The Nation's Pulse

Meet Me in Subsidized St. Louis

New Entertainment complex scheme comes to dying city.

By 5.23.14

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If one trend draws near-universal contempt from America’s urban commentariat, it is that declining cities still subsidize fancy developments to spur “revitalization.” For decades, publicly financed malls, stadiums, and convention centers have been built in cities from Stockton to Baltimore. These projects’ general failure to profit, much less boost their surroundings, raises the question of when they will finally be dismissed as growth strategies. Apparently, it won’t be in St. Louis.

After years of delay, the $100 million Ballpark Village has opened downtown. The large indoor entertainment complex, developed by Cordish Co., is a stereotypical booze haven featuring a retractable-roof concert space, and numerous upscale bars and restaurants. Future phases will include residential and office space, as part of a $650 million master-planned project.

The “village” is located across from the recently built Busch Stadium, and like the Cardinals’ baseball venue, has received substantial government favoritism. In 2012, a combined $17 million in state and local subsidies were approved for the project, under a tax increment financing deal that is to partly pay for itself through added tax revenue. This is a mere fraction of the $183.5 million in subsidies that the project could eventually receive, and complements the $143 million in anticipated tax breaks for Busch Stadium. Together, both projects are expected to transform St. Louis’ moribund downtown into a live work and play zone.

If Ballpark Village seems familiar, it is not just because it mirrors projects elsewhere, but is basically identical to one built recently on the other side of Missouri. In 2006, Kansas City began construction on its own entertainment complex, the Power & Light District. Along with $295 million in city-issued bonds, the project received funding from the same state authority, used the same developer, and was part of a similar downtown revitalization plan. Cordish built an 8-block complex furnished with corporate bars and restaurants, around an open-beverage plaza that hosts live music. It went right across the street from the $276 million Sprint Center arena, which was also be subsidized to help attract an NBA or NHL team.

Public funding for these Kansas City projects was based on the premise that they, too, would pay for themselves through increased sales tax revenue. So how has this worked out? Nearly a decade later, the city still doesn’t have an NBA or NHL team, contributing to the under-performance of both the arena and the entertainment complex. The city now pays between $10-15 million annually on bond debt for each, redirecting sizable revenue chunks from essential services.

Yet this didn’t stop St. Louis officials from proceeding with Ballpark Village. While the project will be funded more incrementally than the one in Kansas City, it still amounts to a handout for Cordish. The developers received $17 million in bonds from the Missouri Downtown Economic Stimulus Authority, and will receive millions from the city in tax receipts, through a 1% sales tax on the village.

One reason that these complexes must be subsidized is that, despite their luxury components, they are being randomly plopped into downtrodden urban areas. Kansas City, notwithstanding a slight recent uptick, can still reasonably be called a struggling Rust Belt city. Since the 1970s, its population has either declined or grown mildly in each decade, and still suffers a high poverty rate. The metro area’s wealthier portion — which the Power & Light District caters to — is concentrated in the southwestern suburbs, some of which are over 30 miles away. This spatial mismatch has proven problematic, and hasn’t been made up for by the minimal downtown foot traffic.

St. Louis reflects these characteristics even more, trailing perhaps only Detroit as the U.S. embodiment of urban decline. It has lost population in every decade since the 1950s, even missing out on the recent urban renaissance experienced elsewhere. Its housing vacancy rate, at 15.6%, is the third highest among major metro areas, as reaffirmed by its numerous hollowed-out neighborhoods, including around downtown. The region does contain some wealth, but it, too, is largely suburban, and Ballpark Village’s entire business model seems built on attracting this cohort. To project a highfalutin image, Cordish has even imported Power & Light’s unpopular dress code, banning sports jerseys after 9pm — for a bar zone that is right next to a stadium.

“If there’s a premise” to the village, says Alex Ihnen, editor of the popular local urban affairs blog NextSTL, “it’s that this entertainment complex is going to bring brand new people to the city.” This same silver bullet approach has been tried many times in St. Louis, dating back to the Gateway Arch in the 1960s, and has continued with publicly financed stadiums, malls, and marketplaces.

“Every time one of these big projects has been proposed,” he said, “everyone’s been told ‘this is the key to the city’s future.’” But many, like the Edward Jones Dome, have saddled the city with debt, and none has reversed its structural decline.

These “monolithic developments” are also misguided, Ihnen continued, because they fail to tap into what has helped the city. While activity around them remains mild except during events, consistent activity does exist in several areas near downtown, including Soulard and the Washington Avenue corridor. Both areas have been beneficiaries of historic preservation and street improvements, and rather than one big developer, have accommodated numerous small businesses. This is also the case for Kansas City’s Crossroads Arts District, a historic warehouse area just south of Power & Light. Such areas are successful because they appeal to the creative class types that now inhabit many struggling downtown neighborhoods, while corporate retail complexes appeal largely to the suburban crowd, which visits sporadically.

Of course, the worst that can be said of Ballpark Village is that it merely copies the revival strategies seen elsewhere. Along with Missouri’s two largest cities, stadiums and other sports-related uses have been subsidized in practically every city of note, despite being widely panned by economists. They are but one aspect of a broader public redevelopment subsidy racket that nowadays includes grocery stores, luxury condos, parking garages, and much more, and that have burdened cities of various shades, from the sparkling Miami, FL, to the nearly-bankrupt Harrisburg, PA. The forbidding economics of these projects should be evident from the start, since their need for subsidies shows that they have inadequate market demand. Yet they continue to open, representing the fallout that occurs when officials speculate with public money. If Ballpark Village succeeds, it will be the exception, and if not, perhaps it can be another hint that putting up white elephant projects in dying cities is bad urban policy.

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About the Author
Scott Beyer is traveling the nation to write a book about revitalizing U.S. cities. He blogs at BigCitySparkplug.com.