Even with public subsidies covering almost 30 percent of the cost of Ballpark Village’s $220 million second phase, the city and school district should still see a net benefit, city officials said Wednesday.
But the incentives sought by the St. Louis Cardinals and their development partner, Cordish Cos., were high enough that the proposal didn’t win a glowing review from number crunchers in the city’s economic development office.
That arm of the city, the St. Louis Development Corporation, did endorse the latest Ballpark Village proposal. Yet based on its analysis of public help and new taxes generated, SLDC financial analyst Jonathan Ferry told an aldermanic committee Wednesday that the project was “right at the cusp” of what the city considers an adequate score: 24 out of 40 possible points.
The analysis is part of a new push from City Hall to better quantify and scrutinize the tax breaks handed out to projects large and small across the city. Aldermen spent much of Wednesday morning studying the complex financing package submitted by the Cardinals and Cordish, questioning the amount of new revenue the city could expect and how much business would be shifted from current establishments downtown.
A vote to advance the agreement with the Cardinals to the full board of aldermen is expected later this year. There, the Cardinals and Cordish need to win approval to tap roughly $65 million in public incentives over the next two decades.
Cardinals President Bill DeWitt III made the team’s case to the committee, describing plans for a new office building, a retail center and a 29-story, 300-apartment high rise next to the complex of bars and restaurants that make up Ballpark Village’s first phase. That portion of the project, a city consultant said, is “running ahead of projections.”
When the new buildings open, projected in early 2019, they would line Clark Avenue just north of Busch Stadium and make it “one of the great adjacent streets to a ballpark anywhere in the country,” DeWitt said.
DeWitt defended the request for public assistance, saying he got “ticked off” when he heard some pundits criticize the team’s request for development subsidies. “Not all of these deals are the same,” DeWitt said.
SLDC Executive Director Otis Williams stressed that the assumptions presented Wednesday were designed to be conservative in determining whether the city would earn enough new tax dollars to justify the public help.
Some of those “worst-case” scenarios SLDC presented to aldermen assumed that 80 percent of restaurant sales at the new development would come from spending that would have gone to other establishments. About 37 percent of payroll taxes generated at the project would already be paid by workers in the city, and 15 percent of retail sales wouldn’t be new.
The restaurant numbers, especially, were a reminder of the complaints among downtown restaurant and bar owners after Ballpark Village’s first phase opened in 2014. A handful of mainstays closed, and some worried the big, shiny new venue next to the ballpark might be partly to blame.
“The last thing we want to do is subsidize putting existing businesses out of business,” Alderman Antonio French said.
Others worried that with a significant amount of vacant office space downtown, new high-end offices — which haven’t been built since Metropolitan Square went up in 1989 — could poach tenants. Vacancy is falling downtown but still approaches 25 percent compared with about 11 percent in the suburbs, according to a recent report from the commercial real estate firm CBRE.
That concern prompted the city to require a provision showing that any tenants in the offices are bringing new jobs or were at risk of leaving the city. But some aldermen questioned the practicality of enforcing that provision, and the city acknowledged that the mechanism for doing so still had to be fleshed out.
“It’s not just you telling me that you’re moving,” Williams said. “We have to have sufficient proof.”
Yet even accounting for the effect on current businesses, the city expects annual new revenue of about $410,000 a year through 2027. Schools are projected to get $150,000 annually. That revenue is despite the tax incentives, so it should increase significantly after the incentives expire about 2037.
“All the scenarios that we’re running show a benefit to the city,” Williams said.
After the hearing, DeWitt said he might disagree with some of the numbers the city uses but understood why it was being done.
“The city’s rightfully being conservative and not overly subsidizing something that doesn’t need it,” DeWitt said.
The Cardinals, however, “feel very bullish on the positive effects to the city.”
Jacob Barker • 314-340-8291
@jacobbarker on Twitter
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