urbanSTL

Alex Ihnen wrote:^ Right, it's bizarre to me how Richmond Heights (and other muni's) continue to seek retail development. I'd have to run the numbers, but a healthy residential Hadley Heights would very likely produce more tax revenue. And that's not really the point. We continue to take entire neighborhoods and bulldoze them for shopping.

I think one can argue that a residential area has a larger and more fragmented tax burden, as well. In other words, huge strip malls are an efficient stream of tax revenue.

^ What do you mean by "efficient" in this case. If a residential neighborhood and community commercial development would yield more tax revenue, are you saying that municipalities simply prefer larger developments because they're easy to understand and sign off on?

Alex Ihnen wrote:^ Right, it's bizarre to me how Richmond Heights (and other muni's) continue to seek retail development. I'd have to run the numbers, but a healthy residential Hadley Heights would very likely produce more tax revenue. And that's not really the point. We continue to take entire neighborhoods and bulldoze them for shopping.

Don't hate the player, hate the game. Muni's like Richmond Heights survive on sales tax. Even if they're only going to keep 50% of it because of the TIF, that's still a whole lot more that what they would get if IKEA/Costco/Menards located somewhere else instead - that's the problem. Perhaps if the muni's in St. Louis County shared more of the sales tax pot, cities wouldn't be so willing to bulldoze neighborhoods and give away so many tax incentives just so a store doesn't choose some other city.

Not to be argumentative, but I imagine an IKEA will produce a lot more taxes then a "healthy" Hadley. We're talking about a 400,000 sq ft two-story bohemoth of a building (assessed at commercial rather than residential rates) that's going to do $100 million annually in sales versus the housing stock of Hadley Township, which even if fully occupied, is going to be limited in value because of the small size, out-dated design and mediocre school district. Even if the residents of a healthy Hadley spent all their money in Richmond Heights, it wouldn't come anywhere close to the amount of economic activity generated from people coming to RH to visit IKEA.

I actually think that an IKEA at this site is a planning nightmare, but with the current sales tax system, I think you'd have a tough time finding very many city officials who would vote no.

pat wrote:I've never been to an IKEA. What is the big deal with them? Is everyone going to go to Richmond Heights because there's an IKEA now? Its just a store right? Does Willy Wonka come out and take you around the store?

Where else can one buy Swedish meatballs, lingonberry jam, and inexpensive cosmopolitan furniture in St. Louis?

Alex Ihnen wrote:^ I'd like to see the $ comparison in development, Hadley Heights residential vs. two big box stores. What's also amazing is how the new I-64 has helped enable this development which will lead to more traffic, a congested I-64 and inevitably calls to widen it (or at least accusations that the $500M project didn't "fix" anything).

Here's some back of the napkin math:

IKEA:
$125 million project, assuming it gets appraised at 25% of cost ($31,250,000), times commercial assessment rate (32%), equals an equalized assessed value of $10,000,000.

$100 million annual sales, 2.5% in city sales taxes, equals $2.5 million, half goes to the TIF, half to the City.

Residential Hadley:
20 acres x 7 houses/acre equals 140 houses (assumes all vacant lots are filled in). Even if I assumed they could be appraised for an average of $200k (which is probably double actual appraisals - I think the existing houses are only like 1000 - 1200 sq ft each), we are only looking at an assessed value of $5,320,000 at the residential assessment rate (19%) or about half of IKEA.

Assuming each household has $50k in income to spend each year within the city, that's $7 million in sales or roughly $175k in sales taxes to the city (or approximately 14% of what they would get post-TIF from IKEA).

City officials know how to count tax dollars and they know which side wins this battle. The real question is that if individual cities did not have such a high motivation to maximize their own sales taxes, would RH be so welcoming to IKEA?

Alex Ihnen wrote:^ What do you mean by "efficient" in this case. If a residential neighborhood and community commercial development would yield more tax revenue, are you saying that municipalities simply prefer larger developments because they're easy to understand and sign off on?

I'm saying there is a larger tax burden (public expenditure) to service a residential area as opposed to a gigantic, big box commercial development (private expenditure). More police hours spent, more utility work, more trash and street service, more administration, etc. The munis care about tax revenue and the cost of maintaining the tax revenue stream.

There are several other factors at play here, don't get me wrong. I'm merely pointing out that a huge development like an Ikea presents a "more bang for your buck" situation for Richmond Heights.

Post by shadrach » Mon Mar 26, 2012 1:02 pm
BTW, I love the idea of Menards coming to the STL market. I've been to the one in Marion, wow, what a store!

Personally, I'd rather see it go somewhere out like Shiloh, Arnold, St. Peters or Lake St. Louis way.
Not sure why, seems to fit better out on the fringes.

Menard's is planning a location in St. Peters as well http://stpeters.patch.com/articles/mena ... pring-2013 and from what I understand that project will almost certainly move forward.

They are planning to expand pretty aggressively in St. Louis. The local expansion along with stores in places further afield like Cape Girardeau will probably also lead to a distribution center in the St. Louis area in the not to distant future as well.

Sorry for taking the thread off track.

Alex Ihnen wrote:^ So perhaps the question is what will Richmond Heights do with an empty Home Depot on Hanley? Or maybe, where will Home Depot seek to relocate? If they build near the Sunnen Metro Station would it count as TOD?

Maplewood/Sunnen would rather have cars for sale on their parking lots Plus they would like to think their little bit smarter in Maplewood, because why would anybody buy from home improvement store when you knock down all the houses to build the store

Would love to see Home Depot go or relocated or even go to an urban format if a new mixed used residential was built from the Metro parking garage to Hanley Station. Of course, The Metro parking garage should have been built with the possibility of nice a side street parallel to Hanley. Which would be a nice way to add sidewalks/walkability to the new mixed use residential area.

I would doubt Home Depot would close this location if Menard's opened in the surrounding area. Too good of a site and area. However, if they did close, I'm sure that site would be redeveloped or replaced with a new tenant very quickly.

As for the use of public incentives for this deal in Richmond Heights, if St. Louis County were one municipality, St. Louis County would still provide these public incentives to these developers/tenants to make the deal. 750,000 +/- s.f. of retail equals a lot of revenue, jobs, traffic, etc that is extremely valuable to any municipality. So I think Richmond Heights is doing the right thing.

Win for the developers/tenants (more money) and win for the municipalities (more money). Without the incentives, the numbers don't work for the developer/tenants and without the developers/tenants, no additional revenue for the municipalities.

^I think St. Louis County would make the deal for IKEA because it will bring a substantial amount of revenue into the region (like it or not, it's a destination location). I'm not sure the County would feel the same way about Menards because almost all of its sales would likely be at the expense of nearby existing stores.

I'm confused as to why so many on the forum think the addition of another home improvement store would somehow be the demise of the other two that are in the area? Home Depot and Lowe's consistently build stores next to each other. Having store diversity and store competition are sought after in the retail business. Building in a retail dead space is business suicide. Think force multiplication. You have a better draw of business when someone came to the shopping area for an ice cream at Cold Stone, saw your store, then decided to buy a circular saw. Or, in the case of multiple home improvement stores, your customer comparison shops and buys stuff at other stores as they're bouncing back and forth.

Its like saying more than clothing store in a mall is a bad idea.