TIF in a Flood Plain–A Recipe for Trouble
High noon approaches as the Saint Louis region awaits Stan Kroenke’s development proposal for Maryland Heights. For those unfamiliar with the situation, Kroenke and a business partner want to transform 1,800 acres of flood plain into a new mixed-use district and will most likely seek public dollars to do so. While Kroenke's name alone evokes strong emotions in Saint Louis, there is much more than civic pride involved when we say this development would be both fiscally and environmentally irresponsible.
The partners have expressed interest in developing a vast retail, commercial, and residential district that, if subsidized, could cost taxpayers millions. Unfortunately, history in the Saint Louis region shows that if you ask you shall likely receive, even if the project is of questionable merit. A prime example of this occurred in 2010 when a Walmart located in both Saint Ann and Bridgeton (two adjoining suburbs of Saint Louis) relocated a spot in Bridgeton 2 miles down the road in order to capture $7 million in public subsidies. Kroenke's plan would not only be costly for Maryland Heights residents; it would also likely move economic activity from other areas in the region, rather than creating new activity.
Periodically reshuffling existing businesses across the metro area was not the original purpose of tax increment financing (TIF). TIF was intended to encourage the development of blighted areas in need of economic growth. Instead, it is often used as a subsidy to attract businesses to areas that are already economically healthy, forcing other government entities like school districts to shoulder the costs of those decisions.
Then there is the separate question of whether it's wise to subsidize construction in a flood plain. Flooding is still a threat in the areas where the Kroenke development would be built. In fact, as recently as last year hundreds of families were forced to evacuate their homes as a result of flooding. Saint Charles County and the Great Rivers Habitat Alliance (GRHA) have sued Saint Peters over flood plain developments in the past for environmental endangerment, and David Stokes, executive director of the GRHA and a former Show-Me staff member, contends that further development on the flood plain “will just make the [environmental] problems we’ve experienced in the past even worse.”
Fortunately, Saint Louis is beginning to acknowledge the TIF problems we’ve been discussing for years at the Show-Me Institute. In the past, municipalities could simply override a county veto with a two-thirds vote and proceed with the projects of their choice, but this year legislation passed both the House and Senate that would limit municipality overrides to financing costs of demolition and clearing land. If this law goes into effect on August 28 as expected—the governor has not technically signed off on it yet—then the seemingly limitless public financing of projects like Kroenke's might be scaled back considerably.
If subsidizing construction on the flood plain is economically questionable, would hurt local school funds, and could actually threaten the safety of nearby residents, shouldn’t the flood plains be left alone?
