Illustration by Daniel Elchert
There will be no massage parlors in Ballpark Village.
You can bank on this good news, because Ballpark Village is all about the bank, or more specifically, about the bank getting corporate welfare from the federal government, and in the name of decency, massage parlors are on a short list of businesses considered verboten for public assistance.
This is as it should be. Few issues can promote civility and consensus like the need to keep corporate welfare out of the hands of masseuses. We just can’t have it.
We also can’t have Ballpark Village without corporate welfare—or so we are told—which is why the city fathers are proposing that
$22.5 million in federal New Markets Tax Credits (NMTCs) be provided to help the poor St. Louis Cardinals organization go forth with its downtown development project.
But not at the expense of our morality, as a quick visit to the website of the St. Louis Development Corporation (SLDC) shows. There, we learn that not just any business use can be part of a taxpayer-funded NMTC project. We’ve got standards.
“Specific exclusions included land-banking, golf courses, massage parlors and tanning salons, as well as farms and liquor stores,” the site reports.
Take that, you fly-by-night speculators who would use the public’s largesse to promote the likes of massage parlors, tanning salons, liquor stores, and farms. Not on our watch, you don’t.
I’m not making this up. These “exclusions” are really listed on the SLDC website and on lots of others like it around the country.
But I didn’t highlight my favorite example just because it looked so funny on the website—although it did. Instead, chalk up my choice to a lifelong love of irony.
Metaphorically, municipal government has become a massage parlor for corporate America.
It just doesn’t get better than “Ballpark Village” when it comes to illuminating this sad fact. It is an MBA-grade case study in the decline of free-enterprise capitalism in America.
The federal government (working through city agencies) is about to bribe healthy banks and their investors—in the form of tax credits that will directly reduce their income-tax bills—to incentivize the loaning of money to the St. Louis Cardinals’ ownership group (or a related entity, perhaps) for a $155 million development of office, retail, and restaurant space next to its stadium.
And that’s not all of the help the Cardinals’ owners would be getting. Various agencies are also planning to issue $35 million to $47 million in revenue bonds, meaning the public would provide more than a third of the Cardinals’ financing.
The Cardinals are one of the most successful business stories of all time in St. Louis. Forbes
magazine estimated last year that it is the eighth most valuable of 30 Major League franchises, with a net worth of $488 million. That would mean the investment of William DeWitt Jr. and partners has increased nearly 900 percent since they bought the team and two parking garages for $50 million to $55 million in 1995.
Even with all of that, the Cardinals’ windfall likely didn’t affect the lifestyles of the owners, whose collective net worth personally was pegged at more than $4 billion in 2001 by the St. Louis Business Journal.
One would be hard-pressed to find a more bankable company in all of St. Louis, and if Ballpark Village lived up to one-tenth of its hype, it would be a striking commercial success story.
Even in the current financial climate, lenders should be trampling over one another to obtain the banking business of such men, particularly for such a wonderful project next to their state-of-the-art stadium. What surer lending opportunity could banks find?
Yet the Cardinals’ collective billionaires are about to receive—albeit indirectly—federal tax dollars created by a Clinton-era program in 1999 for the purpose of encouraging investment in “distressed” areas. This is an antipoverty program twisted into helping multimillionaires create a development to benefit baseball fans, yuppies, and business executives.
What’s next? Operation Food Search catering the luxury suites?
There’s nothing wrong with government trying to use its resources to assist entrepreneurs who really need financing help to develop projects in poverty-stricken areas that really need help by supporting banks that really need the extra incentive to justify the lending involved.
But what has happened here—and across the country—is that the best of intentions have been abused. Good ideas such as the creation of enterprise zones, tax-increment financing, and countless programs like the NMTCs have morphed into an orgy of corporate welfare.
No self-respecting major company embarks on any project, anywhere in the U.S., without first obtaining every tax break and incentive available at every level of government. Toward this end, it’s handy—although not officially necessary—to have “access” to politicians whose campaign coffers one has helped fill.
It’s over for your father’s free-enterprise system in America. I’m not sure what we should call our system now, but “capitalism” isn’t the word that leaps to mind.
It wasn’t so long ago that the captains of industry were mainly concerned about keeping government out of their lives with regard to issues of taxation and regulation. Today, it’s just the opposite: Businessmen expect all the government assistance they can get their hands on, safety net included.
In places like St. Louis, city officials invariably defend corporate-welfare handouts—often at the gunpoint of a major firm threatening to move to the county—by saying they have no choice but to make the best of a difficult system.
Everyone’s getting “incentives,” they will tell you, and we can’t unilaterally disarm. They point to a variety of wealthy suburbs in St. Louis that have succeeded in having their proud communities declared “blighted” for the purpose of slipping tax breaks to wealthy developers in exchange for bringing shopping centers and other major projects to their environs.
So one major company after another gets a little special treatment. The principle of “too big to lose” dominates the actions of city government, from the mayor’s office on down.
City officials are quick to point out that programs like NMTC don’t cost the city a cent, because they amount to use-it-or-lose-it federal dollars that are going to be spent on someone. But what about the opportunity cost of a Ballpark Village? Why not take the same funds and spread them around to three or four sizable projects that actually need help with financing?
Here we come to another rich irony of a good program gone astray: It’s complicated. In fact, because the NMTC application process can be a highly technical matter requiring sophisticated lawyers and accountants, it’s well-heeled entities like the Cardinals that are most likely to put together successful proposals. Smaller projects, the ones the government envisioned the NMTC program would help, have a harder time getting their acts together.
That whirring sound you just heard was President Lyndon Johnson rolling over in his grave.
Understand that no laws have been broken here. The city of St. Louis meets all of the technical, census tract–related rules to be able to define its downtown area as a distressed community. The Cardinals’ proposal certainly dotted every I and crossed every T necessary to qualify for inclusion in the NMTC program.
But it makes no sense. Morally speaking—yes, morally speaking—the Cardinals’ owners have no more business seeking federal assistance of this nature than they would have being in line for food stamps.
That’s right: I think it’s wrong of them to want this assistance.
I know this isn’t a popular sentiment. The most common refrain on this subject is that you can’t blame businessman for taking advantage of what’s out there. Don’t blame the businesses receiving corporate welfare; blame the system.
Well, I do blame DeWitt and his partners. With all of their wealth and power and prestige in this community, they ought to have enough accompanying pride that they wouldn’t want government help to build a private development like Ballpark Village.
Once upon a time, that’s how civic leaders thought. They enjoyed wealth, stature, and prestige—often to a fault—but they took pride in what they gave to the community, not what they sucked from it.
If Ballpark Village isn’t a good investment on its own merits, then they shouldn’t do it. If it is, they should buck up the capital or go to the bank like the rest of us entrepreneurs do.
Am I saying that if I were in their shoes, I wouldn’t take advantage of every government program that could help me save money?
Damn straight I wouldn’t.
The federal NMTC website highlights some of the fine success stories in the program’s history. There was an emergency-worker training facility built in Lafayette, La., in the aftermath of Hurricane Katrina. There was a loan to a Native American businesswoman for a pharmacy, her first business, in a high-poverty town in western Montana.
There was an investment in a community health center in San Diego to create a maternal and child healthcare program. And there was a mixed-use housing-and-retail development, anchored by a national grocery chain, on a vacant military base in a “severely distressed” part of Washington, D.C.
And now there’s Ballpark Village in St. Louis, about to provide the city’s “premier” Class-A office building, along with “unique” stores and restaurants right next to our state-of-the-art stadium. Maybe we’ll have a Cardinals Hall of Fame museum to boot.
But there won’t be a massage parlor.
That wouldn’t be decent.
SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.
