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Urban Economic Development

August 31, 2006 Local Business, Politics/Policy, South City, Suburban Sprawl 14 Comments

Last night was my class in Urban Economic Development. We did a quick overview of what we will look at this semester but the professor did touch on TIFs and Eminent Domain. He also talked about job creation. He encouraged us to consider a career in economic development, indicating one of the key areas that has been lacking is a review of wether or not various incentives actually work. Do they bring in the dollars and jobs claimed?

Well, the St. Louis Business Journal had a story Monday on my favorite new development, Loughborough Commons, talking about economic development:

The $40 million Loughborough Commons retail development by The DESCO Group is expected to bring more money to St. Louis city coffers and create 300 permanent jobs when completed in 2007.

Clayton-based DESCO Group has worked with the city of St. Louis to create a retail center that is expected to generate more than $2 million in annual sales tax revenue, up from an approximate $425,000 generated by businesses located at the site prior to the redevelopment, according to DESCO, which is the real estate arm of Schnuck Markets.

“This is a very good example of a public-private partnership,” Sachtleben said. The company began discussing the redevelopment plans with the city in 2004 and will receive an assistance package of $14 million. The deal consists of an $11 million sales tax and real estate tax incentives package, and a $3 million community improvement district package, he said. The assistance will be generated by the new tax dollars from the development and will not be taken from the city’s taxing districts, he said. Sachtleben said the company has been thrilled with the cooperation of the city, noting that “without this kind of assistance, this kind of urban redevelopment could not happen.”

The development is expected to create 100 to 120 construction jobs during the building period and at least 300 permanent jobs.

The reporter clarifies the sales tax revenue increase; from $425,000 to “more than $2 million.” What is not clarified in the story is if this is before or after the tax incentives. What will the net increase in sales taxes be after the incentives and for how many years? Also, is this $2 million based on other stores being open besides the Schnuck’s and Lowe’s?

And we get to one of the favorites in economic development, job creation. “At least 300 permanent jobs.” Is that 300 in addition to the number from the old Schnuck’s on the site? Doubtful. Most likely it is a total of old jobs plus new. How is this figure calculated? How will we be able to measure the success of the project in say five years to determine if we need to continue with such incentives? We can look to past suburban style shopping center failures such as St. Louis Marketplace for answers. Loughborough Commons in less than 20 years will be the tired old stepchild of South City. Hopefully by then we can get the MetroLink expansion to come through on the adjacent tracks and take another crack at a true urban project that brings long-term economic stability, not just short term developer profits.

– Steve


Currently there are "14 comments" on this Article:

  1. Trevor Acorn says:

    Right on Steve.

    It seems like “Job Creation” is misconstrued with “Job Movement.”

    It’s like Walmart. A local Walmart doesn’t create jobs. It moves them. In fact, the total jobs as a Region probably drops given the less labor/product required in supercenters vs. mom and pop. Plus, with corporate profits streaming to stock holders elsewhere it’s doubtful that the savings due to efficiency will cause much stimulus in other economic spheres in the area.

  2. jeff says:

    Steve – do your professors read your blog? Do they know about it? Has it been brought up in class? I imagine the admissions people are well aware of it (via interviews, applications and essays, etc), but are the individual professors? I fthey are not, is that something you keep in your back pocket to not sound like a know-it-all? Just curious.

  3. Jason Toon says:

    Wait, you’re asking for actual proof that tax giveaways and other “public-private partnerships” make economic sense? Don’t you understand that you must never, ever, ever question that gospel?

  4. awb says:

    How much of the sales tax revenue increase comes from outside the City? Will fewer people shop at other City stores to drive to this place, possibly resulting in no net gain for the City? Factor in the public subsidies for these big boxes, and maybe we taxpayers just got soaped.

    But at least the corporations get free money and can call it a “public/private partnership” instead of corporate welfare. I guess that means public pays, private companies profit.

  5. Jim Zavist says:

    Ahh, the joys of living and dying by the sales tax. Eliminate the sales tax and you eliminate a lot of the rationale for all these developments.

    I’m still going to shop at the Lowe’s in Maplewood and the Home Depots on Kinshighway and Hanley. They happen to be closer than treking over to I-55 to give St. Louis my Lowes sales taxe pennies. Still, I’d rather see this Lowe’s in St. Lous City than in St. Louis County. If we city folks can “encourage” county folks to spend their sales taxes in the city, it just means a better life for us city folks . . .

  6. Maurice says:

    The maplewood stores might be closer to you, but they are not in the city. The city gets a percentage of the $ raised in the city, not in it’s neighboring cities.

    Will it create jobs? How can it not? Currently there is just the Schnucks. With the addition of a Lowes and smaller shops, there will be more people employed. Will these be new jobs or just movement? I would hazard to guess that some of these positions will be transfers (from old schnucks to new), some transfers (from home depot to lowes), and some new hires.

    Will it increase sales dollars in the city or just move them? For me it will move them because I will travel to that Lowes rather than the one in Kirkwood or that wretched home depot on Kings.

    I could see people coming from down 55 (county) into the city rather than head further south to lindberg.

    Pedestrian friendly? Not really. But it is more for autos, to the bane of foot pushers. You see people carrying a few groceries home, but not many will carry a gallon of milk more than a block or two and I have never seen anyone carry a sheet of plywood home.

  7. Craig says:

    That’s some really shoddy reporting that you describe, Steve. The reporter and editor(s) should feel awfully lazy.

    Almost as lazy as “Trevor Acorn” who made the statement that Wal-Mart doesn’t make jobs, just moves them. Yet Trevor doesn’t feel a need to show any empirical evidence of this.

  8. Adam says:

    true people can’t carry every item that might be purchased at a hardware store, but you don’t need a car to transport a paint brush or even (gasp) a gallon of paint or a million other small HW items a few block or even (gasp) a mile, unless you have a disability of course. same goes for groceries.

    …not many will carry a gallon of milk more than a block or two.

    have you taken a poll? if that’s true then no wonder the US has such a problem with obesity.

    also, there are these amazing inventions called carts that i see people wheeling around on the street from time to time…oh, but those would require sidewalks.

    Trevor Acom,

    Craig is right. do you have any evidence?


    Do you have any evidence that Trevor Acom is wrong?

  9. Craig says:

    Adam, if you read the studies you’ll see that some find small growth in retail jobs accompanied by a small loss in wholesale jobs while another finds retail job growth around 2% without the wholesale loss. So the jury is out on the effect on jobs. This is why it’s irresponsible and lazy for a person like Acorn to jump to conclusions in order to smear a company that has undoubtedly caused millions of dollars worth of savings to the American consumer.

  10. Adam says:


    which studies are you talking about? i’d like to read them.

    as far as the “millions of dollars worth of savings to the American consumer,” here’s an interesting article about (who else) wal-mart:


  11. Adam says:

    from the above article:

    Wal-Mart has also lulled shoppers into ignoring the difference between the price of something and the cost. Its unending focus on price underscores something that Americans are only starting to realize about globalization: Ever-cheaper prices have consequences. Says Steve Dobbins, president of thread maker Carolina Mills: “We want clean air, clear water, good living conditions, the best health care in the world–yet we aren’t willing to pay for anything manufactured under those restrictions.”


  12. Craig says:

    For argument’s sake, I’ll agree that a direct offshoot of Wal-Mart’s low prices is increased pollution throughout the globe and exploitation of poorer countries than the USA.

    Isn’t it silly for the excerpt above to say that Wal-Mart “has also lulled shoppers into ignoring the difference between the price of something and the cost”?

    That is basically saying that Wal-Mart has some sort of pervasive power over the psychology of the American public–like a psychotropic drug.

    I wouldn’t blame Wal-Mart if I thought its customers were making a poor decision by shopping there.

  13. Adam says:

    sorry, i just don’t buy the “all the responsibility should lie with the consumer” argument. companies like wal-mart are run by people who make decisions to exploit people and resources in order to increase profits, and those people are just as responsible as the consumers. and no doubt wal-mart has spent a lot of money on marketing research to figure out the most effective ways to “lull” shoppers.

  14. Adam says:

    also, do you have references for those studies you mentioned earlier?


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