Town and Country charged no property tax for decades. Times have changed.

TOWN AND COUNTRY — Property owners in this west St. Louis County suburb are paying a new tax this year they haven't had to pay for nearly three decades.

Town and Country, known for its large homes on lots of 1 acre or more, is levying a municipal property tax for the first time since 1997.

The local tax is estimated to generate $2.4 million per year for the city to cover an annual $1 million budget shortfall and save for future needs, city leaders say.

Across St. Louis County, property taxes are the go-to revenue source for dozens of municipalities and several fire districts. But Town and Country, population 11,500, was for years among a few wealthy municipalities in St. Louis County where business activity was high enough to cover most public expenses through sales tax revenue alone.

Times have changed.

Online shopping, which the Town and Country can't currently tax, is undercutting brick-and-mortar sales, which have fallen after rebounding from the COVID-19 pandemic. Major employers in the city have moved out or downsized their office footprint in a trend toward hybrid and remote work. And the city, which guards its residential "country" character, has all but used up its vacant land available for new commercial development.

"It's just gotten to the point that it was virtually impossible for us to maintain the services we need without a property tax," said Mayor Charles Rehm, who was elected in 2021. "It's just that simple. This is a reluctant step for fiscal solvency, but it was necessary to be done."

In Town and Country, with multi-million-dollar mansions, the owner of a home appraised at $3 million would pay $1,311 a year for the new municipal property tax. The owner of a home worth $500,000 would pay about $218 a year.

Ten other cities in the county don't levy any property tax. They range from populous and retail-rich Chesterfield to Bella Villa, a city of about 750 people with a handful of city employees.

Town and Country, which has about 50 employees, is projecting about $18 million in annual expenses next year — but would only have $17 million in annual revenue without the new tax, officials say.

The city will hold about $9 million in reserve under a longstanding ordinance requiring it to hold at least 50% of the amount it spends on general services year to year, in case of emergency. Rehm said using those reserve funds to plug the budget gap would only push the city's revenue problems "down the road."

The city traditionally got more than half its revenue from proceeds from a 1.25% municipal tax on sales at brick-and-mortar stores , followed by business license fees that generated hundreds of thousands of dollars, City Administrator Bob Shelton said. But that revenue hasn't kept up with yearly increases in costs, largely from fire and police services, he said.

The city can't tax online retail sales, known as a use tax, without voter approval. Last year, 55% of voters rejected a use tax that officials estimated would bring in $500,000 annually. Voters also rejected a use tax in 2021.

About 30% of the city's office market is vacant, Shelton said. In recent years, Energizer left its longtime headquarters at Interstate 64 and Highway 141 in Town and Country for a space half the size in Clayton. Sporting goods company Rawlings is moving its headquarters to Maryland Heights. And Charles Schwab closed its Town and Country branch, in an office that previously served as the headquarters for Ameritrade, to transition employees to remote work.

Shelton said the city is considering ways to draw employers back, including cutting business license and building inspection fees.

Meanwhile, any new development in Town and Country will largely be residential. Most of the city is devoted to residential properties and parks, apart from the few existing shopping plazas and office complexes along the city's edges on Manchester Road and Highway 141.

The last large commercial development was Town Square, a 9-acre park and retail site in the city's center that the city spent roughly $6.5 million to develop. Last month, officials approved a plan to turn Woods Mill Road, a dilapidated shopping center that accounted for less than 1% of retail sales, into condos built around a restaurant and retail space, after residents rejected a proposal by Maryville University for an e-sports complex.

"Believe me, we're in favor of retail, but we also want to balance that with keeping the 'country' in Town and Country," Rehm said.

The property tax will cover the deficit and give the city funding to set aside for a projected $7 million to $10 million cost for upgrades to city hall and the fire station, both more than four decades old, Shelton said. The city has hired a contractor to study and detail the city's infrastructure repair needs for the next decade.

The Board of Aldermen voted 5-1 in April to approve the property tax, after twice rejecting the idea in recent years. The city at the time used federal pandemic aid to plug the gap, but those funds are gone, Rehm said.

"The entire board realized we have been discussing this for two years and our numbers haven't improved any," he said.

Alderman Joe Kinsella, the lone no vote against the property tax, said during the April meeting that he wanted the city to complete its study on its capital needs over the next few years before adopting a property tax. He declined comment this week.

The property tax Town and Country levies is among the lowest in the region, at 23 cents for every $100 in assessed value of residential and commercial property. Cities last year charged a range from $2.1 per $100 in assessed value in Moline Acres to 1 cent per $100 in assessed value in Black Jack.

Rehm said residents in Town and Country should also know the city is the only one where residents aren't charged an additional property tax for fire services. Residents in all other cities pay a property tax that funds either a municipal fire department or a fire protection district. Town and Country pays out of its general fund to contract fire services from a neighboring fire protection district, West County.

The last Town and Country local property tax, in 1996, was 40 cents per $100 assessed valuation. Officials voted the next year to cut the rate down to zero.

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St. Louis County reporter