Richmond Heights: TIF Gone Bad
Richmond Heights is the latest city in Missouri to dangle Tax Increment Financing (TIF) incentives in front of hungry developers seeking taxpayer assistance. Well, not really the latest. You see, Menards and Pace Properties are just the most recent on a long list of suitors who tried to develop Hadley Township, east of Hanley Road between Dale Ave. and Bruno Ave.
According to the St. Louis Post-Dispatch, Richmond Heights has been entertaining proposals since 2003. Things looked great back in 2006, when the Richmond Heights City Council found a serious suitor in Michelson Commercial Realty and Development. But three years later, Michelson still could not get the financing together even with Richmond Heights officials pledging $46.2 million in TIF. The project was scrapped and Michelson pulled out of the 86 contracts it had signed to purchase all the homes and businesses in the affected area. All told, four separate development plan proposals just like Michelson’s failed.
The (eternally) pending developments have sent the neighborhood into a state of disrepair. Richmond Heights City Manager Amy Hamilton told the Post-Dispatch prior to the City Council’s latest vote that more than 35 properties are in “poor or severely deteriorated condition, and the majority of these properties are owned by land speculators.” Hamilton blames speculators and absentee landlords for the degradation, but more likely, Hadley Township property owners are responding to the incentives the city has offered. Who would really invest significant time and money in home improvements while the city unsuccessfully plots deal after deal to snatch up their properties?
And what do Richmond Heights taxpayers get for all their trouble? With Menards, they get yet another big-box home improvement store on South Hanley Road. If the market really drives Menards, Lowe’s, and Home Depot to locate within a half mile of each other, that is great. But it should not be government’s role to plan the local economy. More importantly, however, taxpayers get to finance $19 million of Menards’ $56.1 million development and $26.6 million of Pace’s $125 million development. (Bonus!)
This really is TIF at its worst.