What’s a Nice TIF Like You Doing in a Place Like This?
Public subsidies have taken on an increasingly prominent role in new developments across the St. Louis region, and KP Development is looking for $57 million that would continue the cozy relationship between developers and the government. In this case taxpayer money would go toward redeveloping the retired Chrysler Plant in Fenton. While tax incentives can, in theory, help resolve problems of intractable poverty and underdevelopment, in practice they are often used for less noble purposes.
The project in question, known as the Fenton Logistics Park, would transform the former Chrysler Plant property that was demolished in 2011 into a mixed-use development with industrial, office, and retail space. KP Development estimates the total cost of restoring the land and improving surrounding streets at $17 million, and they’re requesting that it be paid for through the use of tax increment financing (TIF). In addition, the proposal asks for another $34.6 million from TIF and state subsidies to be put toward soft costs and professional fees.
But it’s worth asking whether incentives are required for this project. If the blighted area were restored to its condition from before the Chrysler Plant was constructed almost 60 years ago, the land would seem ripe for investment. Given its proximity to the interstate and railroad, the expansive land base located in a growing industrial market appears to be an excellent place to develop, with or without incentives. KP Development even admits that without TIF the site would generate a 4.92 percent return; however, with TIF the projected return jumps to 8.79 percent, which “developers are accustomed to on similar projects.”
That’s precisely the sort of revelation that should make policymakers leery. The idea that a profitable investment should become more profitable through the use of public tax dollars doesn’t make much sense. Nonetheless, last week the Saint Louis County TIF Commission voted in favor of the plan by a 9–1 margin. The beat goes on.
The government shouldn’t be in the business of guaranteeing bigger returns on investment for private actors. The Saint Louis County Council should reflect on the appropriateness of tax incentives when they make a final decision on subsidization.