Backing a tax increment financing loan structure for private benefit with a city's general revenues is risky business. That the city of St. Louis is now obligated for $28 million toward the acquisition of the One City Center office building by the Pyramid Companies is absurd. Here, we have a developer that has just agreed to take on the long-needed redevelopment of St. Louis Centre and claims -- out of the blue, long after announcing that project -- that such redevelopment will be hindered if the company cannot also acquire the One City Center building enveloped by St. Louis Centre. That makes some sense, although claiming necessity is a hearty exaggeration. What's worse is that this big-time development company, with plenty of incomplete projects, made the claim that it could not afford to purchase the ailing office building itself -- and then asked for this almost-unprecedented TIF.
How can anyone trust a company that owns so much downtown real estate yet expects city government to buy it an expensive office building?
Unfortunately, Pyramid isn't the least trustworthy party. All the Slay administration and the aldermen could have done was tell Pyramid "no." Not this deal, not this time, not that amount. After all, the TIF was based on a hyper-inflated appraisal price that values the building at $26 million. Slay should have demanded a new appraisal.
Instead, our mayor jumps in fully supporting the TIF. Never mind that the city's population is far from stable and that the city is struggling to maintain a decent level of city services with current revenues. There is no guarantee that the city's revenue will rise over the next decade. As the mayor of a city with a delicate but potentially bright future, Slay should have opposed the TIF. The last TIF backed by the city's general revenue was for the failed St. Louis Marketplace project on Manchester Road, the tarnished trophy of former Mayor Vince Schoemehl. That TIF is now a drag on the city's budget. Why create a second?
On December 13, the Board of Estimate and Apportionment voted 2-1 in favor of the TIF agreement. Comptroller Darlene Green stood up for fiscal prudence and opposed the TIF, while Aldermanic President Jim Shrewsbury quietly voted to support a TIF many would-be allies strongly opposed. Of course, Shrewsbury may have caved to the pressure of opposition in the upcoming race for his office. The Board of Aldermen followed with a 26-2 vote for the TIF agreement; only Aldermen Stephen Conway (D-8th) and Fred Heitert (R-12th) opposed the bill.
Thus begins the tenuous tie between a real estate venture and the public good of a metropolitan city. All citizens are indentured to John Steffen and his company's ability to turn this office building around. Perhaps Pyramid's ability is a sure bet, but the revenue of a city government is not betting money. With a diminished and still-recovering population base, continuing hostility from wealthy surburbanites, a relatively low stature among large American cities, decimated public schools and a crime rate that may be rising, St. Louis is not in a position to gamble with its wealth. Conservation, not dissipation, should be the guiding principle of those who lord over the city government.
For those who think the future can't be anything but great, consider why One City Center has become an albatross: Anheuser-Busch recently relocated all of its employees in the building to Sunset Hills. Amid the bully talk of a downtown whose prospects seem limitless, one of the largest regional employers voted against those prospects. That should be cause of worry -- as well as consternation against Anheuser-Busch.
The trouble with tying our city's general revenue to this real estate venture is that we won't know if it's a good or bad thing for decades. Then, if it's bad, there won't be much the city can do except make huge payments into the TIF while cutting city services accordingly. Do Slay, Shrewsbury and the aldermen want to face a future where the city may have to cut services further? I suppose some of them may be banking on a future where city residents are wealthier and need less from their lean, libertarian city government. The rest of us have reason for much worry.