ST. LOUIS PUBLIC SCHOOLS, CITY HALL’S COFFERS and museums and libraries across the city would get a cash infusion this year totaling over $6 million — with more likely to come in 2020 and 2021 — if a bill to be introduced at Friday’s Board of Aldermen meeting becomes law.
The bill, sponsored by 28th Ward Alderwoman Heather Navarro, seeks to amend a tax increment financing (TIF) deal that diverts millions of tax dollars each year from the Chase Park Plaza hotel and condominium complex to support the city-owned Argyle parking garage. The garage is one block east of the Chase at Lindell and Euclid boulevards in the Central West End.
The bill is the result of an agreement hammered out in recent weeks by Navarro and officials in the offices of Treasurer Tishaura Jones and Comptroller Darlene Green. It would extract money that’s sitting unused in the Argyle TIF fund; this appears to be the first time city officials have attempted to free cash early from one of these instruments. The fund has $11.8 million in available money but needs only $5.5 million to pay its obligations, according to Navarro’s bill, which lays out a process for releasing the remainder.
“This bill is going to distribute the tax money that’s been generated by the successful redevelopment of the Chase Park Plaza; if we do these projects in the right way, they should result in a net benefit for the city,” Navarro told McPherson in an interview. “We’ve just had to do a little bit more work in this case to make sure these funds get to the places they should be going: our city and our schools.”
Navarro’s bill comes six months after McPherson’s series on “The TIF Trade” first reported on the growing cash pile inside the Argyle TIF. The TIF was established in 1998 via legislation sponsored by then-28th Ward Alderwoman Lyda Krewson, now mayor of St. Louis; its purpose was to ensure a reliable supply of parking for businesses and restaurants in the CWE. A follow-up story detailed how the TIF is part of an unusual arrangement that diverts tax money to help subsidize the debt of the city’s Parking Division, which is overseen by Jones. (The arrangement was set up under Jones’s predecessor, Larry Williams. The Argyle garage, which opened in 2001, was supposed to have been funded primarily through the fees it charges for parking instead of tax money.)
TIFs are economic development tools that capture tax revenue — from property, sales, payrolls and other sources — and use it to help finance projects including shopping centers, apartment buildings and hotels.
The Chase complex, which became responsible for its full share of property taxes in 2017 after 35 years of full and partial tax abatement, is now stuffing millions of dollars into the Argyle fund each year. The city’s latest report shows the TIF — easily among the 10 biggest of the city’s more than 100 active TIFs — had captured $23.3 million in tax money as of mid-2018, an increase of more than 30 percent from a year earlier. The TIF is set to expire in late 2021.
Running the numbers
Navarro’s bill, which could become law as early as February, comes amid growing scrutiny of TIFs and other development incentives. Critics say TIFs are unnecessary handouts to developers that steer investment away from struggling neighborhoods and distort the property market; proponents argue than when used correctly, TIFs foster development that wouldn’t have otherwise happened and generate new tax revenue.
“We desperately need to reform the tax increment financing system to ensure public dollars support public services,” Jones said in a statement from the treasurer’s office. The statement added that the Argyle TIF cannot be legally terminated before its scheduled expiration.
The bill from Navarro, who is running for re-election in the March Democratic primary, would not generate any “new” tax money. It would merely bring forward the distribution of the Argyle’s surplus funds by two or three years.
In a note attached to the bill, the comptroller’s office estimates the general fund, which is the city’s main operating fund, would receive $2 million from the TIF in 2019 and $850,000 each year in 2020 and 2021 if the bill passes. Special funds in the city’s budget earmarked for specific programs would receive an estimated $1.1 million in 2020 and $325,000 each year in 2020 and 2021.
The amount of money due to the school district, the Zoo-Museum district and other taxing entities is still being determined by the Comptroller’s office, Navarro said. Technically the TIF will continue to exist until 2021, meaning it will continue to capture and disburse tax money until then.
(McPherson’s very rough calculations indicate the school district could receive around $3 million, based on current tax rates and the most recent mix of tax revenues disclosed in the city’s reports on the Argyle TIF. However, Navarro cautioned that the complexity of the tax revenues going into the fund and the calculations used to distribute that revenue make it too early to know for sure.)
Of the $5.5 million needed to pay the TIF’s obligations, $2.9 million will go into escrow to pay off the Argyle’s share of the Parking Division’s debt. The remaining $2.6 million comprises a separate “pay-as-you-go” component of the TIF earmarked for public improvements in and around the nearby Maryland Plaza business and entertainment district. These improvements, subject to specific requirements laid out in the ordinances governing the TIF, fall under the authority of the Central West End North Special Business District.
“I’m pleased there is finally a resolution to this ongoing issue, and appreciate the efforts of all parties involved in getting to closure,” said Jim Dwyer, chairman of the district.
Navarro’s bill is Board Bill No. 226. She told McPherson she expects it to be referred to the aldermanic Ways and Means committee for further discussion. –McP–
(This updates an earlier version of this story with additional context and a mention of Navarro’s re-election bid.)
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This is exactly the kind of local coverage this, and all cities, need and have been losing at a rapid rate. An in-depth look at what is really happening to the money and the major power brokers – how many stories do we get to see like this any more? Very few, and that is to our detriment. Glad to see this excellent reporting and will follow it closely. Thank you!
This is a very helpful explainer. Thank you.
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