“BUT WHERE WILL PEOPLE PARK?”
It’s a question for the ages in car-dependent towns like St. Louis, and it was one of the issues city leaders grappled with in the 1990s as they considered the prospects of the Central West End.
There, private developers were pouring millions into an effort to remake the shuttered Chase Park Plaza hotel into a major destination for business meetings, receptions, galas, dining and movies. The hope was that a revitalized Chase would in turn spur the redevelopment of storefronts and residences on nearby Maryland Plaza, at the time a largely forlorn stretch still searching for new purpose 20 years after Saks Fifth Avenue and other retailers had left for the suburbs.
The answer to the parking question came from the city’s then-treasurer, Larry Williams, who oversaw the city’s parking division. To supplement the Chase’s existing garage and ensure the continued viability of the CWE’s business district, the city would demolish the Argyle Apartments, a collection of tatty buildings at the prime corner of Lindell Boulevard and Euclid Avenue. In their place, the city would build a new garage with about 460 parking spaces and a branch of the St. Louis Public Library on its ground floor. By day, the garage would serve library patrons and CWE businesses; at night it would accommodate customers of nearby restaurants and bars, as well as people attending events at the Chase.
To pay for acquiring the Argyle site, as well as building and equipping the garage, the city in 1999 issued $11.4 million of parking revenue bonds. But consultants hired for a feasibility study had already warned that the garage’s revenues from parking and leases would fall short of being able to pay both its operating expenses and the debt service on the bonds. So prior to the bond issue, the city made a clever move. Lyda Krewson, then the 28th Ward alderwoman and now the city’s mayor, sponsored legislation in 1998 that created a tax increment financing district covering the Chase and the commercial area surrounding Maryland Plaza.
The purpose of the Argyle TIF was to capture property tax and other revenue streams (50 percent of earnings taxes, use taxes and selected sales taxes, for example) and pledge them as an additional source of funds to cover annual shortfalls on the bond payments. This money, generated mostly by the Chase, was intended to not only guarantee the success of the garage, but perhaps provide additional funds down the road to pay for public improvements in the Maryland Plaza area. The consultants referred to the TIF money as a “subsidy.” (Another McPherson story in this series uses charts to show how the subsidy works.)
After the garage opened in 2001 and its parking revenues stabilized, the plan worked – so well, in fact, that the city went ahead in 2008 and authorized the Argyle TIF to collect a further $3 million in taxes (beyond the money needed for debt service) to fund the public improvements. Around the same time, the city’s parking division used a similar TIF-linked financing model when it partnered with a private developer to build the 180-space Euclid/Buckingham garage a couple of blocks south. That garage, also operated by the city’s parking division, opened in 2009.
Relics from the past
Today, both TIFs are still going strong. In line with Missouri law, the Argyle TIF will expire in late 2021; the Euclid/Buckingham TIF runs until 2028. But with the Central West End now booming, the parking division in excellent financial shape, and the 389-room Chase (known officially as the Chase Park Plaza Royal Sonesta Hotel) finally paying its full share of property taxes following 35 years of tax abatement, the Argyle TIF in particular is an anachronism.
Some policymakers and city residents have started to question why the TIF continues to divert property and sales tax revenues to the parking division, now managed by current Treasurer Tishaura Jones.
Heather Navarro, elected last year as 28th Ward alderwoman following Krewson’s victory in the mayor’s race, says the TIF is depriving the city’s schools of much-needed funds.
“When the Chase came off tax abatement, we wanted to use it as an opportunity to get more revenue, but that’s not happening,” Navarro said in an interview with McPherson. “We should be asking a lot of questions. When we approve these TIFs, this is not what we expect.”
In fairness to Jones, she did not create the link between TIFs and parking revenues; she inherited the financing structure from Williams, her predecessor. But the amount of money at stake is significant, and it has increased steadily during Jones’s time in the treasurer’s office.
In fiscal year 2012, which ended a few months before Jones was elected, annual taxes diverted to the parking division via the Argyle and Euclid/Buckingham TIFs totaled about $828,000. In 2016 they topped $1 million for the first time, according to the parking division’s annual reports. (The city’s fiscal year ends on June 30.) The amount dipped in 2017 due to one-off factors associated with a debt refinancing. But it rebounded in 2018 to once again exceed $1 million, officials from the Treasurer’s office told McPherson. It’s projected to rise even further, to $1.1 million in 2019, according to a prospectus issued in connection with the refinancing.
It’s doubtful that the parking division needs this money. During Jones’s tenure the division has become flush with cash, thanks to parking fees and revenue from parking tickets among other things. The division’s annual reports show that its unrestricted assets – essentially, cash and cash equivalents not pledged as collateral for parking debt – stood at $5.64 million at the end of fiscal 2012. By 2017 the assets had more than tripled to $21.0 million. (In June, Jones – under pressure from 22nd Ward Alderman Jeffrey Boyd – agreed to transfer $10 million from the parking division to the city’s general reserve fund, to help shore up the city’s precarious finances.)
A TIF like few others
Another entity flush with cash is the Argyle TIF itself. Over the past decade, it has quietly become a giant. Reports that the city files with the state show the TIF has captured almost $18 million in taxes since its inception, making it one of the city’s 10 biggest active TIFs. The Chase Park Plaza is stuffing more than $2 million of tax money into the TIF each year, the city assessor’s office estimated in February. And that cash is piling up. As of last June the TIF had $6.2 million on hand, even after diverting money to subsidize the Argyle’s portion of the parking division’s debt. (The Euclid/Buckingham TIF has captured $2.2 million since opening but had virtually no cash on hand, according to the city’s reports.)
Boyd, who chairs the Board of Aldermen’s Streets, Traffic and Refuse Committee, has clashed frequently with Jones over her stewardship of parking revenue. He points out that the CWE has improved substantially since the Argyle TIF got started, and that the city’s schools, museums, parks and libraries need the tax money more than the parking division.
“We should do the right thing and be fair and just, and direct that money back to the taxing districts that are entitled to it, so they can provide the quality of services they need to,” Boyd told McPherson.
In fact, this is precisely what the treasurer’s office would like to do, according to Jared Boyd, Jones’s chief of staff. (Jared Boyd and Jeffrey Boyd are not related.)
In an interview with McPherson, Jared Boyd said officials in the treasurer’s office began talking with their counterparts in Comptroller Darlene Green’s office in 2017. That was the year the Chase began paying full taxes, and the discussions centered on options for freeing some of the money from the Argyle TIF. The comptroller’s office monitors the funds flowing into and out of each of the city’s TIFs, and disburses the funds in accordance with state statues and city ordinances.
An initial idea was to simply dissolve the TIF a few years early, but that would run afoul of state law. The parking division’s debt – which was pooled with the original Argyle-specific debt through a 2006 refinancing – still constitutes a lien on the TIF’s revenue, meaning the TIF must stay in place until its scheduled sunset in 2021.
The goal is “finding a way to distribute the revenue in the TIF earlier than the expiration of the TIF, in lieu of the fact that it can’t be terminated early,” Jared Boyd said. “We have to be mindful of the debt that the parking division has, and go forward in a fiscally responsible way, but I think we can do both.”
Who’s in charge?
In the meantime, the Argyle TIF’s cash pile is casting a virtual shadow across a large chunk of the Central West End. This concerns Jim Dwyer, chairman of the CWE North Special Business District, a separate taxing district with boundaries that overlap those of the Argyle TIF district. The SBD collects about $400,000 in property taxes each year and uses the money to fund safety initiatives including security cameras and private security patrols.
“Our expectation from the beginning of the renovation of the Chase Park Plaza was that once the tax abatement expired, there would be a substantial increase in revenue derived from real estate taxes on that property, a portion of which would accrue to the SBD,” Dwyer told McPherson. “We were surprised to learn this year that we are not deriving any additional revenue, nor presumably are any of the other entities that rely on tax support for their existence.”
Dwyer added: “We’ve inquired about the status of the (Argyle TIF) at the comptroller’s office, and have been told this information is not available to us.” Asked why, Dwyer said: “Because the treasurer’s office hasn’t authorized its release.”
Jared Boyd said the treasurer’s office has not been approached by Green’s office regarding Dwyer’s concerns. Boyd added that the treasurer’s office does not make decisions regarding the use of the $3 million portion of the TIF intended for public improvements.
This hints at a further obstacle: possible disagreements between the comptroller and the treasurer over which office should take the lead on decisions regarding the Argyle TIF’s excess funds.
Tyson Pruitt, a spokesman for the comptroller’s office, confirmed in an e-mail to McPherson that the St. Louis Development Corp., the city’s development arm, approves disbursements for public improvements. But he also indicated the treasurer’s office does indeed approve disbursements from the main portion of the TIF.
“Ultimately, it’s the Treasurer’s decision to collapse the Argyle TIF, and the Comptroller’s Office is supportive of that idea,” Pruitt wrote.
SLDC officials did not respond to requests for comment. McPherson also contacted the mayor’s office to ask whether Krewson was aware of the situation involving the Argyle TIF when she was 28th Ward alderwoman, and if she took any steps to address it. Krewson’s spokesman declined to comment.
Finding a fix
Navarro, still learning the ropes as Krewson’s successor on the Board of Aldermen, betrays a certain frustration when she speaks about TIF-assisted projects like the Argyle Garage.
“There are a lot of us that want to have a serious conversation about these TIFs and how they work, and how politics are getting in the way of meaningful incentive reform,” said Navarro, adding that the Argyle deal raises red flags. “I want to use my power as alderwoman to see how we can get this on track for the benefit of the entire city, and the benefit of the schools.”
In the end, the best way forward might be to employ the same type of creativity found in the original Argyle redevelopment plan and associated TIF ordinances that were drafted two decades ago.
The Argyle TIF’s structure means it captures the vast majority of its taxes from the Chase Park Plaza’s hotel and attached condominiums. This is because in the ordinance creating the TIF, virtually all other properties around Maryland Plaza (approximately 35 parcels in all) were “excluded” from the TIF district, in part to keep the taxes they generated free for other TIFs that would need them in later years, according to one person who worked on the project. It would be relatively simple to amend the ordinance to add the Chase Park Plaza to the excluded sites. The TIF would endure until 2021. But it would no longer collect taxes from the Chase.
A second fix could involve the $3 million in additional funds the TIF was authorized to collect starting in 2008. The Comptroller’s records show that only $402,000 of this money has been disbursed thus far, with the most recent disbursement more than two years ago. Clearly the TIF does not need this money. An amendment designating the remaining $2.6 million as “surplus” funds would allow them to escape from the TIF and reach more deserving places, like the St. Louis Public Schools. This would be a solid start towards whittling down the Argyle TIF’s cash pile, in a city where such cash piles are unfortunately all too rare. –McP–
Editor’s note: This is an updated version of this story which corrects a quote attributed to Jared Boyd and provides context about the decision-making power the treasurer’s office has regarding the Argyle TIF. McPherson regrets the error.
Editor’s note: The Board of Aldermen approved an amendment to the Argyle TIF in February 2019 that will disburse its surplus cash. All of McPherson’s articles about the Argyle TIF can be found on the homepage at www.mcphersonpublishing.com.
[Like this story? Be notified every time McPherson publishes a new story by dropping a note to Editor Jack Grone at jgrone@mcphersonpublishing.com, and ask to be added to the e-mail list. There is no charge for McPherson’s content, and I will not sell or share your contact information.]
