On October 12, a St. Louis aldermanic committee passed two bills that would establish a one-percent sales tax increase on an area where Northside Regeneration developer Paul McKee Jr. is building a grocery store and gas station – near the intersection of Tucker Boulevard and 13th Street.
The GreenLeaf Market will be located at 1408 N. 13th St., near the Stan Musial Veterans Memorial Bridge. The ZOOM Store – a gas station, store and car wash – will be directly across the street.
Board Bill 150, sponsored by Alderwoman Tammika Hubbard (Ward 5), would establish that Community Improvement District (CID) – which would increase the sales tax at the future market and gas station by one percent. The tax will go towards the $20-million project’s infrastructure, site acquisition, demolition and repairs, according to the bill.
The tax revenue will also go towards paying back the TIF Note, which is another bill Hubbard introduced on October 12. Board Bill 149 would approve the GreenLeaf TIF note, which essentially allows McKee to go to a third-party lender and get a loan for the project.
Already in July, the Board of Aldermen approved a bill to release $2.8 million in TIF bond financing for the project’s infrastructure. A TIF note is a financing alternative to TIF bonds. This is the first development that McKee has sought to use any of the $390 million TIF, which was first approved in 2009 for the large-scale Northside Regeneration project in North city.
The Housing and Urban Development and Zoning Committee passed the two bills with a 4-3 vote. Now it will go to the full aldermanic board for a second reading on Friday, October 14.
If the bill passes, the North city gas station will have a 9.68 percent sales tax – making it among the highest sales tax in the country. Chicago is at the top with 10.25 percent, and Seattle sits in sixth place with 9.6 percent, according to the Tax Foundation. The grocery store will have a slightly lower tax but St. Louis Development Corporation representatives could not answer the aldermen’s question of how much lower.
Some North Side residents were appalled to hear about the potential CID and sales tax increase.
“The problem with the CID is that this is not what we were told,” said Jessica Payne, an Old North resident. “The community wasn’t informed that there would be higher sales taxes, above and beyond the standard city taxes. To expect the residents of this neighborhood to pay extra fees for Mr. McKee’s gas station development is just wrong.”
During the meeting, McKee said that people with food-stamp cards will not pay any sales tax. However, that did not quiet the opposition.
“This is a turd wrapped in a bow,” said Alderman Antonio French, who voted in opposition. “The grocery store is a great thing. We need to subsidize grocery stores in this area because they have a slim profit margin. But wrapping this up with a gas station, it puts us in a tough spot.”
Alderwoman Cara Spencer (Ward 20), who also opposed the bills, said that Community Improvement Districts are intended to be tools for communities “to raise tax dollars and administer them hyper-locally.” And community members themselves should sit on the board for the district. However, the person who chairs the proposed CID is McKee himself.
Further, she said McKee’s stated purposes for the CID are basically the exact purposes of the TIF – for infrastructure, site acquisition, etc.
“These should not be redundant,” Spencer said.
Residents also don’t like that the tax revenue would go to pay for the project’s complicated financing “scheme.” The sales tax is paying for a portion of McKee’s TIF obligation, essentially leaving him with little skin in the game, they said.
“While this may be legal, it is highly unethical and, frankly, immoral,” Payne said. “That the developer expects some of our city’s lowest income residents to pay his bills after he neglected his properties and purposefully blighted our community for more than a decade is appalling, and that our elected officials are in support of such a predatory scheme is shameful.”
McKee said that he and his wife have invested $62 million into the Northside project over the last 14 years, and that’s after $45 million in state tax credits they’ve received. Every year he pays $450,000 in property taxes to the city. They have not received any money from the city yet, McKee said. (To which French essentially argued that it’s because he hasn’t built anything yet.)
Megan Betts, a community organizer, said that Hubbard has never reached out to the residents about the tax increase.
“It’s something we have to dig to find out about, like everything in the ward,” said Betts, who lost to Penny Hubbard (Tammika’s mother) in the Fifth Ward Democratic committeewoman race on August 2.
It was also true when Hubbard opposed a Family Dollar store going into her ward, though many residents were pushing for it, Betts said.
“It was not an open conversation,” Betts said. “We have no idea what she is representing, what she is pushing. It all seems to be what McKee wants.”
In the North city area, Betts is trying to establish a Community Benefits Agreement, inspired by an agreement that’s on the November 8 ballot in Detroit.
The agreement would include requirements for these tax incentives to basically enforce equitable development practices, she said. The agreement would work to “curb the ‘no strings attached’ incentives that are handed out to developers in our neighborhoods,” she said.
The ZOOM Store was scheduled to open by Thanksgiving and the other market to open by March 1, according to St. Louis Public Radio.
