In the great film “The Death of Stalin,” there are many fantastic scenes of a dark-comic nature where the members of the Soviet Politburo try to figure out the best way to turn hard truths into lies in the service of the state.
In West St. Louis County, we get to see the City of Ballwin doing the same thing regarding a tax-increment financing (TIF) package that is about to end. Of course, it’s not exactly the same thing. Ballwin doesn’t have gulags or torture and has never invaded Hungary, and I give proper credit to Ballwin for all of that.
The Olde Towne Plaza TIF is ending; not because it uses too many unnecessary “e”s in its name (although it does), but because it has hit the Missouri TIF time limit of 23 years. According to a story in West Newsmagazine, the project and TIF have been a large success (emphasis added throughout):
“It really served to fill two goals: One was to stimulate economic development. The other was to improve the infrastructure. Overall, it was a success,” long-time City Attorney Robert Jones recalled.
Further down, we read:
Finance Officer Denise Keller told West Newsmagazine by email, “The Redevelopment Plan itself was very successful in that an attractive and quality development of retail and service commercial uses has been constructed and maintained, enhancing the tax base and the resulting tax revenues for the city and all other taxing districts within the Redevelopment Area.”
Got it. This tax subsidy has been a big success. God only knows how a rapidly growing suburban region could experience growth without the Kreskin-like ability of city officials to predict the future. But wait, if you keep reading further down the article:
Incremental taxes captured for repayment of the bonds, however, (fell) short of expectations and by the time the bonds mature, there will not be sufficient funds to repay the full amount of the principal due.
So, the project and subsidy were a great success, even though the TIF district didn’t actually pay off the bonds. That’s ok, at least general city funds are not involved here, just the TIF district funds:
Keller added that the bonds have never been an obligation of the city and do not reflect on the financial health of the city.
Thank goodness for that. But wait, if you read further, you see that even though the bonds weren’t an “obligation” of the city:
The city was required by the bond indentures to make an annual contribution toward the repayment of the bonds. The cumulative amount of this contribution to date has been $2.7 million.
I don’t know how you define words like “obligation,” “success,” and “sufficient,” but if you read the full article carefully, this wonderful, amazing, tax-subsidized project experienced high turnover, generated far less revenue than expected, had the city step in to pay shortfalls out of other tax revenues (even if it was not “obligated” to), and the development now has to use an ongoing special sales tax ostensibly targeted for transportation to fully pay off the TIF bonds. All of this while any drive down Manchester Road shows a litany of empty storefronts, brought about in part by numerous municipal tax subsidies used to lure businesses from one place to the other based on chasing the subsidy, not where the best location for their business really would be.
TIF doesn’t work. Politicians, urban planners, and city managers can’t predict the future. To quote P.J. O’Rourke, giving the power of tax subsidies to local politicians is like giving whiskey and car keys to teenage boys.
All of the road improvements Ballwin brags about with the TIF project could have been funded by normal taxes collected over the period of the TIF project, from whatever developed here or elsewhere in the area. Why? Because capitalism works. Frequently, municipal officials throughout Missouri forget that and think that somehow they have the special knowledge to plan their economies in a better way. It’s ridiculous, and in the end it usually fails and you find yourself denying reality to the press.
Stalin would have been proud.
