MCPHERSON HAS ONLY BEEN publishing for four months, but already there’s a problem: verbosity. It’s understandable to get carried away while plumbing the depths of topics like tax increment financing, but last week’s story on the Argyle TIF in the Central West End clocked in at more than 2,000 words. That’s woefully long, especially by today’s tweet-infused standards.
In recognition of the fact that even dedicated readers may not want to slog through 34 paragraphs of text (no matter how brilliant the prose), McPherson offers the following six charts. They’re intended to show, rather than tell, the story of the Argyle TIF, and explain how it’s helping to subsidize debt payments in the city’s parking division to the tune of over a million dollars a year.
1. Let’s recap: City leaders dreamed up the Argyle TIF in the late 1990s as a way to use tax revenue to help pay for the Argyle Garage at the corner of Lindell and Euclid; the garage is on the northwest corner with a branch of the St. Louis Public Library on its ground floor. The Argyle has about 460 spaces and is operated by the city’s Parking Division, which is overseen by the city treasurer’s office. The garage, which cost about $11.4 million, opened in 2001 and provides parking for shops and restaurants around Maryland Plaza, as well as for events at the nearby Chase Park Plaza. Before it was built, consultants projected it wouldn’t generate enough parking fees to both cover its operating expenses and pay back its construction debt. So the TIF was designed as a back-up revenue source for the debt payments, to cover the shortfall. The first chart (below) shows the Argyle TIF doing what TIFs do best: capturing taxes from things including property, sales and earnings. The money, which in this case comes mostly from the Chase’s hotel operations and its real estate taxes, is diverted into a special fund. As of 2017 the TIF had captured a cumulative $17.8 million since inception, up from $6.3 million a decade earlier.
2. The city comptroller’s office is responsible for monitoring the money in the TIF fund and making sure the debt payments get made on time. By 2008, the Argyle TIF was pulling in plenty of tax money to cover the garage’s annual shortfall. So the Board of Aldermen authorized the TIF to capture an additional $3 million in taxes to pay for public improvements in the Maryland Plaza area. For reasons unknown, only about $400,000 of that money has been spent; there’s $2.6 million left over. This helps explain why cash has been piling up in the TIF. The second chart keeps the blue line, and adds a green line showing cash on hand in the TIF had reached $6.2 million by 2017. None of the city’s other TIFs have this much money just sitting around.
3. Now it’s time to look at parking revenue. For this, there’s data on the treasurer’s website going back to 2012. This is also where we add the Euclid/Buckingham Garage, a facility two blocks away from the Argyle also operated by the Parking Division. (The entrance is right next to Jimmy John’s on Euclid.) The Euclid/Buckingham is smaller (180 spaces) and newer (2009) but it matters here. That’s because the EuBu, as we’ll call it, has its own TIF to cover its own debt shortfall. The blue bars in the third chart represent the combined operating revenue from the Argyle and EuBu garages each year from 2012 to 2017. (This is money paid by people who want to park their cars. It’s not tax money.) The two garages generated $1.34 million in 2017, up 67% from 2012, thanks to strong demand for parking in the Central West End. That growth is a lot faster than the 21% increase in operating revenue over the same period for the Parking Division as a whole (not shown).
4. You’d think that with their parking revenue growing so strongly, the Argyle and EuBu garages would be able to pay off more of their debt, and their combined annual “shortfall” would go down, right? Nope. In 2006 the Parking Division folded the Argyle’s outstanding bonds into a new debt issue that also refinanced most of the division’s other garages and parking lots. The 2006 debt had lower interest and paid for the building of the EuBu. But buried in the debt prospectus is an obscure quirk, still in force, that saddles both garages with annual payments impossible to meet. In the Argyle’s case, it generates just 6% of the parking division’s operating revenue, but it’s required to cover 47% of the annual debt service on bonds that mature before the TIF expires in 2021. The money from parking can’t cover this. Enter the TIF. Its money, collected from taxes, is required to subsidize the “shortfall,” year after year. In the fourth chart, the blue bars representing Argyle and EuBu parking revenues remain. This chart adds green bars showing the additional TIF money needed to cover the combined Argyle and EuBu portions of the division’s debt. The amount of TIF money has been rising fairly steadily, and it hit $1 million for the first time in 2016. It dropped sharply in 2017, because a new refinancing deal meant the Argyle didn’t owe a debt payment. But officials in the treasurer’s office told McPherson the figure again reached $1 million in fiscal 2018.
5. The fifth chart simply adds up the blue bars on one hand, the green bars on the other, and compares their sizes. In the past six years, the garages have used nearly as much tax money captured via the TIFs to fund themselves as they’ve earned from parking charges. The Argyle is the biggest offender. Leaving out the $3 million for public improvements, the TIF has captured almost $15 million in taxes since its inception for a garage that cost only $11.4 million to build. Interest expenses add to the total cost, but parking revenue — not tax money — was supposed to have paid the bulk of this total.
6. It’s doubtful the Parking Division even needs the TIF money, since it has its own big cash pile. The division’s unrestricted reserves, the blue line in the sixth chart, rose to $21 million in 2017, more than tripling from 2012. The green nubs near the bottom are the same green bars (TIF subsidies) from the fourth chart. But here they look tiny compared to the parking division’s reserves generated through parking fees. This supports the argument for reining in the Argyle TIF and sending its tax money to more deserving places, like the city’s schools. –McP–
Sources: TIF reports available at auditor.mo.gov; City of St. Louis Parking Revenue Bond prospectuses (1999, 2006, 2016); Parking Division of the City of St. Louis.
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