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Sunday Poll: After Millions in Tax Incentives, Has IKEA Been A Net Positive or Net Negative?

October 23, 2016 Big Box, Central West End, Featured, Sunday Poll 16 Comments
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It has now been over a year since IKEA opened for business and it appears to be boosting tax receipts:

The Swedish retailer’s 63110 ZIP code saw a 40 percent spike in state sales tax revenue from October 2015 through June 2016 compared with the prior-year period, according to the latest available data from the Missouri Department of Revenue.

The period with Ikea generated $277 million in state sales tax revenue versus $197 million in the prior-year period without Ikea. (St. Louis Business Journal)

An increase of $80 million, though not all can be attributed to IKEA. It’s unclear now much additional revenue went to the City of St. Louis. But it didn’t come cheap, from February 2014:

Ikea’s plans to open a St. Louis store next year moved ahead Friday when a city panel voted to back a $32 million tax incentive for the project.

Members of the city’s Tax Increment Financing Commission voted unanimously to approve the subsidy. The vote also backed a separate $5.1 million subsidy for a residential building planned for an area just west of the Ikea site.

The Swedish furniture retailer has yet to specify the cost of its St. Louis store, planned for the southwest corner of Forest Park and Vandeventer avenues, but a spokesman said it will exceed $100 million.

The TIF projects are part of a $167.7 million TIF city officials approved for the Cortex bioscience district in 2012. The district is split into 10 TIF areas that must be activated individually as the area develops. (Post-Dispatch)

The store employees hundreds, each paying the 1% earnings tax.

The poll will be open until 8pm.

— Steve Patterson

 

Currently there are "16 comments" on this Article:

  1. rgbose says:

    Note that’s taxable sales and not tax revenue. Are there TIF reports somewhere that reveal if the IKEA met the predicted $100M in taxable sales?

     
  2. guest says:

    It’s been a positive if for nothing more than the good p.r. In ten or twenty years, when the write the story of the comeback of STL, the Central Corridor will be the highlight, and IKEA is one of the highlights of the Central Corridor.

     
  3. gmichaud says:

    At least on my computer it shows the poll closed with zero votes on any line

     
  4. Greg says:

    It’s impossible to call it a bad thing… The TIF is revenue we will not receive vs. money we paid out up front — and we probably wouldn’t have gotten the IKEA without it. It is generating some new taxes and definitely promotes buzz about the City and the Cortex area in specific.

     
  5. JZ71 says:

    If nothing else, it attracts shoppers to St. Louis . . .

     
  6. Timm says:

    Only on this site would someone vote a “net negative” for an area with BILLIONS in recent/current or planned development. Question though….was IKEA award a NEW TIF or allocated part of the over all TIF previously awarded the CORTEX district?

     
    • JZ71 says:

      It’s more of a bigger question – should EVERY new development expect to receive significant tax incentives from the government? Incentives being paid by all the existing taxpayers, who’ve been paying taxes, for years, in the city? Because taxes not paid have to be made up from other sources: https://nextstl.com/2016/05/st-louis-city-economic-incentives-report-tallies-totals-recommends-changes/

       
      • gmichaud says:

        I agree, especially tax abatement schemes harm those who can least afford it as well as services. It is estimated that St. Louis granted around 30 million in tax abatements last year (and the year before etc). This comes out to around 100 bucks for every man, woman and child in St. Louis. And while a reduction of services is included, with the raising of property tax with the school bond issue last year it is clear, it is money coming out of property owners pockets to service the wealthy. It is absolutely grotesque that you have elderly homeowners, the working poor and middle class homeowners taking, what I estimate to be around 100 to 150 bucks per 100,000 valuation and giving it directly to wealthy insiders. It is ridiculous, tax the poor to give to the rich. (Note I can only do a rough estimate, the city itself cannot supply accurate cost figures, another problem with tax abatements)

         
  7. gmichaud says:

    The problem I have, among others, is that St. Louis does not demand that these projects are pedestrian and transit friendly. How damn hard would it have been to push the building up to the street? The main entrance design would have been a bit tricky, but that design has been accomplished many times. The parking experience would have been the exact same as it is now, but the pedestrian would be accommodated. This is especially important given the rest of the Cortex development is at least trying to include pedestrians and transit in the design. It’s bad enough giving tax money away, but when it is not used to further the interests of the citizens it makes for poor leadership and a poor, low quality living environment. I think Otis Williams and the Board of Aldermen are responsible.

     
    • Timm says:

      How would one walk or take mass transit to a furniture store and carry a sofa, dresser etc home? Does every project no matter what it is demand “pedestrian friendly”?

       
      • I’ve been their many times in the last year as a pedestrian each time. I made a purchase each time, not one a sofa.

         
      • gmichaud says:

        How do they do it in New York, London or Helsinki, all cities with a heavy pedestrian and transit footprint? They use movers. Hell even our local St Vincent De Paul used clothing and furniture store off of South Kingshighway has on call independent driver available to move couches you can’t move in a car as well as other items.
        As for as the question should every project be “pedestrian friendly”, the answer is yes, yes, yes.
        How in the hell we are designing for the comfort of cars and not human beings is beyond me.
        It cost no more to site a project to serve pedestrians along with auto’s. Ikea should have been sited along the street. Even if the configuration of the store demanded the entrance face the parking lot and a shared entrance was not possible it would still be a win for human beings. Forget transit, this is about the human being
        Instead today, we have a situation where the pedestrian has the same walk to the building as someone who drove their car into the parking lot and tried to find the furthest point away from the entrance to park.
        You should know a city such as Helsinki has street after street, block after block of pedestrian friendly environments. In St. Louis human environments are hacked apart in favor of what is best for the automobile, with zero consideration for the pedestrian.
        So yes, from my experience and study successful and prosperous cities are those that put the human being foremost, or at least equal, to all design considerations with the auto.
        The Ikea site is a total failure in this regard and does not deserve millions of dollars. The failure of Otis Williams and the Board of Alderman to demand more from the Ikea project is sloppy leadership.
        There is a far different type of leadership in successful cities that actively include citizens as part of the process.
        St. Louis has a closed process that serves insiders. It’s nice and cozy that way and why they don’t want to end their gravy train. Hence any democratic voice of the citizen is not needed nor desired as a check and balance. The hilarious result is aldermanic courtesy where the fucking aldermen and women sign off any piece of shit that is presented by their fellow aldermen and women.
        Ikea is a failure in city building even if it may be a commercial success.

         
          • gmichaud says:

            Well actually Helsinki prohibits highrises and box stores in the core of Helsinki and limits them to only certain areas around Helsinki. I know I spent a little time in suburbs a few years back when my brother in law was building a house and I was surprised to see some of what I considered poor practices that are used in St. Louis. The location you have cited is far outside the core of Helsinki and would be more comparable to St. Charles County.
            On the other hand, poor practices are limited and generally I felt the urban planning is more rigorous everywhere, especially compared to St. Louis. As a result there is excellent transit in Helsinki, including the suburbs and all over Finland for that matter.
            Go to a comparable location in Helsinki to the St. Louis Ikea site and you will find a much different situation. Just about any open areas are public squares, markets or other public spaces, you will find little or no parking interfering with the pedestrian experience, which is the point I was making.
            And n,o even the Helsinki suburbs are nothing like St Louis, there are simply not the parking, auto wastelands that exist in St Louis.
            Here is a link to Helsinki City Planning in English. http://www.hel.fi/www/ksv/en
            You can link to publications on their front page and find information about what they are doing,all in English For instance, contrast the Helsinki city planning review 2016 to the nothing burger of St Louis.
            Or there is a publication on how they have decided that boulevards have been allowed to become too auto orientated and what steps they are taking to moderate and change those boulevards into a more human friendly orientation.
            Or compare their 2050 vision with the East West Gateway garbage publication Connected 2045.
            Helsinki, by the way, although around the same size metro area as St. Louis right now is actively planning for population increases of around 10,000 per year.
            Also please note if you look at the city planning review 2016 look at page 39 which outlines how the public is involved in multiple steps in the urban planning process. Public participation is another nothing burger in St. Louis.
            You also might also want to check out the numerous transit expansions, in the city planning review 2016, most are rail.
            But yeah you found a parking lot in Helsinki, good for you. And by the way if St. Louis has a central website that makes a similar effort in keeping the public informed, please point it out to me, I haven’t seen it.

             
          • JZ71 says:

            I agree that Helsinki has better planning practices and processes. My point was that any city that has urban areas / neighborhoods / districts that were laid out / built prior to the 1950’s will be inherently more walkable than areas in the same city that were laid out between the 1950’s and now. I could be wrong, but I think that Helsinki was spared many of the ravages of WW II, aka involuntary urban renewal, so a larger portion of the old city remains intact, going back centuries.

            On this continent, you can see marked differences between our country and Canada and Mexico, where urban renewal took out big chunks of our older, walkable, neighborhoods, here, while similar neighborhoods, there, remained largely intact.

            Where you and I disagree is on the suburbs (and suburban-scale redevelopment of older urban areas). You want to believe “build it and they will come” and/or “you have to force people to do the ‘right’ thing”, while I believe that what we see is the organic manifestation of many small choices by many people voting with their wallets. Every city that I’ve been to, on this continent and in Europe, have suburban areas surrounding the older, urban, walkable, core, and you’re deluding yourself if you think that Helsinki is some sort non-suburban nirvana!

            People that want the suburban experience gravitate to the suburbs, while people who want the urban experience gravitate to urban areas – it’s called choice! If you really want more, dense, urban infill projects in St. Louis, the big hurdle isn’t the planning process, the big hurdle is the consuming process (or the lack thereof). We’re seeing continued strong interest in the central corridor not because of good or bad planning, we’re seeing it because of the success with recently-completed projects, while we’re seeing very little private-sector investment north of Delmar because most consumers simply don’t want to (or can’t) pay what it would cost to develop there. You can “plan” all you want, but if the football team leaves town you ain’t gonna build a new stadium!

            The same goes for transit. As I’ve stated many times previously, “investing” in the Delmar Streetcar will set back other transit investments for decades. Voters aren’t stupid. If they continue to see boondoggles, like this tourist attraction, they’re NOT going to vote for future projects. Yes, it gets back to leadership (or a lack thereof), but it also gets back to repeatable results. Continuing to build projects that over-promise and under-deliver is a sure recipe for either “just say no” or “I’m outta here”.

            Would a better, more-open and more-inclusive planning process be a good thing? Absolutely! But that is only one part of the equation. More people choose suburban areas for the schools (good), crime rates (low[er]) and the housing stock (newer) than they do for walkability or architectural or urban design. The design choices may suck, but they’re simply not a big priority for many people. Heck, a cul-de-sac is a bigger selling feature than a corner bar!

            Finally, look at taxes. People in Finland pay 50% more in taxes than we do (45% vs 30%) http://www.nationmaster.com/country-info/stats/Economy/Tax/Total-tax-wedge/Single-worker . . Give ANY government 50% more revenue and they can do wonderful things. Bottom line, on multiple levels, you do get what you pay for!

             

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