Part 3: TIF, TDD and CID—what are they?
In a heated council meeting at Ellisville Elementary May 2, for construction of the Walmart.
More than 100 residents showed up at the meeting, most voicing their opposition against the TIF. Among those in opposition were Mayor Adam Paul and Councilwoman Michelle “Shelly” Murray, the only two on the council to vote against the TIF, which passed in a 5-2 vote. (In Ellisville, the mayor has a vote, but no veto power.)
The Sansone Group would receive a $15 million TIF if they chose to also do a Transportation Development District and a Community Improvement District.
In a TDD and CID scenario, Walmart would charge an extra sales tax on their own sales. That money would go to traffic and road-related improvements (TDD) and to beautify the area around it, such as sidewalk and landscaping projects (CID).
A few months after the TIF was approved, . Instead of charging an extra sales tax on their own products, Walmart would pay for any improvements out of pocket.
This reduced the amount of the approved TIF from $15 million to $10.8 million.
“It is a business decision they made on their part of how much money they were investing in this and still making it profitable for themselves,” said Ellisville Finance Director Don Cary.
So what exactly does the TIF do?
In Ellisville’s $10.8 million TIF, the city issues bonds to help pay for certain costs of the $49 million development project.
“That increase is subject to being partially captured to pay for some appropriate cost only—unusual costs,” Cary said. “If you have a blank piece of property and it has utilities to it and everything is ready to be developed, you don’t need that (TIF).
“But if you have a piece of property that doesn’t meet those criteria — it has old buildings on it that are going to have to be torn down, it doesn’t have the modern requirements for stormwater retention — those types of expenses are for the public’s benefit and the state laws allow us to pay for them through TIF.”
Ada Hood, Ellisville’s planning director, said many people asked why Ellisville didn’t do as the city of Florissant, which approved a similar project without using TIF.
“You are not comparing apples to apples,” Hood said. “Our city does not operate in the same way as Florissant.”
Hood explained that Ellisville is a point-of-sale city, meaning that it generates its own sales tax revenue to provide resident services. Florissant, on the other hand, is a pool city, which means it does not generate its own sales tax revenue to provide resident services.
Cary also said several provisions on Ellisville’s TIF agreement with Sansone ensure the store will want to stay in the city.
“Walmart will be holding $2 million worth of notes. If they don’t think this thing is producing revenue, they are on the hook for $2 million,” Cary said.
The city also made Walmart promise that, in case the store leaves, they would be responsible for tearing down the building at their own cost.
Walmart, he said, is the one risking a lot if they don’t make good on their plans.
“From their perspective, if Walmart wants to get other incentives around the country and this TIF doesn’t work, it’s going to be known, far and wide,” Cary said. “Every government in the country is going to be worried about setting up a TIF. They are going to make sure that it works, because it is in their best interest that this whole thing works out.”
Writer's note: Since the Walmart development project was presented to the Ellisville city council in April, rumors surrounding its design, size and effect on the community have surfaced in the comments section of this site, in social media and during public hearings.
In an attempt to clarify what is known, what is a myth and what is unknown about the Walmart development, Ballwin-Ellisville Patch met with Ada Hood, planning director; Bill Schwer, public works director; and Don Cary, finance director, to discuss the project.
Stay tuned for Part 4 of the series.