I really don’t have a huge interest in shopping at any outlet stores. I’m an L.L. Bean and J.C. Penney.com shopper. Maybe once every couple of years I buy something at the Men’s Wearhouse—I’m not an outlet guy.
But I enjoyed over St. Louis Premium Outlets last week, and whether the city will provide a Community Improvement District (CID) sales tax to developers.
The hearing began with the city providing an overview. It was more of a lecture on how the CID sales tax would not cost the city anything, and it reminded me of Beethoven’s Ninth Symphony—it had many repeating themes.
Also, a handful of people were there with protest signs over the potential sales tax hike.
Descriptions about how the CID wasn’t going to use any city funds nor cost the city anything was repeated all night long from the dais. The one percent additional sales tax would raise the sales tax at the outlet mall to 9.3 percent. It was projected to last 20 years and raise $30 million.
Mayor Bruce Geiger described how a CID is nothing like a TIF (Tax Increment Financing). A TIF gives developers a pass on paying real estate taxes for a period of time. Walmart developers are looking for a TIF in Ellisville.
The mayor said the outlet mall would produce much needed sales and property taxes. Of course it would also do that if it was built without a CID tax.
Staff and elected officials repeatedly said a CID sales tax only impacts the people who choose to shop at the outlet mall. No staff member, elected official or member of a development team ever reminded residents that a CID sales tax helps pay for the cost of the project.
Nothing was said about the CID impact on existing malls and merchants. It’s not a level playing field for competitors, if one guy has a $30 million tax advantage.
Now the city told my editor that any business may apply for a CID under the law, and provided a list of what features are covered under it and what isn’t.
Although, I doubt a strip mall with a 7-Eleven will be getting a CID anytime soon.
Council member Randy Logan pointed out the average shopper would spend $200 at an outlet mall, and just $2 in new taxes. Actually, $200 in purchases would cost $18.60 in total taxes. Two dollars is the additional tax.
Later, Steve Dworkin, a member of the Premium Outlets development team, said it was anticipated that the mall would attract four million shoppers a year.
I’m sorry, but if the average shopper will spend $200 generating $2 in CID taxes and if Dworkin is correct the mall will draw four million shoppers a year, that should add up to $8 million a year. Thirty million dollars in development costs would be paid off in fewer than four years and, not 20 years.
So if the loan money is made back in four years, let’s end it there. City staff told my editor there is no penalty for early payoff.
The simple folk
As a dozen or so residents came forward to complain about the CID tax, two council members tried to engage them.
Councilmember Matt Segal told the crowd how he recently went to an outlet store. He said he bought $100 worth of clothes for $40, so he certainly would not mind paying 40 cents extra in sales tax to save $60.
This brought out a shout from the rear of the room of, “Are you on their payroll?”
After two more speakers, Councilman Derek Grier said: “Ninety percent of the people are coming from out of town. That will have a synergistic effect.”
It all just reminded me of the musical Camelot, with the council trying to teach a group of villagers to fall in line with the King—and the song “What do the Simple Folk Do?”
Waiting for this public hearing to end during the city council meeting. "Synergistic" would be a good word for a spelling bee.
Out of Towners?
There was a group of about 10 younger adults, many holding anti-CID signs. They seemed to be organized. There was some question whether very many of this group actually lived in Chesterfield.
I obtained copies of speaker cards that had names and addresses. I checked the names and addresses against county personal property tax records of registered cars.
I was suspicious about three in particular. The results:
- One clearly was from Chesterfield.
- The second one showed an address in Jennings, but the Chesterfield address he provided had his last name, so he likely once lived in Chesterfield
- A third speaker, who refused to give his address, showed just one car registered under his name, and it was to an address in Spanish Lake.
But heck, if you are talking sales tax increase, anyone is a possible taxpayer, regardless of where they live.
Here are some of the points made by residents speaking against the CID:
- “Chesterfield is one of the wealthiest cities in the country. Why are we giving developers special sales taxes?” asked Chesterfield attorney Walter Floyd.
- “Five or six years ago there was a big push for us to pass a sales tax for more green space. We passed that tax. Now we are going to give up green space,” said Laura Guidry.
- “Fast forward a couple of years and we laid off 18 employees including eight police officers and now you say we should build this thing…we are going to need more fire and police. High-end retail attracts high-end thieves,” said Laura Guidry.
There was debate over how many police officers were laid off among council members and Guidry. After the meeting, Police Chief Ray Johnson told me eight police positions were eliminated and six police officers were laid off.
- “Why the hell are you bothering to hold this meeting? You seem to have your minds made up,” said Larry Kuhlman.
City attorney Rob Heggie told Kuhlman: “You can’t say this council was biased.” Heggie might be right, but from watching a number of council members lecture residents, you might think some minds were already made up.
- “I live here because of the parks and green spaces. If these folks are going to be part of our community they need to take the risks,” said Jan Shelly. “You are telling them ‘Large corporations, you are welcome here, and you don’t have to take the (financial) risks.’”
My favorite speaker was Emily Doniff.
- “As a young girl, I remember shopping at Northland Center. It is no more. As a young bride, I shopped at Jamestown Mall. It is no more. As a young mother I shopped at Northwest Plaza. It is no more. As a mature woman I shopped at Crestwood Plaza. It is no more. I don’t want to see more concrete that will be empty in 30 years.”
Cards on the table
Dworkin, with Premium Outlets, flew in from New Jersey to speak.
“Part of the reason we were attracted to Chesterfield was we knew the CID was in the planning process,” said Dworkin. “The next closest outlet mall of this quality is in Chicago,” he added.
If you read between those lines, this was a threat. No CID—No mall.
When I was an elected official, I did not like threats.
Check the Calendar
Dean Wolfe, the wealthy Clayton developer behind the project, made a statement that had me scratching my head.
- “We started the process of this in 1986, and have been before the council. A critical point of this process is to create a gateway to Chesterfield,” Wolfe said.
What? In 1986 Chesterfield Valley flooded on a regular basis. In 1986, there was no City of Chesterfield or a City Council. The city incorporated in 1989.
Save Rockwood Schools
Toward the end of the hearing, developers started talking a new theme: You need a CID tax to have these stores, and the Rockwood School District needs more revenue, and these outlets will generate that revenue.
So now, the CID needs to be passed or school children will suffer. That’s ridiculous. The recent failure of a bond issue for Rockwood School was more because voters felt the district was wasting money and not a case of the district going broke.
At the end of the night 12 people spoke in opposition to giving a CID sales tax. Eight spoke in favor. Four of that eight were connected to the developers.
Chesterfield City Councilman Bob Nation interrupted the lovefest early in the hearing when he said he had a reservation about a CID being used for the project. In the regular meeting, only Councilman Barry Flachsbart voted against the first reading of the bill.
My prediction: The CID will pass at the next meeting with at least a 6-to-2 vote.