Historical June 1988 report or notice. Original dates, prices and contacts describe the source period; current availability has not been established.
The previous letters on public financial assistance to the proposed 57xx McPherson redevelopment by Bob Dowgwillo in April and Dan McGuire in May defined the extreme positions on continuing the incentives for residential rehabilitation in Skinker-Debaliviere (S-D).
As a resident who remembers the steering, redlining, and conventional wisdom in 1969-73 that “this neighborhood will be razed in five years,” perhaps the issues are not so black and white.
Two initial observations: There seem to be no guidelines on when incentives are appropriate; and the issues seem similar to those of spot zoning.
For those who bought homes when it was risky but cheap, without tax or city incentives, it’s easy to feel that newcomers should have to buy on the same basis of commitment to city living, though they pay more for assuming less risk.
City incentives contain tax breaks which allow people to contribute less to infrastructure, police protection, education, etc. from which all benefit, to subsidize private investment from which few will benefit.
The federal real estate investment incentives reduced by tax reform, prompted investments of borrowed money in new (speculative office buildings) and rehabbed property where there was little operating profit potential, but in- . stead gave investors paper loss deductions from taxable income each year and cash profit from the sale-of the appreciated property as soon as permitted (before the second rate rehabilitation fell apart).
On the other hand, Dan is in a no-win situation. I work in economic development where the competitive bidding with incentive packages, known as gimmees, for new or expanded factory investment is unbelievable.
But when the choice is jobs or no jobs, what are political leaders or employees asked for concessions to do?
It ain’t pretty.
Most neighborhood residents don’t have the money to rehabilitate whole blocks of multifamily housing. Nor have enough of us systematically invested in single buildings on the remaining deteriorated blocks eliminating the need for developers. Instead, by investing in IRA’s and the like rather than rental housing, we are dependent on developers chasing the bottom line: City rehab profits have to compete with those from ‘sure things’ like St. Charles County or Phoenix strip shopping centers/subdivisions or Houston office buildings, and equal profits are allegedly dependent on gimmees. Should buildings be left neglected (Nina Place) for future use as crack houses because the proposed housing is expensive or requires gimmees? Do incentives allow a developer to: 1. make a profit in the first place (their claim), 2. match those to be made elsewhere, or 3. make extreme profits and still sell overpriced housing? Maybe some day competition for redevelopment sites will make that clearer.
However, the claim that “had the City not provided governmental assistance in the form of tax abatements, eminent domain, etc., the S-D neighborhood would today be a wasteland” is malarkey. S-D and the CWE, with much owner-occupied housing, were well on the way to recovery and stability by 1976 when Pantheon, to its credit, had the foresight to see that rehabbing the blocks of multi-family housing between the two would be profitable and had its Waterman-Pershing redevelopment plan approved by the city. Whether DeBaliviere Place would be a wasteland without incentives is an argument I’ll leave to others; however, even with them, it would have failed without the anchors of S-D and CWE at either end.
And though its added to S-D’s property values, security, and attractiveness, we would hardly be a wasteland without it. Unfortunately big developers and political figures provide good media copy and their ‘facts’ are what we read/hear; so people forget the successful efforts of hundreds of residents who put their money, time, and sweat where their ideals were. Nor do Bearden and Rosedale-Washington support the argument for gimmees. Bearden, Inc. failed because it evicted good tenants (eliminating cash flow) from buildings long before it had enough money from investors looking for tax write-offs and capital gains for rehabbing. Years with too many vacant unrehabbed buildings left no income, just new investors and loans, to cover high overhead.
As for the twelve buildings at Rosedale and Washington, City Equity seems to have assumed that in order to double rents and get full occupancy, just add amenities and make apartments look pretty; ignoring that affluent renters expect adjacent housing to look just as pretty.
This lesson is not lost on the 57xx McPherson effort, the $4000 for exterior repairs is not for the benefit of current owners and as property values skyrocket, property taxes will ultimately force the lower income homeowners to sell. S-D has some rents in the $500’s but full occupancy took longer than projects with little cost or quality control and high carrying costs need.
But perhaps I am lacking crucial facts. I hope Dan will ask the relevant city agency to put together information on developments granted incentives in S-D (DeBaliviere, Delmar, city limits, Forest Park Expressway) from 1968 to the present?
When was: each granted; the first new or rehabilitated unit finished; how many units completed to date; and how many housing units are currently in S-D? Maybe a comprehensive set of facts published in the next issue of The Times will lower the rhetoric level. Questions: Are city financial incentives still needed in most parts of a neighborhood where many homes and multi-families sell for over $100,000 and if so, needed in as great amounts as developers ask for (10 rather than 25 year abatements)? Should an owner-occupied two family in Rosedale be called a development and awarded a 25-year tax abatement this year after the rehabilitation was substantially completed? Two-thirds of the increased taxes abated would have gone to the schools, the city recovers its one-third from the earning taxes of the new residents who see two sets of students (sometimes theirs) attend K-12 before they pay their fair share of the costs.
A way to answer these questions might be to develop guidelines (incentive zoning) either just for this neighborhood or maybe city-wide, since the same controversy has surfaced over downtown developments in recent years.
Dan Schesch 60xx McPherson
Originally published in The Times of Skinker-DeBaliviere, June 1988.
Read this article in the original newspaper issue.
Original source: SD_Times1988_06.pdf, printed page(s) 6; PDF page(s) 6.
