Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Tax Break for Luxury Apartments Defies Common Sense

Newspaper article St Louis Post-Dispatch (MO)

Nicklaus: Tax Break for Luxury Apartments Defies Common Sense

Article excerpt

Downtown Clayton has some of the area's highest real-estate values. It's usually described as upscale, prosperous and bustling.

It's also blighted. At least that's the official label that Clayton aldermen have applied to one corner parcel just a block from leafy Shaw Park. The low-rise office buildings on the site look just fine; they're certainly not in an obvious state of disrepair.

Under Missouri law, though, the word "blighted" can mean whatever local officials want it to mean. Once they declare a property blighted, they can shower its developer with subsidies.

On the property at Meramec and Bonhomme avenues, developer GTE Properties is building a $72 million, 26-story luxury apartment building. That's not an unusual proposal for downtown Clayton, where several upscale residential buildings have been built without taxpayer help.

This one, called The Crossing, will benefit from a 50 percent tax abatement for 20 years. Clayton aldermen approved the tax break last month over the objections of some local residents and school district officials, who say they'll miss out on $4 million in tax revenue.

City officials defend their decision by saying that, even after the subsidy, the project will create more tax revenue than the existing buildings produce. They also say it will increase transit ridership.

Both arguments are flawed. A high-rise near a MetroLink station should attract a few more riders, but most luxury apartment dwellers won't be daily rail commuters.

When it thinks about future tax revenue, the city is invoking the wrong comparison. The choice isn't between development and no development; it's between the subsidized project and an unsubsidized one.

Without the tax break, the developers might propose a building that's smaller or less fancy, or they might have to settle for a slimmer profit. …

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