By Andrew Arkills, Data Analyst and Community Leader
In May of 2016, the City of St. Louis released a detailed report on tax incentives. Since then, we have seen few proposals for more equitable policies. For all the talk of applying racial equity lenses to systems, somehow, St. Louis’ development policy continues to escape serious examination.
Let’s not sugarcoat things:
Over the past 15 years, the City’s development community has been awarded billions of dollars in city, state and federal tax subsidies and incentives. The result? More racial segregation and an accelerating trend toward neighborhood-level income segregation. Recent analysis shows that 72 percent of these subsidies went to developments in the Central Corridor, where we are seeing another incentive-fueled development boom. St. Louis Development Corporation (SLDC) is doling out obscene amounts of tax abatement for posh, non-university-owned dormitories for children of wealthy families. Meanwhile, thousands of families with kids who are working multiple jobs to get through community college, UMSL or a trade school are subsidizing them.
Just north of Delmar, there is now an unbroken line of high-poverty census tracts stretching from the river to Wellston. This is new. Concurrently, many Central Corridor neighborhoods are becoming wealthier and whiter. These things are not unrelated. As long as our city continues down an outdated path of “trickle down”-style development policies, these outcomes will continue to be entirely predictable. As Bob Lewis (President of Development Strategies) said in 2014: “It’s other people’s money. You might as well ask for it.”
Why should this matter for those in the community development sector?
Why would many development companies or lending institutions look to much of north or south St. Louis for non-Low Income Housing Tax Credit (LIHTC)-fueled opportunities when they know they can get massive subsidies to build luxury high-margin apartments, condos and retail in higher-income neighborhoods? Our city’s development policy encourages exclusionary developments. For smaller rehabbers that understand the system, “spot blight”-enabled abatements similarly encourage targeted rehabbing in neighborhoods that already have healthy markets, which is the opposite of the policy’s stated intent.
What is TeamTIF?
TeamTIF is a group of residents that have come together to counterbalance the status quo concepts driving our city’s development policy and to help revitalize a movement to enact the community development recommendations of the Ferguson Commission. TeamTIF believes we need real change. We also believe that equitable development is in the city’s long-term economic best interest.
At a basic level, TeamTIF believes that the City can and should be asking for more when negotiating with developers. Projects are offered TIF, abatement, and site-specific, “developer-driven” special taxation districts that inflate developers’ bottom lines. As a result, developers demand continually higher development fees (a.k.a. profits). Meanwhile, our city’s debt rating is being downgraded, and ratings agencies cite these sweetheart deals as a reason. This raises our city’s lending costs, which are largely passed on to homeowners and renters in the city’s northern and southern wings. There seems to be little concern for the social costs of our current development policies. TeamTIF believes that SLDC has abdicated its fiduciary responsibility to the vast majority of our citizenry.
The City seems unwilling to learn that if our goal is to drive equitable development, building lots of higher-end housing in the Central Corridor hasn’t been a winning strategy. These no-strings-attached deals have increased neighborhood-level economic and racial segregation patterns, and there is no rational reason to believe that will change.
TeamTIF believes we deserve both better negotiators and better strategies. Central to this will be incentive-linked Inclusionary Zoning and stronger safeguards against unnecessary tax abatements in areas with higher property values and/or lower poverty rates.
How Would Incentive-Linked Inclusionary Zoning Work?
If a sizable multifamily development is being built, we need to tie Inclusionary Zoning requirements to incentives. You can build your 250-unit building with aid from the City, but in return, you must set aside units for various levels of affordability. If we are to effectively combat growing economic segregation, this is the only option left to the City. If current developments had Inclusionary Zoning requirements, we could be creating affordable housing units in neighborhoods where we want to integrate lower- and moderate-income families.
A growing number of cities are instituting incentive-linked Inclusionary Zoning requirements, and not just coastal real estate hotspots. Fellow “Rust Belt” city Pittsburgh appears close to adopting incentive-linked Inclusionary Zoning. Even as far south as New Orleans, they are considering these ordinances. We should join them.
By instituting Inclusionary Zoning and a stricter approval process for the “spot blighting” system, we will begin to de-incentivize inequitable development practices. As businesspeople, developers look for the easiest money available, which is currently tax-subsidized development projects that are marketed to higher-income families. If we are to see more broadly shared prosperity, we must both pass an Inclusionary Zoning ordinance and remove incentivizing systems that grant developers abatements in the neighborhoods where they would already be turning a decent profit anyway.
In the wake of #Ferguson, many in our metropolitan area have recognized that building a more equitable St. Louis remains central among the challenges facing our region. We should not let this historical window pass us by. If we do not adopt reforms during the current construction boom, we will have missed a great opportunity. Who knows? Maybe we’ll even save the City’s credit rating in the process.
Andrew Arkills is a data analyst and community leader, with a professional focus in supply chain and logistics. His community work is focused on neighborhood leadership and advocacy, where he pushes for more racially equitable, transparent, and responsible government. He has a BA in Psychology from Purdue University and an MBA from Saint Louis University. Andrew works for a large, local non-profit healthcare organization in St. Louis. He is the current President of the Tower Grove South Neighborhood Association, and has also served as Treasurer of that organization.
Articles in “From the Field” represent the opinions of the author only and do not represent the views of the Community Builders Network of Metro St. Louis or the University of Missouri-St. Louis.
