To the editor:
Who is standing up for Crestwood? Who is standing up for Lindbergh Schools? Our elected officials are on the cusp of making a set of very bad decisions about the redevelopment of Crestwood Plaza. This letter is a civic-minded response to their impending approval of tax incentives to support a weak, mediocre plan and project.
Crestwood — duties and obligations: Our elected officials are required to adhere to the city Charter, from which they are authorized to create ordinances that protect the health, safety and welfare of those living in Crestwood. Our elected officials legislate and execute actions proper to police, fire, public works, parks and recreation, plus public administration. Forfeiting tax revenues under the rubric “tax incentives” is an oxymoron.
To date, the mayor and aldermen have abdicated their core responsibilities with a reported deficit of $750,000 for 2015 and a projected fiscal gap of $700,000 for 2016.
Subsequently, our city reserves potentially go from $6.9 million to $6.2 million for 2016. And they want to forfeit $15 million to $16.5 million to a developer. How do you round this square peg in the real world?
UrbanStreet Group — intentions and performance: This developer bought the mall property for $2.625 million at auction with an option for tax incentives. These tax incentives are legal descriptors which in practice are tax forfeitures. Relieving the developer of demolition, architectural, engineering fees, among others, falls well beyond the city’s core responsibilities of protecting our health, safety and welfare.
The developer knew at the time of the purchase the boundaries, contours and degraded condition of the property. To be clear, UrbanStreet Group made the calculation not to go to banks, as a loan from a bank would be accompanied by strict un-derwriting standards.
Instead, they opted to procure investment through a hedge fund, and took a calculated risk to bang down remaining costs by requesting incentives, knowing that the city’s elected officials were desperate for redevelopment.
UrbanStreet wants to minimize costs in two ways.
First, appeal the assessed value of the property from $3.1 million to $1.2 million. In this way, the developer reduces tax liabilities with or without a tax pass-through to the school district. Second, through the use of incentives the developer’s costs are externalized, thus maximizing profits. “But for” and “blight” are legal fictions whose definitions are so loose that blight can be declared in the middle of prospering communities.
The blighting requirements set the incentives in motion, but those incentives, presented as economic development tools, are nothing but weapons used by developers against target communities. For the developer to assert, “No TIF, no apartments … no development,” is a strong market signal that UrbanStreet Group cannot meet the scrutiny and rigor of bankers and in turn doesn’t have a viable plan and project.
Any business that leases or buys into this project is agnostic as to who bears the initial development costs. Matter of fact, for some a plan and project relying on tax incentives is a red flag for further consideration. Those prospects with any business acumen know this is an artificial and contrived scheme wrought with indefensible uncertainty.
The amended Watson Road Corridor Plan as a comprehensive plan is poison fruit. A credible comprehensive plan under current development has all but disappeared from the public square.
Furthermore, how can the developer commit for two years on the one hand and on the other enter contracts that provide for terms of 23 to 25 years? The only way is through transferrable provisions with the option of flipping the property.
Businesses of all stripes move from uncertainty to certainty. Crestwood has had five developments with a mix of tax incentives of all types with no net increase in jobs or incomes.
Let’s pivot. What home or business owner could hold a piece of property which is not in compliance with our codes for 22 months?
Instead of the city providing code en-forcement fairly and broadly, what do they do? The city has given a wink and a nod to the developer. This waiver on the part of the city is an admission that they have abandoned their core duties and obligations and have resigned themselves to fear and desperation.
In contrast, the city should present the confidence the community deserves. Look at the census data. Code enforcement would incentivize the developer to take responsibility for its efforts. No apologizing. No space for leverage against the city, the community and the school district.
If the owner doesn’t want to develop the property, that is the owner’s prerogative.
However, the city is obligated to give the owner notice: You must bring the property up to code whether it is abandoned or it is put up for sale.
Hence this improves the value of property with the owner’s money, not the city’s. This increases the prospects for a defensible project either by the current developer or another developer, one that is imaginative and committed to the common good. Instead, what is currently in play?
The prospect of tax revenues extracted and subtracted from resources that otherwise would be available to municipal services, to the tune of $15 million to $16.5 million.
Homeowners and business owners — wealth: To be forewarned is to be forearmed. Home values and business property values are tied, in large part, to an energetic, innovative school district and an efficient government.
We are on a trajectory that is going to miss these targets by wide margins. Who is standing up for Crestwood? Are you?
John O’Fallon Bell