St. Louis Mills Auctioned Off for 6 Percent of Its Original Cost
The St. Louis Outlet Mall, formerly St. Louis Mills Mall, sold on November 18 on Auction.com for $9 million. The mall’s value—$40 million—has depreciated considerably since 2008 when it was appraised at $117 million.
I remember my first visit to “the Mills” shortly after it opened in 2003. The 1.2 million square foot building was bustling with people. The line for Panda Express was more like that of an amusement park ride than a mall food counter.
Today, only 77 percent of the mall is occupied (the average occupancy rate for malls is 92%). “Ghost town” is the best way to describe what I saw during my visit last November. The stores I once frequented as a teen were gone—replaced by metal bars and “for rent” signs.
You could look at the decline of the Mills Mall as a sign of the times—malls are out, online shopping is in. In fact, survey data supports this conclusion. In 2014, 34% of Americans said they did more than half of their shopping online—a 99% increase from the 2006 shopping season.
It’s certainly true that digital retailers like Amazon have disrupted the shopping industry, but the decline of the Mills Mall signals more than just the need for mall rats to find a new place to hang out. The failure of the Mills exemplifies why governments shouldn’t use tax increment financing (TIF) as a mechanism for economic development.
TIF is a method of attracting businesses to blighted communities through government subsidies. In 2003, an $18.5 million TIF in conjunction with a $34 million transportation district helped fund the mall’s development. In a 2006 Primer on TIF, UMSL professor Kenneth Thomas pointed out a few problems with this instance of TIF use.
- The building of the Mills Mall displaced sales tax revenue from Northwest Plaza in St. Ann, a shopping complex nearby.
- The project was environmentally harmful—the mall and surrounding road system was constructed on top of a wetland.
- The median income in the community was $52,656—hardly blighted.
Hazelwood’s Economic Developer David Cox told the St. Louis Business Journal, “If the developers could have looked into a crystal ball, they probably would have built it smaller.”
But that underscores another problem with funding large development projects like the Mills—crystal balls don’t exist.
The construction of the Mills Mall had promised 3,000 new jobs. Only half that number was realized.
The Mills Mall points to a serious need for TIF reform in Missouri. Malls may, indeed, be on their way out. Inappropriate uses of TIF should follow suit.