Lindbergh School District 'TIF king of state,' chief financial officer says
The Lindbergh School District "has become the TIF king of the state of Missouri,'' according to a school district official who is serving on the Crestwood Tax Increment Financing Commission.
Pat Lanane, assistant superintendent for finance and the Lindbergh School District's chief financial officer, made that comment during a recent TIF Commission meeting as members discussed a redevelopment proposal for the Watson Plaza shopping center that was submitted by Gary Grewe of G.J. Grewe Inc.
Watson Plaza is adjacent to the city's Watson/Sappington Road Redevelopment Area where a Kohl's Department Store opened last fall.
In its plan, G.J. Grewe Inc. is proposing a PETCO and a new Walgreens on the site of the vacant Tippin's restaurant as well as retaining the shopping center's existing tenants.
The cost of the proposal is estimated at $11,226,305, excluding funding generated by a Transportation Development District that would be used to pay for improvements to Watson Road that would enhance the flow of traffic.
Besides TDD funds to offset transportation-related expenses, G.J. Grewe Inc. is seeking $2 million in tax-increment financing to facilitate land-acquisition costs. In a TIF district, tax receipts for school districts, fire districts and other taxing entities are frozen at existing levels for the length of the TIF — up to 23 years. As land within the TIF district increases in value, the incremental tax revenue — 100 percent of property taxes and 50 percent of sales and utility taxes — is used to retire the TIF obligation.
During his remarks, Lanane contended that the number of TIF projects within the Lindbergh School District, to an extent, was shifting the tax burden onto residential taxpayers.
At one point during the panel's discussion, TIF Commission member Forrest Miller, who owns the Royale Orleans banquet center, said, "... In 1985, Crestwood was hot. Many things in the St. Louis community were on fire. We were a vibrant city. In 2004 we are no longer what we used to be ... We have overdeveloped our whole retail area in this community and we're going to pay a heavy price for it. That's the way it is. Your questions were good. I listened to them. I enjoyed them, but the reality of it is it's not like it once was.''
Lanane said, "And is that the chicken or the egg? I mean did it get bad because certain retailers let their properties deteriorate and now new tenants did not want to come there? They didn't do the normal work that you do — I've been to your place. It's magnificent. If anything is out of place there, it's corrected immediately. You don't let it get to a point where you have to go out and ask someone else, the public, to pick up the tab for that.''
Miller said, "Well, I mean, I tried to expand my business and he (TIF Commission member and St. Louis County Department of Planning Director Glenn Powers) knows. I went before him. The cost got so high, I walked away from it ... This is one of the highest places in the country to develop something. St. Louis is. I mean we don't have these empty stores because people are clamoring to get here. We have them because we're a tough place to do business in. I'm in the Lindbergh School District. I mean I think you guys are doing a wonderful job. But you can raise your taxes and we all pay. You don't have to worry about selling a product.''
Lanane said, "We can (raises taxes) if you vote for them.''
Miller said, "Well, I vote for them, but I'm saying it's altogether different than the guy opening up a Tippin's restaurant saying: 'OK. Now y'all come.' Now I got to pay this sales tax. I got to pay this add-on tax. I got to pay this lawyer. I got to pay this architect. I got to pay this county guy. I mean it's overwhelming right now. Then the other costs that you have, the do-business costs, the insurance costs, the health insurance costs, I mean, times have changed. It's tough and I've been in business for 25 years. I've never seen it this tough.''
After further discussion, it was noted that TIF projects within the Lindbergh School District are retiring their obligations on schedule or even ahead of schedule.
Miller asked Lanane, "How do you feel about this TIF? I mean do you feel this is going to be like those TIFs or do you have something that really bothers you about this as far as paying out ... Do you think he can pay this out?''
Noting that the numbers are tight, Lanane said, "... My real concern is twofold. One that I expressed that it does have the appearance of rewarding someone for a development that has been not well maintained, etc. The other one's more basic. TIF is wrong in the first place. It could be wrong in the second, third, fourth and fifth places that we've been talking about tonight, but from a school district standpoint, what has been allowed to happen is another taxing entity has been allowed to interrupt the revenue of another taxing entity. I don't know anywhere else that happens. I can't think of one other instance. If we came in and asked the city of Crestwood and said: 'We're going to divert your sales tax for 10 years because we're a little low on cash over there.' I don't think they'd be very happy about that and I don't think anybody would support that. I don't think if we went to St. Louis County and asked them to interrupt their revenue ...''
Miller interjected, "But you're still going to get your money that you're always getting here.''
Lanane said, "We will keep the current value, but we live on new value, new construction. For a hold-harmless school district, the only revenue that is not capped for us is new construction. In our projections, in our planning, we count on a certain amount of that. Now every time there's a new development, the developer comes with TIF in hand, saying: 'Got to have it. Can't do it without it.' That revenue then becomes gone. It's not available to us. We are limited, by law, on current property taxes to (the) CPI (Consumer Price Index). That's been like 1.4 percent. We are frozen at a '92-'93 level from the state. If all the people in this room had not had a raise since 1992-'93, I don't think that would sit very well.''
Miller said, "But me as a citizen of your school district, when you ask me for a tax increase for a bond issue, I'm buying in, the community's buying into your school district to improve your school district. Now we're asking you to come in and improve our commercial district.''
Lanane said, "It's not our job. Our job is to educate children in this community.''
Miller said, "Well, then why are you here?''
Lanane said, "By law I'm here and I'm here trying to protect the revenue stream for the Lindbergh School District and its taxpayers. To the extent we lose new construction, it shifts the burden for taxation onto residential taxpayers. We will be before you all even sooner because of all of these TIFs rather than later.''
Noting that Lindbergh would receive the benefit of the proposed redevelopment in seven years, Miller said, "So you just have to wait. So I guess my question is: You're waiting now and nothing may happen at all, won't you be better off to say: 'Hey, at least I know when this is paid off, I'll get my new construction tax boost for my school district and in the meantime there may be a little personal property tax that goes in there along with it, which is not frozen.'
Lanane said, "Twenty years ago, we would have gotten all of this.''
Miller said, "Oh I understand. I told you things aren't like they were 20 years ago.''
Lanane said, "... Our costs have also gone up and to maintain a quality (school district), we have to have revenue sources. And to the extent that we don't get it from commercial new construction immediately, there's a lag in that, it is a factor that we would have otherwise received.''
Alderman Tom Fagan, who serves on the TIF panel, later said, "Let me say one thing, if I could. No. 1, the county took money from the city of Crestwood. So to say that a governmental entity has not had to share with other governmental entities is flatly incorrect because we had to go through with the sharing of sales tax (with St. Louis County). That's one. No. 2, I guess my question is has the school district or has Lindbergh ever agreed to go ahead with a TIF and from what it sounds like, and I appreciate your position that you're diametrically opposed to them. We have some people on the board who think they're morally bankrupt and wrong. And that's fine if that's your position. But it seems to me that Lindbergh does derive a benefit by the city of Crestwood staying strong and if the city, let's say, worst-case scenario, this doesn't happen, we lose more businesses. Some other strip shopping malls continue to lose business. Who's that ultimately going to hurt? It's ultimately going to hurt Lindbergh because you're not going to have businesses going in ...
"Frankly, as an outsider, that seems like a shortsighted view, though I appreciate the revenue constraints you have, but, you know, I think Lindbergh can go to the residents of their school district if they think they need more money and ask for it. And they do. They come before us and sometimes they're successful and sometimes they're not. And for the city of Crestwood, we're — I think — much more hamstrung than the Lindbergh School District. That's my personal opinion,'' Fagan added.
Lanane said, "Well, I don't know how hamstrung you are, so I can't comment on that. I can simply tell you that Lindbergh has become the TIF king of the state of Missouri in terms of the amount of TIF development that has happened within our relatively small square-mile area. TIF was never really anticipated for an area like this anyway. It's been used that way. We have supported some in the past, but I have to tell everyone that we are at a financial situation where it's going to be very difficult for us to support any development that diverts money from the school district.
"I guess you've all seen the news. It's getting fairly desperate around the state in terms of support for education and I can absolutely promise that we will be coming back before the voters. There's no doubt in my mind. We will be spending in excess of about $2 million of the incoming revenue for this next fiscal year. So it's a matter of — it's a certainty, not a possibility,'' he said.