All posts in the topic Shhh!... Legislature's $371 Subsidy Undermines Central Cities (Short link)
Summary
- There are 16 posts — by 13 authors — in this topic.
- Latest post made by Bob Spaulding at May 09 16:50 UTC
Dean suggests I forgot about a subsidy of hundreds of millions to the
Twins in downtown. I didn't, because that subsidy is qualitatively
different:
First, Legislators didn't decide to subsidize the Twins outside of
public view - as this subsidy is happening. We had ten years of very
public debate, not DFL and Republican caucus leaders striking a
backroom deal.
Second, the Twins subsidy went to something that did not directly
compete with a comparable facility in a neighboring city - we have
just one Major League Baseball team. The Mall's proposal for hotels,
office space, retail space, community theater, all directly compete
with facilities we have developed. The Twins pathetic rationale that
their team would move if they weren't subsidized by the state actually
provides stronger justification for the subsidy than is warranted here.
Third, and I will get into this in a subsequent post, this $371
million subsidy actually is coming from a decades-old pool of money
that local cities use for property tax relief - so St. Paul is harmed
even more than is first apparent.
John asked, "why hasn't the mall then had the same effect on places
such as rosedale, ridgedale, maple grove or woodbury?"
Two reasons: those locations are farther away from the Mall than the
downtowns, and the mall competes strongly for tourist dollars, which
in most cities is a key role downtowns play.
And to clarify John's post, downtown Minneapolis has lost much retail
as well - retail developments like City Center, Gavidaae Common, and
the (short lived) Conservatory all have gone from filled with 3+
stories of retail in 1992 to largely devoid of retail now (or in the
case of the Conservatory, torn down). And as I mentioned, Riverplace
and St. Anthony Main expeirenced a loss of retail and entertainment as
well. Minneapolis leaders are now wringing their hands over the
departure of Borders Books and Crate & Barrel, and struggling to
attract new retailers.
Finally, as proof this issue is rapidly evolving, I erred, but in a
way that makes the project's basics even worse. The state subsidy to
the mall is actually $371 million - I had wrongly said in the last
post it was a mere $200 million.
$371 MILLION IS DECIDEDLY MORE THAN THE STATE WILL EVER SPEND
CONSTRUCTING THE CENTRAL CORRIDOR!! And how much public discussion
has there been about this????
This is a terrible way to make public policy.
Here's my original post:
Actually the other malls all the way down to the strip centers have been
hurt by the MOA. Rosedale certainly made this clear with their much
publicized Ramsey County Tax appeal which they won.
John Mannillo
On 5/1/08, Bob Spaulding <<email obscured>> wrote:
> John asked, "why hasn't the mall then had the same effect on places
> such as rosedale, ridgedale, maple grove or woodbury?"
>
> Two reasons: those locations are farther away from the Mall than the
> downtowns, and the mall competes strongly for tourist dollars, which
> in most cities is a key role downtowns play.
eden prairie center is a similar distance and it has grown since the
mall opened. i'd say it is becuase the population boom in that area
and the free parking.
>
> And to clarify John's post, downtown Minneapolis has lost much retail
> as well - retail developments like City Center, Gavidaae Common, and
> the (short lived) Conservatory all have gone from filled with 3+
> stories of retail in 1992 to largely devoid of retail now (or in the
> case of the Conservatory, torn down). And as I mentioned, Riverplace
> and St. Anthony Main expeirenced a loss of retail and entertainment as
> well. Minneapolis leaders are now wringing their hands over the
> departure of Borders Books and Crate & Barrel, and struggling to
> attract new retailers.
Borders books opened well after the mall opened or expanded. Oh and
to blame this on the MoA feels like a stretch to me.
except for the conservatory, city center and gavidaae was full of
retail when i worked down there and only begun to empty out around
2001, IRC, 9 to 10 years after the mall opened. There was also a
target store that opened after the mall.
John harris
webber-camden, mpls
I think John Harris misses the point by debating whether specific
businesses or specific commercial zones (downtown St. Paul or the
Eden Prairie Center) have or have lost business to Monsterdale.
Commercial developments divert dollars; they don't create them.
Consumers who go to Monsterdale would spend those dollars elsewhere
if Monsterdale did not exist; we don't have to be able to pinpoint
where in order to know it is happening.
John might say, "Well, that's tough, but that's how competition
works." But what is the argument for putting that competition on
such an unlevel playing field? Why should downtown St. Paul or
Minneapolis, or Grand Avenue or Signal Hills Shopping Center, have to
compete with a behemoth being massively subsidized by dollars from
taxpayers who live throughout the state, not just in Bloomington?
Chip Peterson
Mac Groveland
Poll after poll resulted that roughly 2/3 of the state's population did NOT
want to be taxed for a new stadium. Yet the STATE legislature went through the
most convoluted, elaborate contortions to allow the county to tax us anyhow
without a vote. You tell me there weren't 'backroom deals' to make that happen!
The Twins were originally in the city of Bloomington. Then the 'smoke filled
room boys' stole them from Bloomington to 'revitalize' downtown.
You are right . It didn't work then and won't work now. They are all a bunch of
politician who by definition will make any deal as long as they can keep their
cushy jobs.
Dean Sheldon
----- Original Message -----
From: Bob Spaulding
To: St. Paul Issues Forum
Sent: Thursday, May 01, 2008 8:18 AM
Subject: Re: [SPIF] Shhh!... Legislature's $371 Subsidy Undermines Central
Cities
Dean suggests I forgot about a subsidy of hundreds of millions to the
Twins in downtown. I didn't, because that subsidy is qualitatively
different:
Anytime we subsidize developments that compete with other developments, we run
the risk of devaluing what we already have because the market may not have the
capacity to support the new, subsidized development other than simply shifting
capacity from elsewhere in the region. Rosedale did get a major reduction in
the value of its property and paid less in property taxes and the MOA was part
of the reason. There was work done in the late 1990s (which I need to locate
and review) that showed a 5-20 percent reduction in sales at other malls across
the region. Southdale was the hardest hit.
What is particularly loathsome about the current subsidy proposal is the use of
the fiscal disparities pool to fund a parking ramp to the tune of $200 million
so that everyone can have "free" parking. This is a gross violation of the
purpose of regional tax base sharing and will set an extremely bad precedent if
it occurs. Since the pool is meant to share tax base and reduce competition,
use of it would essentially force existing businesses to pay for their
competitor and devalue their own property at the same time. With the current
vacancy rates in our downtowns, this is truly destructive public policy.
The Senate tax bill has the fiscal disparities provision, the House does not,
so this is not a done deal. Legislators are focused on the construction jobs,
but House Tax Chair Ann Lenczweski has been politically courageous in her
opposition. She asked to see the developers books at a hearing last week and is
trying to get at how much subsidy is really needed.
The Citizens League (who I work for) strongly opposes this provision and you
can read more about it at www.citizensleague.org.
The one issue that seems to be ignored by this discussion is the jobs that will be created. Isn't it going to be great that the proposed subsidy would create so many jobs? What a bunch of hog wash. Yes any construction project will create a number of jobs that pay great wages. These jobs last only as long as the construction lasts. Yet every time something like this goes before a Legislative Committee we see news accounts of the various Construction trades members packing hearing rooms to witness and/or testify to the new jobs the project would create. I know that any new store, service, or activity will need employees. So there will be new jobs created when the project is finished. But these will be, probably, just above wage part time jobs that teens will take. These are not good jobs, except for retirees and workers new to the work force. My point is that the Construction unions attempt to make this a jobs issue, when in fact, the only real jobs being created are construction jobs. I certainly understand why they support these projects. But I question why there isn't any legislator willing to call it what it is, pandering to the labor constituency. Based on their arguments, we should mortgage the state so they can always have work. Bob DeBoer <<email obscured>> wrote: Anytime we subsidize developments that compete with other developments, we run the risk of devaluing what we already have because the market may not have the capacity to support the new, subsidized development other than simply shifting capacity from elsewhere in the region. Rosedale did get a major reduction in the value of its property and paid less in property taxes and the MOA was part of the reason. There was work done in the late 1990s (which I need to locate and review) that showed a 5-20 percent reduction in sales at other malls across the region. Southdale was the hardest hit. What is particularly loathsome about the current subsidy proposal is the use of the fiscal disparities pool to fund a parking ramp to the tune of $200 million so that everyone can have "free" parking. This is a gross violation of the purpose of regional tax base sharing and will set an extremely bad precedent if it occurs. Since the pool is meant to share tax base and reduce competition, use of it would essentially force existing businesses to pay for their competitor and devalue their own property at the same time. With the current vacancy rates in our downtowns, this is truly destructive public policy. The Senate tax bill has the fiscal disparities provision, the House does not, so this is not a done deal. Legislators are focused on the construction jobs, but House Tax Chair Ann Lenczweski has been politically courageous in her opposition. She asked to see the developers books at a hearing last week and is trying to get at how much subsidy is really needed. The Citizens League (who I work for) strongly opposes this provision and you can read more about it at www.citizensleague.org. Bob DeBoer Merriam Park, St. Paul Info about Bob DeBoer: http://forums.e-democracy.org/contacts/bobdeboer This topic's messages may be viewed at: http://forums.e-democracy.org/r/topic/68JTA2k5ZRjtp9DpbJ3AXz
"Free" parking, indeed. I recommend a book by Donald Shoup, professor of urban planning at University of California, Los Angeles. Shoup also holds a doctorate in economics from Yale. The High Cost of Free Parking reveals the level at which auto parking is subsidized in the United States and reveals the resulting negative consequences to communities. From a review of the book: "Drivers currently park free on 99 percent of their trips and their cars are parked 95 percent of the time. But free parking isn’t really free. Shoup, an urban economist and professor of urban planning at UCLA, estimates that in 2002 between $127 and $374 billion a year was spent nationally to subsidize off-street parking—as much as the U.S. spent on Medicare or national defense that year." http://www.its.berkeley.edu/itsreview/summer2005/freeparking.html A $200 million parking subsidy at the Mall of Your Momica is in no way good for the cities of St. Paul, Minneapolis or Bloomington. Instead we should be investing these monies into public infrastructure (like transit) that will allow for strong local economies to blossom throughout the region. We would receive far greater economic impact from having many, smaller and locally owned businesses in comparison to the large multi-national corporate model that our Mall in Bloomington represents. Thanks to Bob Spaulding for posting on this important topic. Matty Lang, Midtown Phillips, Minneapolis
This is such a big issue that I honestly have no idea how to respond. I
thought of something wonkish, then thought of a few obscene analogies I
could us in an attempt at gutter humor, and then I thought of being a bit
cynical and esoteric. That's what I'm going to go with.
This particular issue is, indeed, one of the worst examples of something
coming from a backroom deal. But why is this surprising? That's how
things are done in a state that is changing over from a rural majority
with an urban power base to no clear majority and a suburban power base.
The power dynamic has been shifting for a generation, and will continue
to.
That's just part of the reason why our Saint Paul legislative delegation
has been woefully ineffective. We also have Minneapolis to thank for
taking their King Lion's share of the spoils which the Suburban power base
has allocated to inner cities. The truth is that Minneapolis uses us as a
patsy, and no one has seriously complained yet.
This is also an illustration of precisely what I meant months ago when I
said that there is no social or political unit that can be called "The
Twin Cities Metro Area". We are in competition with each other for
resources, and we certainly will be at least until the power shift is over
with. That's probably another generation at least, so fasten your seat
belts.
Backroom deals and inflexibility are to be expected to at least some
extent, especially given the competition from the changing power dynamic.
The Central Corridor, for example, has not changed in technology, route,
or basic conception for 20 years despite many hours of "Public Input".
That's because the people who wanted it (mostly Peter McLaughlin) have
taken the basic idea and steered it through whatever process they had to
while keeping it intact. You can come up with whatever process you want,
but if someone has an idea to ram through or a deal to broker in private
it will be done, and the public process will be abused as so much theatre.
This should not surprise anyone - it's how things are done.
So what should we be outraged about here - the process, the proposal, the
harsh routine we're getting on our bonding requests? The short answer is
"All of the above". If someone is at the Capitol to advocate for Saint
Paul, they should pull everything out of their hat and argue like all Hell
for at least a few crumbs. One of the best ways to do that is to derail
this until we get our share, and that means it's time to argue like all
Hell and burn up as much of the limited floor session time as you can.
Who wants to bet that they will? Anyone?
Me neither. You can guess what I think is the real reason the Saint Paul
delegation hasn't been effective at bringing home the bacon. There's a
lot stacked against us right now, but I don't see anyone really out there
shutting the place down to get what we want.
[side note: someone here mentioned having a "s**t-in" at the Capitol,
where we occupy all the bathrooms as a protest for Saint Paul's share
getting flushed. Saul Alinksy threatened that at O'Hare airport once, and
the mere threat of it got the union what they wanted in a heartbeat. I'm
up for doing this, if for no other reason than you all know I'm full of
s**t.]
I admit to not reading the book that Matty recommends and Bob has referred to
in this forum.
It has been used to argue against subsidized off-street (and cheap on-street)
parking. Here's a quote (that I really like) from the review that Matty links:
"Excessive parking is one reason American cities are charmless compared to
European cities. Americans require parking and limit density, while Europeans
require density and limit parking, Shoup explains."
And, of course........of three suggestions: "The first is to remove
requirements for off-street parking, which is often overbuilt and
underutilized."
This kind of vision fits more with my idea of what a real city is like.....but,
I doubt if any St. Paul neighborhood is going to ask to be the first to try
such a plan. Or, am I dead wrong about this?
Paul Gleeson
St. Paul
Strib editorial: http://startribune.com/opinion/editorials/18467184.html?page=1&c= " ...The megamall's owner, Triple Five Group, is a Canadian firm with significant real estate holdings and banking, venture capital and other business interests. Because the company is privately held, its finances remain a mystery. It's possible that the megamall's Phase II would proceed without a subsidy, which would be the best outcome for the state, the metro communities that depend on the fiscal disparities pool, and the construction workers who converged in St. Paul this week..." During the many hours of testimony before the House Tax Committee, the Chair asked to see MOA's books to determine if the subsidy were needed. Curious to know if the Chair/members, the Senate Tax committee and/or the Governor have seen the books. Senator Marty's article stated that it was felt the MoA would go ahead with the project anyway...subsidy or not. At the hearings, one of the reasons given by mall management that the key to the mall's success was to 'stay fresh' and the subsidy/funding were necessary to pay for that. best wishes, cheryl luger nokomis east (Minnehaha) Mpls. I never wonder to see men wicked, but I often wonder to see them not ashamed. --- Jonathan Swift
I can't imagine anyone suggesting that we eliminate requirements for off street
parking. They are in place to get vehicles off the street. I certainly don't
want to live in any area where I would have to drive around just to find a
place to park.
The difference between Europe and America is many streets in Europe are too
narrow to allow parking and traffic flow and the presence of significant low
cost public transportation.
<email obscured> wrote: I admit to not reading the book that Matty
recommends and Bob has referred to in this forum.
It has been used to argue against subsidized off-street (and cheap on-street)
parking. Here's a quote (that I really like) from the review that Matty links:
"Excessive parking is one reason American cities are charmless compared to
European cities. Americans require parking and limit density, while Europeans
require density and limit parking, Shoup explains."
And, of course........of three suggestions: "The first is to remove
requirements for off-street parking, which is often overbuilt and
underutilized."
This kind of vision fits more with my idea of what a real city is like.....but,
I doubt if any St. Paul neighborhood is going to ask to be the first to try
such a plan. Or, am I dead wrong about this?
Paul Gleeson
St. Paul
What are public subsidies of building projects suppose to achieve? I was led to
believe, for example, that TIF funds were meant to create a level playing field
for developers. It is clearly more expensive to construct on an urban infill
site, than it is to build on raw land. If anyone doubts this, walk/drive down
to the Farmer's Market in Lowertown and take a look - it is very scary. If we
are going to curb the terrible sprawl in this metro area and protect and
rebuild our inner cities, the subsidies must be appropriately targeted.
TIF for the West/jail site? As long as it is done out in the open, you bet.
However, the property to be developed at the MOA site is about as close to raw
land as I can be found within the Cities and their first rung suburbs. Can
anyone explain to me why it will cost more to build the MOA addition on that
land, than it would on raw land in Chanhassen, or Woodbury? This seems more
like tribute than a subsidy.
I will be the first to admit, that the scope of my interests are very narrow. I
am concerned about Downtown Saint Paul and how I can live there comfortably.
Now I have seen a lot of discussion about malls in Roseville and Eden Prairie,
etc., that are surviving and/or thriving, or not, due to the MOA. However, if
you want to consider a real retail miracle, go where I do most of my shopping
now - take a drive down Robert Street in West Saint Paul. Since the MOA opened,
West Saint Paul has added several big box stores, in particular, a Lowes, Wall
Mart and Home Depot. Need a car? Head on out! Two new dealers have opened since
the first of the year. The Robert Street Menards and Target have been super
sized, etc., etc.. With the big boxes have come a number of smaller specialty
stores. I have not read anything about these developments being subsidized, but
I must admit that I have not researched the issue. In any event, in decending
order this is where I spend my money shopping, West Saint Paul, MOA, other
Saint Paul, Downtown Saint Paul.
Anyway, paying tribute to the MOA developers is just wrong. However, laying
blame on the MOA for the fact that Downtown is now a retail waste land is just
as foolish, e.g., how did the MOA retail cause a 20% vacancy rate in office
space Downtown? Between the MOA and a 20% vacancy rate, which do you think has
the greater effect on Downtown's retail?
Let's get back to basics. TIF funds were never intended to build parking ramps. http://www.house.leg.state.mn.us/hrd/issinfo/tifdist.htm Check out the "but for" test: http://www.house.leg.state.mn.us/hrd/issinfo/butfortif.htm
The MOA's impact on downtown St. Paul is real. There have been some studies that have quantified the Mall's impact on area retail nodes, including downtown. I'm working to lay my hands on those as we speak. The Mall if America serves two important retail sectors that compete with downtown. First, it is a destination for clothing, shoes and apparel. Second, it serves as a cultural/entertainment destination for out-of-town visitors. So think about what we've lost downtown since the Mall of America opened. We had 42 clothing stores in 1991 and now we have two. And second, downtown's "cultural corridor" served as a key "family friendly" gateway for visitors who embraced our many museums and cultural attractions, and spent time and money at our shops and hotels. Despite building the Xcel Center and RiverCentre in the last decade, we've struggled to keep our existing hotels open. The main confusion Mr. McLean has involves retail sectors. Certainly, a Home Depot, Lowe's and Wal-Mart opened up on Robert Street in recent years. Just visited yesterday. These don't compete with the Mall of America, as there are no hardware stores or big-box discounters at the Mall of America. Nor am I aware of any of those retailers locating in a major downtown. And many vacancies remain on Robert Street. Like it or not, most chain retailers have careful formulas that guide them to open stores in certain archetypal developments: a regional mall surrounded by free parking, a neighborhood strip mall surrounded by parking, or a big-box retail center surrounded by parking. National retailers can use formulas to predict with reasonable accuracy how they will fare in a market with specific demographics, and a certain development archetype. But those same national retailers don't know how to similarly analyze downtown retail. There is no free parking downtown. Office buildings and condos are scattered willy-nilly around retail areas. It's often not economical to tear down entire buildings and build their model efficient store as they can elsewhere. There is not "management company" that both controls all the real estate in a downtown, and works to fill retail vacancies with fruitful tenants. Many customers come on foot or bus, and can't carry as much away. Complex systems of movement mean moving just one block can change foot traffic dramatically. And though the skyway system might be a boon, there are few examples for a retailer to know how to measure it's positive impact. For those reasons, it took until about five years ago to open up a Target store in the same downtown that had always housed Target's Corporate Headquarters (Minneapolis). That uncertainty is a big part of the reason why Target required Minneapolis to subsidize the development: Target didn't know how well it would go. Turns out, that store has been among the top performers in the system. Now they have a couple similar models to go on. And as chains gobble up the surer profits to be found in the suburban markets, they have increasingly ventured tentatively back into urban markets. Still, an important backbone of success in any downtown's retail is a strong retail core of small businesses who know their own market personally, and are adaptable enough to respond to the unique dynamics of that market. Those attributes - personal knowledge of their area, and adaptability - are things that chain retailers don't bring. But that doesn't mean chain retail can't or won't locate in a downtown. In fact, I'd put money on the fact that we'll see some chain retail open up in our downtown in the coming years. And in the end, none of this - I repeat NONE of this - is me providing any excuse to our current void in retail downtown. Downtown retail is an area we have seen little in the way of cooperation in recent years, which explains its current state. As a City, we don't have a lot of money, but there are plenty of things we could do to shore up our retail sector without much money, if we choose to put our minds to it. In fact, I wrote a post that outlined a bunch of them recently, and you can browse over to it at: http://tinyurl.com/6edmg9. Best, Bob PS - the use of TIFs for parking ramps is actually perfectly legal, and frequently done. What ISN'T done is the use of the Fiscal Disparities Act to subsidize private development. This is an awful and unprecedented abuse of the Fiscal Disparities system. I'll write about that soon, but in the mean time, read about it here, here, here, or here: http://www.tcdailyplanet.net/node/11058 http://www.startribune.com/opinion/editorials/18467184.html http://www.startribune.com/opinion/commentary/18529969.html http://www.startribune.com/local/west/18159584.html?page=1&c=y
An excellent op-ed piece on the Mall of America subsidy appeared today in the Pioneer Press, that captures well the primary reasons to oppose the proposed use of the fiscal disparities program to subsidize the expansion of the Mall of America: http://www.twincities.com/opinion/ci_9197344 This article focuses on a grim realtiy: the MOA subsidy would deal a major blow to the integrity and future of our nationally-recognized Fiscal Disparities program, which stabilizes cities by sharing tax base revenue. Here in St. Paul, we got $20.5 million from the program in the last year, and we've long benefitted from the program. The program takes a portion of all new taxes collected from commercial- industrial properties across metro cities, and distributes it so as to even out the tax burden across the metro area. The program is credited with helping the Twin Cities avoid the fate suffered by so many central cities and inner suburbs elsewhere. Places like Detroit and St. Louis (as well as many, many other regions) see cities caught in an endless spiral that results in disinvestment and sprawl. That spiral starts with a loss of tax base (companies and employees moving away). Then there is an increasing demand on services from an increasingly needy population. Then, because major commercial taxpayers have been lost, there is need to increase taxes on those who remain just to keep providing the same services. And over time, residents in these cities pay more for fewer services and a lower quality of life than they would get in other nearby cities, causing even more incentive for businesses and residents to leave the city. And the cycle continues. The other huge advantage of the Fiscal Disparities program is to make the use subsidies to lure companies from one part of the metro to another less compelling, so we can stop wasting our time competing with one another, and begin to cooperate and compete as a region. Bob James Lileks: Stores Galore! But what of the MOA Ramp? http://pd.startribune.com/sp?eId=92&gcId=476325942&rNum=6 Pawlenty wants Mall of America Proposal Refined http://www.startribune.com/politics/state/18414214.html Session Weekly/Daily Planet News: A mega opportunity at what cost? http://www.tcdailyplanet.net/article/2008/04/26/mega-opportunity-what-cost.html StarTribune Editorial: If mall proposal goes through, a parade of projects will follow http://www.startribune.com/opinion/editorials/18467184.html John Marty: Shopping mall parking ramp to get public money? http://www.tcdailyplanet.net/article/2008/04/21/shopping-mall-parking-ramp-get-public-money.html David Morris: Be Suspicious of Megamall Subsidy http://www.startribune.com/opinion/commentary/18529969.html
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