Is the City Foundry Just Moving Vegetables Around the Plate?
When you were a kid, did you ever push your vegetables around your plate hoping that the different placement would convince your parents that you’d eaten something? Often, we see a similar thing happen with large commercial developments funded by taxpayer dollars: Nothing new is created; already existing restaurants and stores shift to new developments in the guise of adding value to a region. A St. Louis Post Dispatch report highlights a perfect example of this: Kalbi Taco Shack is closing its original location to move into the City Foundry.
The City Foundry, a mixed-use development in Midtown, was granted $19.4 million in subsidies for the first phase of the development years ago. The St. Louis Tax-Increment Financing (TIF) Commission recently voted in favor of an additional $18 million in TIF for phase two of the project. Economic development incentives are meant to create new economic development and activity in the region. Kalbi Taco Shack abandoning one location for another is not a win for the greater St. Louis region. . Shifting existing businesses from one location to another creates new abandoned storefronts, but little to any value for the region.
Unfortunately, this is the outcome we see from economic development incentives all too often. Take Kansas City for example, where the Kansas–Missouri border war saw hundreds of millions of tax dollars forgone and many businesses shift across the border, but hardly any net growth for either state.
Researchers have found that economic development incentives do not increase economic activity in the larger area. One reason for that: Retail relocation does not create substantial (if any) job opportunities or new economic activity. Do these large developments that become the new home for existing businesses give the appearance that something is happening in the region? Sure. But it’s just vegetables moving around the plate; nothing is getting eaten.