Nor will they know that the tax increase enabled the members-only Crestwood Swim Club to sell off 1 acre of land with an aging private swimming pool, currently appraised at $88,000, for $750,000. But in St. Louis County, with its 91 municipalities and just so much development enticement to go around, a suburb does what a suburb's got to do. In this case, besides a $2.2 million tax-increment-financing plan, Crestwood created a transportation-development district and a community-improvement district.
Let's not put everyone to sleep with too much detail about the difference between a TIF, a TDD and a CID. Believe it, explaining that convoluted mess makes a drug dealer's money-laundering seem like simple arithmetic. It boils down to this: Crestwood wanted to develop that busy corner, but to do so, the $2.2 million TIF subsidy wasn't quite enough. TIF funnels a portion of the new, or "incremental," sales-tax money from a development back into the project to pay off its cost. The swimming pool was outside the footprint of the TIF district but was needed for additional parking. So a TDD was formed to raise more public money, to be paid off with a three-eighths-cent sales tax to be collected at the proposed Kohl's.
The developer, THF Inc., first offered $250,000 for the 1-acre pool site, but that sum was deemed insufficient by the swim club. So THF settled on $750,000 and looked for a way to generate more cash for the project. Technically, the three-eighths-cent TDD sales tax won't be used to pay off the pool -- instead, it will pay for driveways and lights and such -- but all that money is fungible, moving around to enable the developer to cash out the swim club.
That's what irritates Catherine Barrett, a lifelong Crestwood resident who feels that the dues-paying members of a private pool are making out like bandits. "What economic benefit is there to Crestwood? Why are we trying to subsidize a private pool?" asks Barrett. "They're going to get more money for their pool than they should, an additional $500,000, to build a pool for 110 families, the majority of whom are not even Crestwood residents. What good is that doing for us?"
Barrett has another ax to grind: The new pool will be located on land owned by the swim club, right next to her house. That displeases her in part because the swim club was granted a conditional-use permit so it could build the replacement pool in an area zoned for residential development.
Gary Vincent, a Crestwood alderman, doesn't see eye to eye with Barrett. He happens to be president of the Rosebrook Real Estate Co., which owns the pool. He recused himself from voting on matters connected to the land sale, and he thinks Barrett and other neighbors should clam up. "They're saying we're getting paid too much money -- how can they determine that?" Vincent asks. "What difference does it make to a resident, around that pool, what we get paid for? That's not going to affect them at all. That has absolutely no impact on them whatsoever, at all. Period."
Yeah, right. It might be nobody's bidness, if the developer was paying its own way. But the sales tax paid by the public at this Kohl's will go in part to subsidize the developer and in part to pay for a new pool for a private club. So Barrett does have a legit gripe.
Assistant city administrator Matt Conley defends the use of a TIF to develop the corner across from the Crestwood Plaza, saying, "This project is the poster child for tax-increment financing." An abandoned gas station and asbestos in the five-story bank building make cleanup of the site expensive and have prevented private-sector development, he says. Without the use of TIFs by inner-ring suburbs, the sprawl in Jefferson, Franklin and St. Charles counties will be fed by economic refugees from St. Louis County, Conley contends.
"Retail follows rooftops," he says. "Where they're building houses, that's where they'll go. If Kohl's doesn't build in Crestwood, they'll build out in Eureka. That's the way it is. We don't make those calls; the people who work for Wal-Mart and Target and Kohl's, they do that. We don't necessarily like the tools we have to use, but they're the only ones we have. If we could have other mechanisms to use that weren't so controversial and weren't so convoluted, we would love to use them."
Using a TIF and a TDD to make a project possible is like borrowing money from Peter and Paul to pay off Guido. But as with all TIFs, from the ones used to build St. Louis Galleria on, most property owners don't complain because they're getting paid double or triple their property value. The host city doesn't gripe, because in the short term it gets increased tax revenue. And surely the developer doesn't whine, because he's guaranteed a generous return on his investment without the usual risk.
The losers are the ones who have no say in the decision: neighboring cities, which lose development and revenue to the TIF district; small-business owners, who never qualify for TIFs; and public schools and other taxing districts, which lose the incremental taxes for years to come.
But if you're a member of the Crestwood Swim Club, jump in, the water's fine -- and it's paid for.