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OT: Midtown Development


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8 hours ago, Billiken Rich said:

I have no specific information on this particular project or others mentioned but having dealt with TIFs for years, I have come to realize that the original purpose has not been actually what often happens.  Tifs were originally developed to help revitalize areas that would not be done unless that happened.  Now in the CWE area that was probably true at one time but now that area has become a different situation then in the beginning.  Of course all developers want to be in the areas that are hot and they also want to be subsidized in whatever ways they can get.  They have become addicted to tax credits for everything they do.  At some point a development project has to be sustainable on their own.  Another thing I have seen with TIFS is they seldom ever age out like they were suppose to do.  The developer often just finds new ways to keep them going by "improving things".  As I said I am not taking a position on any of these projects just pointing out that everything is not always so black and white.

 

 

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3 hours ago, cheeseman said:

I have no specific information on this particular project or others mentioned but having dealt with TIFs for years, I have come to realize that the original purpose has not been actually what often happens.  Tifs were originally developed to help revitalize areas that would not be done unless that happened.  Now in the CWE area that was probably true at one time but now that area has become a different situation then in the beginning.  Of course all developers want to be in the areas that are hot and they also want to be subsidized in whatever ways they can get.  They have become addicted to tax credits for everything they do.  At some point a development project has to be sustainable on their own.  Another thing I have seen with TIFS is they seldom ever age out like they were suppose to do.  The developer often just finds new ways to keep them going by "improving things".  As I said I am not taking a position on any of these projects just pointing out that everything is not always so black and white.

 

 

Wasn't a developer (may have been Kroenke's RE group?) trying to get TIF financing for the old car dealership lot on the SW corner of Clarkson and Manchester? Definitely NOT a distressed area!

A lot of these financing tools aren't vital to a development's success. Many projects would be just fine without TIFs and tax abatements but hold those financing tools over cities' heads and threaten to pull out if they don't receive them. My sister is a city council member for one of the inner ring municipalities in St. Louis and recently had a developer come to them asking for tax abatement for their project. After reviewing the financial projections showing the project would start cash flowing immediately they rejected the tax abatement. To no one's surprise the developer proceeded with the project anyway. 

Historic tax credits, unfortunately, get lumped in with a lot of these other financing tools. But for state and federal HTCs, the majority of historic redevelopment projects just wouldn't happen, as they're risky projects to take on and it's nearly impossible to close the financing gap without HTC equity.  Historic tax credits have over a 40 year track record of being revenue positive tax credits. Historic redevelopment projects put more money back into coffers through increased federal and state income tax, state and local sales tax, and significant increases in property taxes. They not only create shovel ready jobs but permanent jobs long after construction has ended. The credit spurs economic activity, creates jobs, especially higher wage skilled trade positions and rehabs the fabric of our country’s tangible and cultural heritage, especially in economically distressed areas. Studies show that for every historic tax credit dollar given, between $5 and $9 of private investment is leveraged. These projects also spur a lot of non-historic economic activity in the immediate area. And it's not just urban cores utilizing historic tax credits. Many small towns  and "Main Streets" have been revitalized through the utilization of HTCs. And of course, historic redevelopment is a climate friendly tool. The greenest building is the one that is already built and can be brought back to productive economic use (plus, it won't cost the city thousands of dollars to tear down).

I guess that was a long-winded way of saying I agree....a lot of financing tools aren't necessary for the project to proceed and succeed but are instead political and used to squeeze as much out of the city/state as possible to help improve their bottom line.  Other financing tools are in fact vital to a project's ability to proceed and succeed and provide many benefits to the community. 

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Cortex may be booming when it comes to business, but it isn’t exactly booming when it comes to adding housing density.  This is three projects in a row that would have added housing density in or near Cortex that have been sidelined.

People who work in the businesses that are causing Cortex to boom tend to want to live close to where they work.  There just isn’t enough housing stock in that area and if more isn’t added it is going to threaten the continued success of Cortex.  Cutting off the TIF spout on projects that add housing might not be the smartest move.  It makes far more sense to stop the TIFs on projects that aren’t adding housing density in that area.  

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1 hour ago, Slu let the dogs out? said:

Wasn't a developer (may have been Kroenke's RE group?) trying to get TIF financing for the old car dealership lot on the SW corner of Clarkson and Manchester? Definitely NOT a distressed area!

A lot of these financing tools aren't vital to a development's success. Many projects would be just fine without TIFs and tax abatements but hold those financing tools over cities' heads and threaten to pull out if they don't receive them. My sister is a city council member for one of the inner ring municipalities in St. Louis and recently had a developer come to them asking for tax abatement for their project. After reviewing the financial projections showing the project would start cash flowing immediately they rejected the tax abatement. To no one's surprise the developer proceeded with the project anyway. 

Historic tax credits, unfortunately, get lumped in with a lot of these other financing tools. But for state and federal HTCs, the majority of historic redevelopment projects just wouldn't happen, as they're risky projects to take on and it's nearly impossible to close the financing gap without HTC equity.  Historic tax credits have over a 40 year track record of being revenue positive tax credits. Historic redevelopment projects put more money back into coffers through increased federal and state income tax, state and local sales tax, and significant increases in property taxes. They not only create shovel ready jobs but permanent jobs long after construction has ended. The credit spurs economic activity, creates jobs, especially higher wage skilled trade positions and rehabs the fabric of our country’s tangible and cultural heritage, especially in economically distressed areas. Studies show that for every historic tax credit dollar given, between $5 and $9 of private investment is leveraged. These projects also spur a lot of non-historic economic activity in the immediate area. And it's not just urban cores utilizing historic tax credits. Many small towns  and "Main Streets" have been revitalized through the utilization of HTCs. And of course, historic redevelopment is a climate friendly tool. The greenest building is the one that is already built and can be brought back to productive economic use (plus, it won't cost the city thousands of dollars to tear down).

I guess that was a long-winded way of saying I agree....a lot of financing tools aren't necessary for the project to proceed and succeed but are instead political and used to squeeze as much out of the city/state as possible to help improve their bottom line.  Other financing tools are in fact vital to a project's ability to proceed and succeed and provide many benefits to the community. 

The project at Clarkson and Manchester was for a Walmart but Kroenke had nothing to do with it. I believe it was Sansone who was proposing it .  He was asking for double of the TIF normal allowance.  After a lengthy process, Walmart basically said that they were not really all that interested in the project but if Sansone could have pulled it off they were willing to partner with him because he was offering a huge pay off to them - obviously from the extra TIF money.

 

 

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I'll admit that I know very little about the financing and large building projects in the City.  At least the Cortex deal hadn't already been agreed to and then blown up.  I just hope that our new progressive mayor and our new progressive 17th Ward Alderman aren't biting off their noses to spite their faces.   

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Each deal is complicated and should be evaluated independently to determine whether or not the incentives are necessary or beneficial.  Like most things, the problem is that politics tends to get in the way via aldermanic courtesy and other nonsense.  

While I'm cautiously happy to see Jones attempting to roll back the use of these incentives and/or leverage them to increase investment in other parts of the city, doing so is tricky for a number of reasons.  The market has gotten used to these incentives being available and if you pull the rug out too quickly, it could certainly halt investment/progress.  

 

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4 hours ago, SShoe said:

Each deal is complicated and should be evaluated independently to determine whether or not the incentives are necessary or beneficial.  Like most things, the problem is that politics tends to get in the way via aldermanic courtesy and other nonsense.  

While I'm cautiously happy to see Jones attempting to roll back the use of these incentives and/or leverage them to increase investment in other parts of the city, doing so is tricky for a number of reasons.  The market has gotten used to these incentives being available and if you pull the rug out too quickly, it could certainly halt investment/progress.  

 

Excellent points. To be clear, I'm not for eliminating TIFs and tax abatements altogether as they are certainly a crucial part of the capital stack for some projects. As you said, these incentives have become ubiquitous to the point that most developers just expect them in every deal. There clearly needs to be some reform in that regard.  Don't know the specifics of these Cortex residential projects but the way Jones is going about doesn't seem wise, especially if these developers were promised TIF financing under the previous administration and now have large gaps in their financing.  Hopefully Jones can find a way to allocate resources to the northside while also supporting one our region's greatest assets in Cortex.

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9 minutes ago, Slu let the dogs out? said:

Excellent points. To be clear, I'm not against eliminating TIFs and tax abatements altogether as they are certainly a crucial part of the capital stack for some projects. As you said, these incentives have become ubiquitous to the point that most developers just expect them in every deal. There clearly needs to be some reform in that regard.  Don't know the specifics of these Cortex residential projects but the way Jones is going about doesn't seem wise, especially if these developers were promised TIF financing under the previous administration and now have large gaps in their financing.  Hopefully Jones can find a way to allocate resources to the northside while also supporting one our region's greatest assets in Cortex.

It's not just the developers that have to adjust.  One thing people don't often recognize is the impact these incentives have on land values. In fact, it's often the sellers/speculators that receive much of their benefits because the incentives increase the amount that developers can spend on acquisition and make the project work, which helps drive up land prices.  Getting those land prices back down to reasonable levels where a developer can still make a project work without the incentives is far more difficult once market expectations become set.

Because they knew Cortex was going to take decades to develop, the TIF was set up to be flexible over time so that developers could adjust to changes in the market, maximize TIF revenues, and so the City could review each new project as it came in.  In many ways, KDG's proposal is just a new TIF within the larger district and I don't believe there's any reneging on prior deals.

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12 minutes ago, SShoe said:

It's not just the developers that have to adjust.  One thing people don't often recognize is the impact these incentives have on land values. In fact, it's often the sellers/speculators that receive much of their benefits because the incentives increase the amount that developers can spend on acquisition and make the project work, which helps drive up land prices.  Getting those land prices back down to reasonable levels where a developer can still make a project work without the incentives is far more difficult once market expectations become set.

Because they knew Cortex was going to take decades to develop, the TIF was set up to be flexible over time so that developers could adjust to changes in the market, maximize TIF revenues, and so the City could review each new project as it came in.  In many ways, KDG's proposal is just a new TIF within the larger district and I don't believe there's any reneging on prior deals.

Interesting, thanks for your insight. 

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  • 4 weeks later...

-posting for context on the StL stadium

Austin, Texas — General contractor Austin Commercial has completed Q2 Stadium, a 20,500-seat soccer stadium for Austin FC, the city’s new Major League Soccer team. The Austin City Council originally approved the development of the stadium, which is situated on a 24-acre site on the city’s north side, in August 2018. Designed by Gensler and owned by Precourt Sports Ventures, the stadium features an outdoor amphitheater and stage for live music, a beer hall with local food and beverage options, large video screens for parties and retail merchandise stores

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  • 3 weeks later...

MY question is what is the plan and who is the planner?  When the location was sold a few years back it was bought by a guy who owned a medical limo service and a used car lot on S Kingshighway with no previous interest in anything like Humphrey's.  Since that time, he has done nothing with the property.  He had no connection to Jan Mangelsdorf, who was a great supporter of Billiken sports!

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this is fantastic new!   a lot of us oldtimers remember our days at humphreys very fondly.    to hear this just brings those memories all back.   love love love this!

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