PJ’s Rejected Proposal Shows the High Price of NIMBYism

A few weeks back I began my exploration of the proposals that had been submitted to Kirkwood City Council in response to the RFP the city issued on the two city owned surface parking lots on Jefferson Ave. We first looked at IPG’s proposal for a mixed-use boutique hotel and parking structure on the East Jefferson lot, and then followed it up with a look at their plans for a mixed-use apartment building and parking garage on West Jefferson. Together, those two proposals would’ve brought a net increase of up to 211 parking spaces, 45 homes, a 66 room boutique hotel and 12 small-business retail spaces to Downtown Kirkwood had they not been rejected.

This week I want to continue that exploration with a look at the vision for the two lots submitted by Clay | Adams, a real-estate firm headed by Adam Hartig, who also happens to be the owner of PJ’s Tavern in Downtown Kirkwood, in conjunction with ARCO Construction and GMA (architecture).

Clay | Adams submission was unique for a few reasons. First, because Clay | Adams and PJ’s are more or less on in the same, Clay | Adams was able to propose what no one else could: a development that encompassed not only the city owned West Jefferson parking lot, but also the adjacent land currently occupied by PJ’s itself. Second, and perhaps more importantly, the Clay | Adams proposal gave us our first real look at exactly how much tax revenue City Council left on the table in favor of the status quo.

We’ll take a closer look at what PJ’s wanted to do first, and then look at the opportunity cost the city has incurred in rejecting this proposal and others like it.

The Clay-Adams Proposal

Before we get started, a quick note that December’s Jefferson RFPs were an opportunity for Clay-Adams to submit a formal proposal, but the West Jefferson concept is one they have been thinking about, formally or informally, since Hartig took ownership of PJ’s at the tail end of 2021 (the PJ’s lot is zoned B-2, Kirkwood’s max density, so doing something more significant than single-story retail makes some sense). Because Clay | Adams has been thinking about this for longer than the last six months, the visual materials included in their submission date further back to June 2022, and depict only the West Jefferson site. That leaves us to infer what the updated two-lot proposal would look like from their written materials, so if some of the renderings don’t quite match up with what I’m saying below, that’s probably why.

In short, though, Clay-Adams proposed a multi-stage project that sought to keep disruptions to PJ’s service, the Kirkwood’s existing tax revenue streams, and Downtown in general to a minimum. In that vein, the idea was to first construct a new structure on the East Jefferson site (next to Mission Taco) that would have included a 285-spot parking garage fronted by two restaurant spaces: a larger one of 4,500 sqft and a smaller one of 850 sqft.

Upon completion of that structure on the East lot, PJ’s and its sister restaurant Heaterz Hot Chicken (which has since seemed to close) would have moved into the two restaurant spaces (attempting to keep the ambiance as unchanged as possible according to their memo) and demo of the current PJ’s/Heaterz building would begin.

Once demo was complete, Clay | Adams would then begin work on a new four-story structure on the now combined PJ’s/city-owned West Jefferson lots. The new building would have hosted 161 additional structured parking spaces, 9,000 sqft of ground floor retail, and 93 new apartments. 75 of those apartments would be 1-bedrooms and 18 would be 2-bedrooms with rents ranging from $2,793 – $3,458 per month:

Unit Type	No. of Units	Rents	Total SF	Unit Size
High End 1-BR	21	$2,793	17,640	980 SqFt
Standard 1-BR	54	$2,168.40	45,036	834 SqFt
High End 2-BR	3	$2,832.85	3,207	1,069 SqFt
Standard 2-BR	15	$3,458.00	19,950	1,330 SqFt

So Much for Affordability?

Now, every time I post that a new project will help Kirkwood’s affordability, people look at the rents and scoff. And admittedly, those are higher rents than what I think people generally characterize as “affordable,” it’s just that we’re not quite talking about the same things. I do think these would make Kirkwood affordable for a few reasons:

1) Because these 93 apartments are for rent, they automatically would’ve been more affordable than buying a single-family home in Kirkwood even though the rent is relatively high. If I wanted to move back to Kirkwood, just about the only option I could afford would be renting an apartment like these

2) Because they’d bring an additional 93 homes to Kirkwood, they’d automatically allow 93 families to be able to afford to live in Kirkwood who currently can’t. More spots available in Kirkwood simply means Kirkwood is attainable for more people.

3) Even if those 93 families families are fairly wealthy, it’s important to think about those 93 wealthy families would be doing in the counterfactual. Would they be buying a small home somewhere else in Kirkwood, tearing it down, and building a McMansion? or would they be renting an existing currently affordable apartment elsewhere in Kirkwood helping to drive the price of its rent up? Warehousing rich people helps keep the rest of Kirkwood more affordable for everyone else.

4) While almost every new building starts off as expensive, as it ages and faces competition from even newer developments that come along, prices drop yielding more affordability over time. There was a time when Station Plaza was the most expensive apartment in Kirkwood, but then The James comes along and Station Plaza has to drop its rents to ensure they can still attract tenants even though they don’t have a pool or Café Napoli or whatever. Now The James is considered expensive, but if these new apartments came online and they were nicer than The James, then The James would have to think about if their rent was still competitive and consider dropping prices lower to attract tenants too.

So yes, I think these apartments would help with Kirkwood’s affordability even though the rents are high. It’s just that they’re not going to be below market rate (to get that kind of affordability, you have to utilize affordable housing tax credits).

Good Project/Bad Project?

All told, the combined two-site proposal would have brought an additional 301 parking spaces, 93 homes, and nearly 7,000 sqft of retail space over and above the status quo.

Overall, the PJ’s project seems to have encountered the same difficulties of most of the other proposals submitted: an inability to reconcile the Council’s demand that any project significantly increase the amount of parking in Downtown Kirkwood mixed with their implicit desire that any such project be small in scale.

These two desires are inherently in tension. Including the PJ’s building in a proposal allowed Clay | Adams to develop something big enough that they could afford to cross-subsidize the parking the council wanted, but it also ensured that the building was going to be too big for the council’s conservative aesthetic preferences. A smaller building would have been more acceptable, but it probably would’ve made building so much parking financially infeasible.

Overall, my preferences are more aligned with the smaller, more fine-grained developments with less parking side of that tradeoff than the larger typology shown here, but until the council embraces paid parking (rather than mandates) as the solution to Kirkwood’s parking problem, and passes changes to our building code that would make smaller scale development financially feasible, these sorts of massive developments are going to continue to be developers’ only way of squaring the circle.

So yes, I think it’s too big and boxy, but I also think that’s on the Council more than anyone else. In fact, if smaller scale projects were what they wanted, they could have very easily divided the West Jefferson lot into three separate parcels rather than one big one. In fact, the lot already exists as three different addresses/tax parcels (115/113/107 W Jefferson) so even administratively it would have been easy:

But three smaller developments would’ve made it really difficult to build parking at a large scale. Instead of setting priorities, the Council tried to have its cake and eat it too and ended up with nothing. Let’s see how much that mistake will cost us.

Impact on Kirkwood’s Bottom Line

In my previous write-ups, I’ve talked quite a bit about the physicals assets —the parking spaces, retail stores, rooftop venues, and coveted boutique hotels the city has forgone from rejecting these proposals. As I mentioned above, those same costs are apparent here as well (a net increase of 301 parking spots is even bigger than the 211 spot increase proposed by IPG), but Clay | Adams’ proposal allows us go a step further and actually begin to quantify the hit to the city’s bottom line imposed by such NIMBYism.

That impact manifests in both the sales tax revenue foregone by the city itself, and the property taxes that accrue to both the city, but also the Kirkwood School District, the library, and Downtown Kirkwood Special Business districts. We’ll look at the sales tax impact first.

Sales Taxes

With regard to sales taxes, The Clay | Adams gives a nice breakdown of exactly what the three lots in question currently bring to the city in the form of sales tax revenue:

Property	Kirkwood’s Portion of Sales Tax Revenue
123 W. Jefferson (PJ’s building)	$31,500
W. Jefferson city-owned lot	$0
E. Jefferson city-owned lot	$0
TOTAL	$31,500

Clay | Adams then estimates what the two sites would have generated for the city in terms of sales taxes four years after completion. These estimates are based on a projected $8.08 million in annual sales across the two sites:

Property	Kirkwood’s Portion of Sales Tax Revenue
West Jefferson site	$64,236
East Jefferson site	$56,964
TOTAL	$121,200

That means that before we factor in any second order effects —like the additional sales tax revenue generated at other Kirkwood businesses by the residents of the 93 new homes included in the project or the greater availability of parking in Downtown— the city is leaving an additional $89,700 in sales tax revenue each year from these two sites alone.

Property Taxes

Next we look at the property tax impact. In 2023, the owners of the PJ’s building paid $46,368.20 in property taxes, of which ~$34,550 went to Kirkwood-specific entities. The two city-owned parking lots are tax exempt and therefor pay nothing (same as their contribution in sales tax), so the current total property tax revenue derived from the three properties is as follows:

Entity	Amount Paid
Kirkwood Library	$1,424.46
Kirkwood School District	$28,195.72
City of Kirkwood	$2,968.08
Downtown Kirkwood SBD	$1,960.67
TOTAL	$34,548.94

If we got those two parking lots off the city’s (un-taxable) books and allowed the developer to put them (and the PJ’s lot) to a higher, more productive use however, the property tax revenue would explode from the current $46,368 up to an estimated ~$240,000 of which approximately $180k would flow to Kirkwood related entities:

Entity	Amount Paid
Kirkwood Library	$7,424.66
Kirkwood School District	$146,963.02
City of Kirkwood	$15,470.39
Downtown Kirkwood SBD	$10,219.49
TOTAL	$180,077.55

In property taxes, the city and its related entities are leaving another $145k on the table each and every year.

Bottom Line

If we look at the sales and property tax together, we see that by rejecting this project

• The Kirkwood Public Library is missing out on: $6,000 a year
• The Kirkwood School District is missing out on: $118,767 a year
• The City of Kirkwood is missing: $102,202 a year
• And the Downtown Kirkwood Special Business District is missing out on: $8,259 per year

Add them all up and the Council’s rejection of this project (and the others like it) will cost Kirkwood-related entities $235,228.61 each and every year.

But it gets worse. Remember these two buildings that used to occupy the West Jefferson lot before the city demolished them in 2011?

According to the county’s tax records, their owner, Mel Bay, paid ~$30k in property taxes in 2011, the last year they were still around. The four Kirkwood entities listed above would get about 75% of that which gives you $22,032 in forgone tax revenue each year since 2011. Even if we don’t adjust for inflation or include any sales tax revenue they would have brought in, and instead just multiply by 12 (the number of years they’ve been gone), Kirkwood’s institutions have lost out on more than $264k compared to if the council had just done nothing. If we add on the cost of acquiring the property ($1.25 million) and building the parking lot ($95k), this 75-car parking lot has cost our city and schools nearly $2 million in 12 years. And with each year of inaction, that number grows a little more.

How big are we going to let it get before we decide that allowing people to build homes, businesses, and parking here —things that help the city’s bottom line rather than hurt it— might be a better deal?