The Tax Subsidy That Wasn’t
In the 1990s, private developers partnered with members of the Olivette City Council to endorse the implementation of a $38 million in the area just west of the intersection of I-170 and Olive Blvd. Due to the threat of eminent domain and several years of unresolved negotiations, local homeowners were left in the lurch about the status of their property. Finally, in 2000, Olivette residents voted in a referendum against the project with a margin of 53.5 to 46.5 percent (absolute numbers are 1,656-1,435) to defeat the TIF proposal.
Supporters of the TIF proposal argued that it was the only way for Olivette to compete and generate new tax revenues. At the time, the
Riverfront Times reported on the debate about this tax subsidy. After the TIF was defeated, what happened? Were the TIF supporters correct? Was a taxpayer-subsidized mega-project the only way to save the area?
Not surprisingly, the TIF supporters were completely wrong. By letting the free market have control over real estate development, the area has experienced a period of sustainable economic progress and revitalization. A bustling Chevys Fresh Mex restaurant continues to thrive. A CVS Pharmacy that opened in 2009 was built without public subsidies. Most notably, the area’s previously existing homes are well maintained, and a new, post-TIF, housing development?— The Villas at Hilltop?— offers upscale townhome-style living.
Rather than enduring the forfeiture of tax revenues, as would have occurred under the TIF proposal, these properties naturally generate income for local government services instead. The Chevys, CVS, and Villas together are appraised for a noteworthy $11,329,300 and paid $212,355.48 in property taxes in 2012. Additionally, between the years of 1993-1995 and 2005-2007, Olivette’s average sales tax receipts increased more than 143 percent ($1,022,382 to $2,487,038) and its total share of the state’s tax receipts largely stayed the same as well, at about 0.5 percent. The private land developers and their allies on the Olivette City Council warned that TIF funding was absolutely necessary in order to stimulate economic growth. But does this area look blighted to you?
More from the Show-Me Institute on Tax Increment Financing: