Recently, the Saint Louis Business Journal reported that Koman Group, a real estate developer, plans to add to two apartment buildings to the Central West End. With a total investment of $31 million dollars, these new buildings, which will include apartments along with shop space on lower floors, would be excellent additions to the Central West End. Unfortunately, the developer is requesting that the city grant $6 million in tax subsidies for the project through tax increment financing (TIF).
TIF is a controversial way of subsidizing development, which we have written about many times before. According to its proponents, it can entice businesses to build in blighted areas that would otherwise remain undeveloped, or conserve historic sites that might otherwise be knocked down. Skeptics of TIF argue that the tool is too often used to subsidize—at the expense of overlapping tax districts—development that would have occurred anyway.
Whichever view is correct, TIF is almost certainly unjustified in the case of the Koman Group’s proposal. The areas in question are not blighted in any way. I should know, as I currently live across the street from one of the locations and down the street from the other. The proposed building sites, far from being deleterious to the community, are well-maintained properties with active businesses. A new apartment building and Whole Foods is going up in the middle of the block. If these properties can be defined as blighted, any property can be. This is just another example of how a program designed to help downtrodden neighborhoods can be twisted to support luxury developments in booming areas.
The Central West End has many new apartment buildings, a large source of local employment (BJC Healthcare), and a healthy bar and restaurant scene. It’s time to stop giving tax subsidizes to companies that decide to build there. Koman Group can knock down my nearest dry cleaner and bar if they want, but they shouldn’t get a tax break to do it.
