How does the City of St. Louis look financially? I know TIF reform has come up and the bond rating lowered recently for the city. Is the city seeing any kind of increased revenues from the recent developments or is most of it deferred?

We don't have enough $ to fix bad streets and bridges, update equipment, pay employees a competitively. so i would say its somewhere between bad to somewhat troubling. If the Cardinals DO NOT make the playoffs...that is the difference between being in the black or red. few years ago the Cards going to the WS meant that City employees didn't have to take furlough

New mayor needs to "right size" city staff...5-10% in staff.

It's pretty bad. Our civic leaders celebrate being $1.5M in the black for last fiscal year, while illegally underfunding things like the Affordable Housing Fund by the same amount for each of the last 3 years.

Much of the tax abatement activity is happening in the Central corridor, on many of these big block buster developments. Property tax increases (due to increased property values) are not realized on these projects for 10+ years. 57% of City property taxes go to SLPS. The same government leaders decrying the state of public schools have been choking off much needed revenue for the same.

City finances are a hot mess, and everyone in City government knows it, but is deferring responsibility and reform down the road for an indeterminate amount of time to an undetermined group of reformers. Aldermen and the Mayor's Office are both busy playing a game of, "hey, it's the other guy's fault".
But hey, we were *$1.5M in the black* last year, so everything is fine, nothing to see here.

Also, at least 2 of the recent credit downgrades for the City have directly cited our short term inability (refusal) to realize any tax benefit from or development boom is hamstringing our short and long term ability to remain solvent and pay our debt obligations.

The Annual Financial Report for 2015 can be found here: https://www.stlouis-mo.gov/government/d ... t-CAFR.cfm

Looking at the PDF here page 10 (page 26 of the entire PDF) shows the numbers. As mentioned, it shows 2015 is $1.5 million in the black when comparing revenue to expenses, so which of the revenue and expense line items should be asterisked with a "but..."?

For example, I'm wondering if "charges for services" and general tax revenue numbers are what was "billed"/expected or actually collected?

Also, to the comments above, I take it city government is skimping on things like streets and public safety expenses and that if spending was adequate the city would be in the red?

Edit: I originally mistakenly said "I take it city government is skimming..." I meant "skimping". Corrected.

The frustrating thing about TIF and other tax abatements is that no one on the city side of the equation ever seems to do the analysis to determine if they're a net win or loss for the city. All development is assumed to be good and the city does whatever it takes to make it happen.

How many people does the city employ? Why do we need two "city halls"? City Hall and Abrams Courthouse or 1320 Market? When the original city hall was built it served far more people than the two do today. The city has a billion dollar budget?! Where does that money go?

jcity wrote:How many people does the city employ? Why do we need two "city halls"? City Hall and Abrams Courthouse or 1320 Market? When the original city hall was built it served far more people than the two do today. The city has a billion dollar budget?! Where does that money go?

6000?
City doesnt have a $1B budget in reality....a lot of it is pass thru money and according to Lewis Reed, 75% of that $1B is personnel (salaries/benefits/retirement ect) ...

I made an interactive map showing all of the abatement bills for this BoA session so far.
https://batchgeo.com/map/3dfcb265f2af60 ... 3b4da9c9cb

You can click on each parcel being blighted and see the appraised and assessed values for 2015, the 2015 & 2014 tax bills (where available), and the value of building permits currently active on that parcel.

Of particular interest is 4142-4144 DeTonty. It's part of a $10M UIC townhouse/apartment project which will "finish" Shaw, according to stakeholders. The tax bill for this particular parcel last year was $230. The value of the building permit is $2.9M. If assessed normally, the new tax bill after construction would be, at a minimum, $42,000/yr.
I asked Conway about this on Twitter last night and he got very defensive and evaded the question.

UIC is by all measures booming, which begs the question of if this abatement, which lets them escape paying at least $420,000 in taxes over 10 yrs, is needed to make the project viable, or if it is a complex thank you note from the City.

It's decisions like these that make me question if anyone in City government is actually concerned with the state of the budget. Keep in mind, several of the ratings agencies have downgraded STL City's credit rating in the last year. At least one of them cited our short term inability to realize the tax and fiscal benefit of the bulk of the recent development boom.

Anyways, play with the map, let me know what you think.
https://batchgeo.com/map/3dfcb265f2af60 ... 3b4da9c9cb

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They also cite the continuous assault on the earnings tax.

Agreed. That's not a realized problem to deal with though at this time. Over-incentivizing is here already.

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Keeping mind $1B in abated residential property results in $3M in forgone property taxes for the city, whereas the E tax is $160M/yr. The smaller cut Rex is floating would be $25M/yr.

http://www.stltoday.com/news/opinion/co ... 848af.html

Couple thoughts about the abatement.... we absolutely have to have a better analysis of projects and a plan for abatement that directly advances the type of city that we want to create. I personally would like to see that public schools get at least some minimum benefit from teh get-go and also an affordable housing requirement -- whether for a set-aside number of units or a payment in lieu of taxes -- for any abated residential projects in healthy areas.

I'd like to see the max abatement for certain neighborhoods to be less than 100%.

Make everyone living and parking in the city gets a sticker for their car denoting that. Students get a pass.

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The frustrating thing about property tax abatements is that they don't just impact the city's annual budget. They also hit the schools.

If I were looking to reform tax abatements the first thing I'd do was eliminate 20-year abatements. That's just crazy, especially for residential development which won't be directly creating any jobs. The more critical thing I'd do is tie abatements to the earnings tax. If all property tax abatements were conditional on the city's earnings tax being in place, we'd be aligning the interests of real estate developers with the residents of the city and we'd also be protecting potential revenue streams should Jeff City ever take the earnings tax away from us.

And ZMD, MSD, Junior College, Children's service fund, Mental Health, library, MO Blind Fund

The max abatement is 100% for 10 years and 50% for 15 more years. There are some houses on 5700 McPherson that have that, just entered the 50% period.

The 5510 Pershing project has 100% for ten years and 50% for the next ten, I believe. It's hard to wrap my head around the idea that housing for grad students -- which is how that project is being described -- justifies the lost tax income. I'm guessing some on the BOA even agree, but the only one alderman matters for things like this, which is another big problem.

It's interesting how the 26th ward has an appendage that contains that lot and just one building to the east.

Meanwhile the West End City II building in the 28th got a 10 year.

Much detail about the City's budget is in the earnings tax thread if I recall. The City's budget is not $1 billion. All kinds of stuff that isn't in most City budgets, or is instead in a County budget, gets you to that figure. Things like the airport, Water Dept., Sheriff's Office, Prosecutor, etc.

I know there is a lot of talk about tax abatment being a drag on the City budget, but on an annual basis the revenue lost is less than 1% of the City's budget, and less than 4% when TIF's are included - and that does not account for any of the tax revenue gained via development, business retention, etc.

What's the real drag on the City's budget? The enormous population loss, which equals less tax base. That's the big story. Only Detroit, of large US cities, has lost more people from it's peak, and Detroit went through the largest municipal bankruptcy in history. Detroit's one year deficit in 2013 was something like $180M.

So, viewed from that perspective, its probably a miracle that St. Louis isn't in the same boat. Yes, we have budget problems, and yes, we have real risks in the future, #1 of which, by far, would be the risk to the earnings tax posed by Rex Sinquefield.

The City obvioulsy needs to control costs where it can. And there are some places where we can do that. But there are other places where we are just going to incue large costs associated with being an old city with old infrastructure, and 60 years of declining population. In the long run, there's no way out unless we have population stability or some level of growth. End of story.

Scott Ogilvie
24th Ward Alderman

^ not one word in there about schools. sad! and you know that there are parts of the city like CWE that are in heavy demand; we need to act accordingly. And btw, as you mentioned Detroit, while they give many/most larger projects incentives like we do, residential projects now require affordable set asides. (* some exceptions may apply.)

Considering the City's history over the last century it is remarkable we don't have a junk bondrating. IIRC the downgrade we recently suffered were systemic changes in how the ratings agencies assess risk in municipal bonds and had little to do with St. Louis specifically. This thread is far too much doom and gloom.

ward24 wrote:Much detail about the City's budget is in the earnings tax thread if I recall. The City's budget is not $1 billion. All kinds of stuff that isn't in most City budgets, or is instead in a County budget, gets you to that figure. Things like the airport, Water Dept., Sheriff's Office, Prosecutor, etc.

I know there is a lot of talk about tax abatment being a drag on the City budget, but on an annual basis the revenue lost is less than 1% of the City's budget, and less than 4% when TIF's are included - and that does not account for any of the tax revenue gained via development, business retention, etc.

Ald. Ogilvie, the incentive report released earlier this year showed $700M in foregone revenue between 2000-2014 including TIFs and abatements. That's an average of $50M/yr. That's a lot more than 1-4%. The general fund (discretionary spending) in the City budget is closer to $500M. $50M/yr in foregone revenue is closer to 10% of the budget.

Abatement rates have gone up since 2014 as well. The effect of incentives on the budget is not inconsequential.

Also, schools, to echo STLRainbow. Schools suffer the greatest loss of funds from the incentives given out. We can't keep burning the fiscal candle at both ends and expect it to end well.

If the state funded the SLPS at the same percentage it does on average statewide, it would be contributing $100M more per year.

Andrew, I'm just talking about the City's budget, since that's what the thread is about.

21% of the property tax paid locally goes to the City. We've abated $303M over 15 years total, for all taxing districts. The impact to the City is $303M x .21 / 15 years, which equals $4.25M a year, which is less than 1% of the annual budget.

The absolute amount for TIFs is harder to calculate because the percentage of city tax revenue, vs. other taxing district tax revenue, diverted for each TIF varies. But maybe 2/3rds of that $400M was city tax revenue. (I don't think this city revenue number was actually in the PFM study) So $400M x .66 / 15 years equals $17.6M a year, or about 3.5% of the City's budget.

Yes, we can argue about TIFs, but most of those TIFs also created new tax revenue, or preserved existing revenue that would have otherwise left. My point is we aren't giving up more than 4% of annual revenue to incentives, and when you weigh that against the other "headwinds" to the City's budget, the big ones really are population losses and job losses.

If we end all incentives tomorrow, it isn't like the outlook to the City's budget fundamentally changes.

SLPS is losing about 3% of tax revenue to tax abatements & TIFs. I'm not going to argue 3% is insignificant, but I would argue, again, that the lost value to them from population loss, charters schools, transfers (and resultant loss of state revenue) is far, far greater. My point here isn't to say that "abatements don't matter" - its just to keep the relative scale in mind. My point is to say that we could have the most efficient, effective, fair, restrained, optimized system of incentives, and the fundamentals of either the City's budget or SLPS budget don't look radically different. Both budgets are just suffering from decades and decades of population and student declines.