council to step back from this proposed development until a financial analysis by a third party ensures the development agreement is in the best interest of the residents of University City. Surely the revised financial analysis of this development should be cause for the city to hold open study sessions so that the public can also understand these complicated issues. Public hearings for the community to voice their concerns would be most welcomed.
Ellen Bern is a resident of University City.