Located in the Central West End of St. Louis, Missouri, the Argyle Building is one of the city’s more expensive rental projects. Two-bedroom apartments currently run up to $2,295 per month — an environment that, according to recent marketing materials, “SCREAMS luxury.”
Yet when it came time to erect a parking garage next door, the developer sold the land to the city, which then financed the parking edifice entirely with public funds, having argued that the project was “financially unfeasible in the marketplace.”
In short, the taxpayers fully funded a $14.5 million parking garage next to luxury apartments in a trendy part of the city. What makes it even more surprising is that the developer didn’t even apply for support from TIF funding: the city apparently just wanted to give it to him.
That deal is now Exhibit A in a new paper by researchers at the Show-Me Institute criticizing the use of Tax Increment Financing, or TIFs, in St. Louis. In the last year, a group of progressive activists calling itself Team TIF has pushed for reforms of the city’s giveaways. Now they’re being joined in that cry by a conservative think tank that holds genuine sway at the state legislature. The combination could prove explosive.
Note from Storm:
As readers of The Restoration Economy or Rewealth know, I’m a big fan of tax increment financing (TIF). But as those who have attended my talks and workshops—or who have read my new Resilience Strategy Guide—know, I’m also very critical of how it’s being applied in many American cities.
Tax increment financing is an excellent and well-proven tool that has helped revitalize literally hundreds of impoversihed neighborhoods nationwide. But any tool can be used badly, and these days, TIF often suffers from three problems:
- Misused, such as for sprawl projects;
- Abused, as unnecessary public subsidies for politically-connected private developers; and
- Overused, resulting in general revenue depletion that hurts schools and public services.
If the Show-Me Institute is correct, it would seem that Problem #2 might be at work in St. Louis.
Photo of St. Louis, Missouri via Adobe Stock.