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City backs new tax at Lindell Market Place
(by Rebecca S. Rivas - March 05, 2008)
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Those who shop at the Schnucks on Lindell Boulevard or other stores in Lindell Market Place can expect to pay more sales tax soon.
On Feb. 26, the Board of Aldermen’s Ways and Means Committee approved a petition to establish Lindell Market Place as a community-improvement district, which allows business owners to raise money for area improvements by taxing goods.
The property owner, known as Lindell Market Place L.P., could tax consumers up to 1 percent on items bought there. The property is managed by THF Realty.
For those who spend $100 a week on groceries, an extra $1 — or $52 a year — could go toward the center’s improvements. The tax does not apply to Jack in the Box, which recently underwent a major renovation.
The sales-tax rate in the city of St. Louis is already the region’s highest at 8.241 percent. If owners decide to tax the maximum 1 percent, it would bump up sales tax to close to 10 percent in the shopping center.
Eighteenth Ward Alderman Terry Kennedy said the $2.5 million in extra tax revenue that the center could generate each year would go toward giving the shopping center a facelift. By making the lighting more welcoming, putting up awnings and improving the parking lot, the shopping center could have more of an urban feel, rather than a suburban strip-mall look, he said.
“We want to do some significant improvements and the community-improvement district is a great tool for that,” Kennedy said.
However, community-improvement districts typically involve several property owners, not just one, said John Sandberg, a partner at the Sandberg, Phoenix and von Gontard law firm downtown and a Central West End resident.
Sandberg was a board member for the Downtown St. Louis Community Improvement District, where multiple business owners make decisions on what happens with the revenue generated from the CID tax.
“If it’s only one owner, he can do whatever he wants,” Sandberg said. “If someone suggested that to me, I would have to ask why they are doing it. It wouldn’t make sense.”
The CID Act, a state law passed in 1998, empowers businesses and citizens to offer specific services that their local government cannot offer citywide, he said. As a business owner in downtown St. Louis since 1979, Sandberg said that the downtown CID has helped improve cleanliness, security and the overall look of the area.
“It’s hard to get a neighborhood together, but if you can do it, there’s great value in it,” Sandberg said.
Another strategy for targeted local improvements is the creation of special business districts, which work a little differently and are less flexible than CIDs. The Central West End has seven special business districts. They collect their money through property taxes, and the amount of money that special business districts generate is tied to property-tax assessments. If revenue increases to more than 5 percent, a district must reduce the tax rate accordingly.
Dan Krasnoff, executive director of the Central West End Midtown Development, said in some rare cases, businesses establish CIDs to subsidize redevelopment, as was the case with Park East Lofts on Euclid Avenue.
But subsidizing development projects is not the traditional purpose of community-improvement districts, he said. More commonly, CIDs, such as the one on South Grand Avenue, set up cleaning, security or other services.
Krasnoff said the Lindell shopping center has had security problems in the past, and improvements with lighting could help freshen up its current 1980s look, as well as increase security.
Although the Lindell shopping center’s rental tenants don’t have a direct say in how the CID revenue is used, they still have some power, Krasnoff said. “In the case of Lindell Market Place, it’s a shopping center,” he said. “If the owner makes decisions that the businesses don’t like, they’ll leave.”
According to the CID law, the petition for a CID must include a five-year capital and strategic plan that outlines the purpose of the district. The plan that was submitted to the Board of Aldermen listed vague goals, including “collect and administer district sales tax” and “provide ongoing maintenance and security functions within the district.”
The petition did not include a timeline for when the proposed improvements would be made or how much they would cost.
Michael Neary, a property manager for THF Realty, which manages the rental properties at Lindell Market Place, said the owners did not submit a five-year plan because they wanted to wait until after the petition was approved. Neary said details on a plan or estimated costs are not yet available.
After the aldermen voted almost unanimously to approve two CID petitions at a committee meeting, Alderman Jeffrey Boyd walked out of the board room and said to his colleagues, “I wonder if we keep giving these away,” he said, referring to the CIDs, “are we just taxing the public?”
In a phone interview, he said that the board has approved about 10 petitions for CIDs in the past six months. There are 54 CIDs established throughout the city and two more pending, according to the collector of revenue’s office.
Boyd said the aldermen don’t have time to thoroughly review each petition.
“You go on the sense that the alderman has done the checks and balances,” he said. “It would be too cumbersome to comb through every bill. That’s the comptroller’s and mayor’s offices responsibilities.”However, he said he questions the proliferation of special taxing districts including CIDs, transportation-development districts and tax-increment-financing districts.
“CIDs put extra tax burden on the consumers,” Boyd said, “and I wonder at some point, how much tax can the people handle?”
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