When is blight not really blight? Apparently, when tax incentives are involved.
According to the St. Louis Post-Dispatch, the St. Louis Land Clearance for Redevelopment Authority (LCRA) has recommended that Balke Brown Transwestern receive 10 years of property “tax assurance” for a proposed housing development in the Central West End. The deal involves the current property being deemed blighted.
The property? A parking lot—a good-looking, useful one at that. The lot is pictured at the top of this post. Does it look blighted to you?
And what exactly is the “tax assurance” Balke Brown is receiving? The resolution by the LCRA explains this a bit (pg. 44):
ten (10) years tax assurance that includes a fixed schedule of payments in lieu of taxes (PILOTs) equaling annual real estate taxes of $850 per unit, and annual real estate tax increases of 2.5%
Translation? It’s a tax break. Instead of paying taxes on the multimillion-dollar apartment complex as most St. Louis property owners would, the developer will pay a lesser, stair-stepped but nonetheless fixed amount each year. We continuously see developers try to bargain their way out of their tax burden and city officials can’t seem to tell them no.
While a new apartment complex in the Central West End may seem great, the tax assurance deal does not. To get the best deal for taxpayers and consumers, what Show-Me Institute analysts have said before bears repeating: If a developer can’t afford a project without assistance, maybe it shouldn’t be doing it. Local officials shouldn’t pick winners and losers, and they shouldn’t feed the appetite for incentives—especially in one of St. Louis’s wealthiest neighborhoods.