On Monday, December 12, 17th Ward Alderman Joe Roddy gave a presentation at the Schlafly Branch of the St. Louis Public Library attempting to justify the tax incentives being offered to develop a $130 million 34-story apartment building proposed for the Central West End. One slide in his slideshow showed a vertical drop from money-makers, with Business at the top, to money-suckers. In one group of money-suckers, Roddy presented the incredible pairing of “Criminals and Residents with Children Attending SLPS.” This more than anything seemed to set off a progressive group called #TeamTIF, which sent the following analysis.
While many people have been offended by Ald. Joe Roddy’s highly inflammatory slide, the graphic was far more than insensitive. It was a window into the thought process supporting our city’s current tax incentive system.
The top category in our city’s incentive “pecking order” is business. Despite the fact that Tax Increment Financing (TIF) incentives often return all three of the listed forms of taxation back to the developer or business, it is presented as the greatest generator of money. CIDs and abatement combination is also undermining the real estate tax generation potential of development in our city’s booming central corridor. A sales tax rate that will approach 11 percent in some locations will also reduce the public’s buying power. In return, we are not receiving meaningful investments in affordable housing or racial and economic integration of city neighborhoods. Quite the opposite. Our current incentive policy is a driver of continued segregation.
Undoubtedly, the vast majority of businesses and other employers/institutions contribute a great deal of our city’s tax base. Unfortunately, we are seeing this very revenue generation endangered by the tax incentivization system currently in place. Developers are seeking greater and greater levels of subsidy. Requests for TIF contributions above the city’s 15 percent maximum have become routine. Cupples X has requested 20 percent of funding come from TIF, for instance. Over half of the funds going to the City Foundry project will come from public sources. Despite this massive amount of subsidy, City Foundry is currently asking potential tenants to sign a Non-Disclosure Agreement, which seems to be intended to squelch reports that City Foundry has been offering prospective tenants Earnings Tax recapture, like the deal The Riverfront Times reported with Polsinelli’s downtown office.
Beneath businesses, we are presented with the category “Residents Who Pay Higher Earnings Tax and Don’t Have Children in Saint Louis Public Schools (SLPS).” This is the cohort Roddy is most interested in courting: Wealthier residents whose children attend private school. Never mind that the above-mentioned employer’s portion of the Earnings Tax revenue is often recaptured via these TIFs, which halves the value of that employment position’s contribution to city revenue.
The next category down, “Retired, Fixed-Income Residents With No Children in SLPS,” begins our tour of the groups of people considered a drain on public resources. Ald. Roddy cites in particular the elderly and disabled. While there are certainly social service costs involved with these populations, this is the beginning of being able to clearly see the central flaw in the city’s view of costs, investment, etc.
The next category is the one that got people worked up: “Criminals and Residents with Children Attending SLPS.” Obviously, the title of this cohort is highly inflammatory. In a region that has been actively discussing the criminalization of poverty and the school-to-prison pipeline, this category goes beyond any reasonable definition of “tone-deaf” and goes well into the realm of being offensive.
When taken in context of recent Central Corridor population shifts, with a roughly 5 percent drop in African-American population from 2000-2014 and an almost 16 percent increase in white population, this becomes even more alarming. As 80 percent of SLPS students are African-American and often lower-income, he has lumped the very people being driven from the neighborhoods he represents (via tax incentive-fueled gentrification) in with criminals. As we said, this is far beyond brushing the graphic off as simply being “tone-deaf.”
Roddy’s presentation rests on a very peculiar way of looking at city budgets. For his view of city finances to be understood, one must realize that he is essentially assigning the full expense of budgetary line items to the citizens who use a particular service. #TeamTIF believes that this is a highly flawed way to view city finances and investments in the city we love. We believe that we should view the budget in a way that actually comports with the real world. In that real world, the expense of SLPS is an investment in providing a public good that benefits every city resident.
Do we hope SLPS continues to improve? Of course we do! A lot of that has to do with the funding for the school district. Most of that funding comes from property taxes. By exempting so many highly valuable developments from property taxes, we are actively undermining the school system’s funding. In Roddy’s view, if you don’t have a child enrolled in SLPS, you derive no value from SLPS. This is an incredible way of looking at the city budget.
The same goes for our elders. Reducing them to money-losers, but not as bad as people with children in SLPS, is an equally disconcerting view to take of folks that have paid city taxes, often for decades or entire working lives.
Similarly, assigning the costs of our public safety infrastructure to “criminals” is an equally strange way of viewing the budget. We pay for police, etc., because we want safety for our loved ones and personal property. A person who lives in a low-crime neighborhood is just as much a “customer” of the St. Louis Metropolitan Police Department’s services as someone who lives in a higher-crime area. It would be interesting to see a request put forward to the alders in lower-crime areas to reduce their police force presence, so that Public Safety resources could be shifted to areas of need and to innovative strategies to give youth and adults support and assistance in reducing the disparities between neighborhoods. We highly doubt that any of the alders would support losing funding to the district covering their wards. That this would never happen is offered as an example of how the graphic seems to imply a view of city budgeting that has little connection to reality.
As we consider this snapshot into the mindset of city leaders provided by this graphic, our city is now proposing an increase in the sales tax rate, partially to support Public Safety, further proof our city’s leaders view Public Safety as a good and service that benefits all city residents, not simply an expense of arresting and jailing those who break the law.
As near as anyone can tell, this graphic can only be explained by combining the costs of Public Safety and SLPS’s budget. According to recent public reports, SLPS funding for the most recently available year is roughly $400 million, $340.9 million of which appears to be the portion budgeted by the SAB, from city property tax revenue. Our city’s Public Safety budget is $325.5 million, according to the city’s most recent Comprehensive Annual Financial Report (CAFR) . These are obviously large expenses, but they are investments, not just lost dollars. Our city should consider SLPS just as much of a potential driver of economic growth as we do tech startups. Having an educated workforce is absolutely necessary to attract and retain businesses and economic activity. We should be seeking more ways to invest in our city’s children, not considering their education to be a drag on our city.
We hope that this describes what #TeamTIF believes is a central fissure, between incentive policy advocates and the thought process and viewpoint that drives our city’s current development incentive policy. #TeamTIF wants a more transparent, inclusive and progressive-thinking St. Louis city. We believe it is time that St. Louis looks to urban planning best practices and that we leave behind development policies that continue deep inequities in our city. We can build a stronger St. Louis, but we must view our residents as assets.
