300 South Broadway Tower

Renovations and new residential construction in downtown St. Louis, Washington Avenue, the Old Post Office, etc.
First unread post458 posts
To elaborate... Real estate trades on cash flow. Any decent sized surface lot nearby would cost more than this building; any garage nearby would cost in the ballpark of 10 - 15x the price of this building. In most cities, there isn't such a discrepancy between parking facilities and leasable buildings, but there definitely is in STL.

If we had ANY job growth, perhaps office demand would be such that BUILDINGS would trade at sky-high prices, but unfortunately that isn't the case and parking is making a killing. Instead of shaking our fingers at city leaders for approving development incentives, we should be asking how they are going to reverse a decades-long trend of job loss.
^^Very true. A one-story office building in Ladue just sold for $9 million. Whereas 1010 Market--a 20-story office building downtown--just sold for under $5 million.
kinger wrote:
Fri May 11, 2018 8:38 am
If we had ANY job growth, perhaps office demand would be such that BUILDINGS would trade at sky-high prices, but unfortunately that isn't the case and parking is making a killing.
Not disagreeing with your larger point on real estate, but I do think we have some job growth downtown. But more definitely is needed; also some better data to know more precisely where we are would be nice.
I would say that we would need like 10-20x the growth we currently have to see a major shift in real estate valuation.
If Ballpark village was built out, Cupples X, Cupples 7, the greenspace in front of the Eagleton Courthouse, Mike Shannons, and the Millineum site were all active and occupied i would have less stomach pains about this project. On it surface the building is a very nice respectable building. If building this building means that Ballpark VIllage doesn't fill its site, or Cupples X never gets off the ground do we net out in the positive compared to that scenario. As a microcosm we are obviously trading up, but as an ecosystem it seems like a shame to not build on an even more impactful site.

The rub of course is the developer sees being adjacent to the ballpark with views of the interior as a primary selling point of the project. If that wasn't a driving factor the building could go practically anywhere within downtown and there are a TON of cheaper lots than the relative value of the building they are proposing to tear down.
^ Yes, you could make that argument that it should be built on any of the much cheaper lots to be had in downtown and the point will be made if a 50-story breaks ground on North Broadway on the other side of downtown. Heck, you would expect the same for Drury to move ahead with a tower for Laclede's Landing on a surface parking lot it already owns.

But my take of reality is the capital market is willing to finance new construction downtown if it is next to the ballpark because that is where the capital market thinks the premium can be had new construction. Maybe will see a chance taken on North Broadway, Maybe it will change sooner, maybe it will take more jobs or a game changer like finding a tenant for ATT One Center. Those who own the other properties know that as well and this developer took the opportunity to buy the one property not privately held and willing to sell.

In the meantime, I would speculate the next movement to happen is going to be from Koman and its Cupples site. Will Koman stick with office or scrap go all in on its one residential tower if both BPV II and 300 S Broadway do well? People holding Mike Shannon's old place and the parking company are probably just asking for way too much money and or can easily bank it.
chaifetz10 wrote:
Fri May 11, 2018 8:15 am
Please keep in mind that the parking lots and garages are still owned by someone. It takes two to make a deal and the city can't force an owner to sell (short of Eminent Domain, which is not a good route to go down). As people have pointed out dozens of times on UrbanSTL, the owners of the parking garage are based out west (Phoenix, AZ?) and are happy with the annual parking revenue they bring in.
In a situation like this where a surface parking lot owned by an out-of-state company is preventing DT economic growth/rehabilitation I think eminent domain is appropriate so long as the owners are fairly compensated (and by fair I mean maybe a little above market value, not necessarily what they're asking for it). That's not to say that the law would find it appropriate, of course. For a local lot owner I'd be a little less inclined to use ED since they're presumably putting their money back into the local economy at least.
^ So if the surface parking lot are locals then we shouldn't use eminent domain? Another alternative, if the investors of the proposed tower who happen to be out of towners as well as decided they wanted Koman's empty lot because Cupples X didn't go forward should eminent domain be used to take from Koman?

I have to agree with Chaiftez. On principle alone IMO we just have to let private owners who are paying taxes and upcoming their property (even their isn't much to maintain on a surface lot) make a deal and the reality is sometimes your not going to get what you want. In this case the willing seller with a good location is the one who made the reasonable deal.
dredger wrote:
Sat May 12, 2018 8:52 pm
^ So if the surface parking lot are locals then we shouldn't use eminent domain?
1) i said i'd be less inclined. it would depend on the particulars of the situation.

dredger wrote:
Sat May 12, 2018 8:52 pm
Another alternative, if the investors of the proposed tower who happen to be out of towners as well as decided they wanted Koman's empty lot because Cupples X didn't go forward should eminent domain be used to take from Koman?
2) out-of-towners developing residential and commercial =/= out-of-towners sitting on a surface parking lot.

3) if Koman were indefinitely sitting on a surface parking lot then maybe. see (1) above. but they're not; they're actively working to develop their empty lot.

dredger wrote:
Sat May 12, 2018 8:52 pm
I have to agree with Chaiftez. On principle alone IMO we just have to let private owners who are paying taxes and upcoming their property (even their isn't much to maintain on a surface lot) make a deal and the reality is sometimes your not going to get what you want. In this case the willing seller with a good location is the one who made the reasonable deal.
i disagree. places regulate land uses all the time. there is no place where land owners are allowed to do whatever they want. if a particular use is hindering the city's overall economic prosperity then i think eminent domain with fair compensation is justified. sorry, i'm not a libertarian.
^eminent domain is kind of inelegant solution. Seems like you could simply work to make surface lots much less economically viable thereby incentivizing other solutions. What if surface parking and greenspace within 1/4 mile of downtownwere taxed at 10 times its assessed book value compared to improvements. You would have a bunch of parking lot pwners falling over themselves to build on there lots.
^ absolutely. other cities do it. unfortunately our old-guard leaders prefer to ignore the best practices of more successful cities.
urban_dilettante wrote:
Sat May 12, 2018 11:29 am
chaifetz10 wrote:
Fri May 11, 2018 8:15 am
Please keep in mind that the parking lots and garages are still owned by someone. It takes two to make a deal and the city can't force an owner to sell (short of Eminent Domain, which is not a good route to go down). As people have pointed out dozens of times on UrbanSTL, the owners of the parking garage are based out west (Phoenix, AZ?) and are happy with the annual parking revenue they bring in.
In a situation like this where a surface parking lot owned by an out-of-state company is preventing DT economic growth/rehabilitation I think eminent domain is appropriate so long as the owners are fairly compensated (and by fair I mean maybe a little above market value, not necessarily what they're asking for it). That's not to say that the law would find it appropriate, of course. For a local lot owner I'd be a little less inclined to use ED since they're presumably putting their money back into the local economy at least.
A property is still purchased at "market rate" when taken via eminent domain; as long as lot/garage owners have revenue numbers, the income approach is going to justify the high prices. I don't think this is a situation of anyone being "unwilling" to sell (or unwilling to sell at a realistic price), which is where eminent domain is most often used.
kinger wrote: ...as long as lot/garage owners have revenue numbers, the income approach is going to justify the high prices. I don't think this is a situation of anyone being "unwilling" to sell (or unwilling to sell at a realistic price)...
then the city needs to impose substantial taxes on parking lot/garage owners to reduce their profit margins. allowing out-of-state speculators to indefinitely run parking lots on prime real estate is detrimental to the city's economic health.
"then the city needs to impose substantial taxes on parking lot/garage owners to reduce their profit margins. allowing out-of-state speculators to indefinitely run parking lots on prime real estate is detrimental to the city's economic health."

Couldn't agree more. St. Louis needs a Land-value tax (or rather, to flip our current real estate formula to fall more heavily on land and less on improvements), to drive out absentee landlords and other squatters choking up high-value real estate. In theory, the developers that boss City Hall should like this idea too, although I suppose they're already grifting some pretty sweet deals with the current, unchecked TIF/Abatement regime...

Thanks,
SB in BH
^ & ^^

I'm at a loss. How does dictating higher taxes on empty lots in a downtown full of empty lots drive demand or a market for leaseable space? Owners and or capital markets still have to justify the millions its takes to build space that has to lease at the end of the day in a slow growth region.

Even more at a loss of absentee and squatters comment. I believe we are talking about land owners who actually have deed to the property, pay taxes and maintain their properties even if their not much to maintain. City truly want to tackle the issue of absentee owner and squatter it should be going after McKee and the failed development policies for north side that included giving a pass in actually having to maintaining his properties/keeping them from true squatters..
^ well, take this tower for example. clearly there's a market for high-end residential. if parking lots were less lucrative downtown we'd be getting a 33 story residential tower on a vacant lot instead of razing a beautiful, well-maintained historic warehouse that would likely also be converted into residential due to its proximity to Busch.

commercial and residential > parking lots.
If this ever happens I would hope it would be phased in starting with taxing surface parking before moving to parking garages. Our garages largely suck but while there is still acres upon acres of surface parking I don't mind the garages. They are still way more productive than surface parking and downtowns workforce still largely drives to work. Maybe when our downtown is significantly denser, out of empty land, and attracting a higher share of residential workers can we start targeting garages.
urban_dilettante wrote:
Mon May 14, 2018 8:31 pm
^ well, take this tower for example. clearly there's a market for high-end residential. if parking lots were less lucrative downtown we'd be getting a 33 story residential tower on a vacant lot instead of razing a beautiful, well-maintained historic warehouse that would likely also be converted into residential due to its proximity to Busch.
Yes, agree that their is some demand but it is also a very specific market in a very specific area of downtown with a number of properties within view of Busch stadium that didn't want to sell or have intentions in time to develop themselves. Not to mention, I would say it is easier to raise parking rates to cover taxes around Busch stadium and keep your sales prices high so I still have a tough time finding the logic in taxing a bunch of surface lots hoping that the equation will suddenly change in one or maybe two instances.

Will have to agree to disagree.
^I think this is closely related to the Urban Theory thread link to the study comparing the two blocks with similar value homes and different tax returns due to different lot sizes and whether or not this is fair. Essentially, the argument was that the small lots were subsidizing the large ones, since the assessed taxes per lot were similar, even though the street frontage was quite different. In this case a very reasonable argument could be made that buildings are subsidizing surface lots. Wait, you say. The two need one another. Parking minimums. Traffic. Et cetera, et cetera, & so forth. So . . . should we subsidize automotive transit? Or would some other mode of getting around more sense? Or some combination. Intermodal people. Piggyback. PoTC. (Person on Tram Car.) Greater than Car Load. Tomorrow today.

Same thread. Different title.
Dredger and co.,

Thanks for the replies. When you have some time, please consider reviewing the Land Value Tax link in my og post. There are a bunch of good discussion videos on the interwebs as well. Without getting too into the weeds of tax policy, an LVT makes perfect sense for a landlocked city like St. Louis.

In short, by taxing the value of the land, rather (or at a higher rate than) the improvements, the city incents the "highest use" of each parcel based on its location. To use our surface lot example, those parcels are valuable precisely because they're in the middle of the City's downtown, i.e. its central business, entertainment, and tourism district. Under the current regime, those incumbent surface lot operators are getting a sweet deal--they need not make much in the way of improvements, i.e. pay much in taxes, to keep the income flowing and are collecting what's sometimes called economic "rents," i.e. getting paid for doing nothing beyond owning the deed to a sweet piece of property and paying the bear minimum to keep it functional. Great, from their perspective, but the City could likely a find a developer with a higher, more productive use for that parcel (and not just from a tax collection perspective), whether that be structured parking, or a residential tower, or what have you. The point is that an LVT encourages ownership of the land by those who have the money and will to invest in improving it, and doesn't penalize them for doing so (by jacking up their tax bill pursuant to those improvements).

My "squatters" comment was meant to be inflammatory, but not necessarily directed at surface lot owners, who of course are just pursuing their own best interests in part according to our current tax policy. Under an LVT, they would have an economic decision to make--improve their property, perhaps by building structured parking, or sell to someone who will. To your point, the LVT would really mess with absentee landlords and speculators, which of course includes speculator par excellence, Mr. McKee.

Lastly, an LVT could at least partially reduce the need for TIFs/Abatements, etc. to entice developers, precisely because those improvements would be taxed at reduced (or even zero) rates compared to the land. This would also help stabilize city tax revenue as the value of the land doesn't change as much structures over time. It would also take economic development power out of the hand of the BoA, BEA, etc. (which is why an LVT is probably doomed from the start).

TL/DR: An LVT is a more efficient, effective, and I'd say fairer method of taxation for a city like St. Louis, and would be beneficial to most all St. Louisans, with the exception of some incumbent property owners, particularly absentee landlords and speculators.

Thanks,
SB
SB in BH wrote:
Tue May 15, 2018 11:38 am
Dredger and co.,

Thanks for the replies. When you have some time, please consider reviewing the Land Value Tax link in my og post. There are a bunch of good discussion videos on the interwebs as well. Without getting too into the weeds of tax policy, an LVT makes perfect sense for a landlocked city like St. Louis.

In short, by taxing the value of the land, rather (or at a higher rate than) the improvements, the city incents the "highest use" of each parcel based on its location. To use our surface lot example, those parcels are valuable precisely because they're in the middle of the City's downtown, i.e. its central business, entertainment, and tourism district. Under the current regime, those incumbent surface lot operators are getting a sweet deal--they need not make much in the way of improvements, i.e. pay much in taxes, to keep the income flowing and are collecting what's sometimes called economic "rents," i.e. getting paid for doing nothing beyond owning the deed to a sweet piece of property and paying the bear minimum to keep it functional. Great, from their perspective, but the City could likely a find a developer with a higher, more productive use for that parcel (and not just from a tax collection perspective), whether that be structured parking, or a residential tower, or what have you. The point is that an LVT encourages ownership of the land by those who have the money and will to invest in improving it, and doesn't penalize them for doing so (by jacking up their tax bill pursuant to those improvements).

My "squatters" comment was meant to be inflammatory, but not necessarily directed at surface lot owners, who of course are just pursuing their own best interests in part according to our current tax policy. Under an LVT, they would have an economic decision to make--improve their property, perhaps by building structured parking, or sell to someone who will. To your point, the LVT would really mess with absentee landlords and speculators, which of course includes speculator par excellence, Mr. McKee.

Lastly, an LVT could at least partially reduce the need for TIFs/Abatements, etc. to entice developers, precisely because those improvements would be taxed at reduced (or even zero) rates compared to the land. This would also help stabilize city tax revenue as the value of the land doesn't change as much structures over time. It would also take economic development power out of the hand of the BoA, BEA, etc. (which is why an LVT is probably doomed from the start).

TL/DR: An LVT is a more efficient, effective, and I'd say fairer method of taxation for a city like St. Louis, and would be beneficial to most all St. Louisans, with the exception of some incumbent property owners, particularly absentee landlords and speculators.

Thanks,
SB
Thank you. This is a much better definition/explanation of the concept i was alluding to. Also when i state above taxing a surface lot at 10x that of a improved site it was just a number pulled from nowhere. I would assume the city would select an appropriate tax rate to re-balance the tax burden so they aren't crippling the majority of property owners.

The proposed "impermeable surface area tax" for MSD would function similarly.

I think it is fair to say that surface lots are undesirable but i don't favor imminent domain except in extreme circumstances where a parcel owner is blocking a significant development by holding out for a very unreasonable price. The point is to create an economic incentives to drive desired development patterns and the LVT is an simple elegant way to do that.

If such a tax structure were introduced it could be phased in and the surface lot owners would likely look to whether the burden is still tolerable, or whether they should build, or sell. In the meantime they would probably continue to operate as surface lots.

The one thing i am not sure about is whether I would consider it fair for the city and non-profits to operate for profit parking infrastructure in direct competition with these operators who now carry a larger tax burden. I'm not crying for them but it does seem a little unfair.
Thanks, Enginerd.

Agree with you on eminent domain--really should be the last ditch effort in only the most dire circumstances. Like a non-local owner who won't accommodate a must-build public works project.

Also with you on implementation of the LVT. Would probably need to be budget neutral in the first few years, so our hypothetical surface lot operators and slumlords have time to adjust their business models accordingly. Getting the land valuation formulas set is another challenge, and we'd have to be careful to preserve the mix of single, multi-family, and general diversity of building structures and neighborhoods. Something like a grandfathering of or carve-out for, say, owner-occupied housing or locally-owned businesses in residential areas. Tax policy and zoning policy would need to be harmonized to some degree. And great point about NFPs--lots of prime city real estate is occupied by these, and I'm not convinced they all really "earn" that NFP status in terms of other public benefits they provide, as opposed to using it purely as a business strategy.

First I've heard of the MSD "non-permeable surface" tax, but am intrigued by it. Do you have a good source I can review?

Thanks,
SB in BH
Getting this topic a bit back on track to 300 South Broadway... do we have any firm update on financing or timeline? With STLCC moved out, I assume demolition shouldn't be too far away.
Sorry to keep this thread off the rails a bit but i wasn't sure where else to answer so...
SB in BH wrote: First I've heard of the MSD "non-permeable surface" tax, but am intrigued by it. Do you have a good source I can review?
https://nextstl.com/2015/03/msd-bond-issue/

"MSD had instituted a stormwater fee based on the amount of impervious land on a property. The Missouri Supreme Court declared it a tax that voter’s should have approved and threw it out. MSD had the right idea- the more runoff your land produces, the more you pay."

Not sure if there is any movement to get it on a ballot, i assume it would meet some stiff opposition from the big box crowd. I doubt there is any formalized text to review. There are a couple more articles on nextstl that reference it. Search MSD and stormwater and you'll get the gist.
dredger wrote:
Tue May 15, 2018 12:01 am
Yes, agree that their is some demand but it is also a very specific market in a very specific area of downtown with a number of properties within view of Busch stadium that didn't want to sell or have intentions in time to develop themselves.
and the whole point is to make it unprofitable to indefinitely run parking lots in parts of the city where there is demand for higher uses. if you're intention is to run a parking lot indefinitely, tough luck. if you just haven't been able to find the time to develop your surface parking after a decade or more, tough luck. i thought that was clear.

dredger wrote:
Tue May 15, 2018 12:01 am
Not to mention, I would say it is easier to raise parking rates to cover taxes around Busch stadium and keep your sales prices high so I still have a tough time finding the logic in taxing a bunch of surface lots hoping that the equation will suddenly change in one or maybe two instances.
the logic is that people won't pay $50 to park. they raise their rates, they lose business. they don't raise their rates, they don't make enough money to justify maintaining the space as a parking lot. hence, they are encouraged to develop the space into something more productive or sell it to someone who will. this isn't rocket science or uncharted territory. it's already done in other cites.