Real Estate Development With Public Dollars Provides No Demonstrable Net Benefit
Missouri’s Fifth Senate District — which includes downtown St. Louis — was the recipient of nearly $1 billion in state monies between 2000 and 2010, according to data from the tax credit tool at Show-Me Living.
If we look in greater detail at the more than $600 million expended by the state for “Redevelopment” in the Fifth Senate District, we see that $530 million was devoted to historic preservation.
Of the state historic preservation spending in the Fifth Senate District, $375 million went to projects that also received the Federal Historic Preservation Tax Credit. Missouri’s preservation tax credit reimburses 25 percent of project costs, and the federal tax credit reimburses 20 percent of project costs, so we can estimate total Federal Historic Preservation Tax Credit spending in Missouri’s Fifth Senate District at $300 million.
This amounts to $0.98 in federal funds spent on historic preservation in Missouri’s Fifth Senate District for every resident of the United States.
When we consider local tax increment financing (TIF), using data from the Missouri Department of Economic Development’s 2009 TIF Annual Report, we can account for an additional $600 million in taxpayer funding for development in St. Louis city. As we can see in the chart below, as of 2009, less than $100 million of this spending has been paid for.
Given current estimates of St. Louis city’s population from the American Community Survey, TIF expenditures amount to $1,768.61 for each city resident.
The total amount of public funding for real estate development in St. Louis city may be unknowable, given the complex interplay between various modes of taxpayer financing. Data exists for Community Improvement Districts, federal grants, state and local industrial development bond financing, local real property tax abatement, and other public programs, but is much harder to aggregate.
A person almost has to go to law school to appreciate how development in St. Louis works. For those of us living here without the benefit of a legal education, though, it is readily apparent that, although state and local governments spend lots of taxpayer monies on real estate development, no one is providing quantitative evidence that the benefits of these expenditures exceed the costs.