On Tuesday, Missouri lawmakers will start debating $360 million in proposed tax breaks to help turn St. Louis' underused airport into a bustling international cargo hub.
Yet, as currently written, that bill could commit Missouri to spending $300 million of that to build factories and giant freezers — even if few cargo planes ever land at Lambert-St. Louis International Airport, much less transport Midwest-made goods around the globe.
That simple fact highlights the space between the soaring rhetoric of China hub supporters and the nitty-gritty details of the complex legislation they say is essential to make it happen. And it's one of many details that have fueled suspicion of the so-called Aerotropolis tax credits since they were unveiled six months ago.
Debate over the credits lies at the center of the special legislative session to start Tuesday. They are the linchpin of a huge economic development bill that would create new funds for science startups and computing centers and reshape Missouri's whole menu of tax credit programs. That bill, in turn, provides political room to move Missouri's presidential primary and restore local control to the St. Louis Police Department.
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It's a big dish being plated this week, but the key ingredient is Aerotropolis.
The program, worth $360 million over the next 15 years, is crucial if Lambert hopes to parlay a few China Eastern cargo flights — which Sunday's Post-Dispatch reported will start later this month — into a true international freight hub, with spokes to South America, Africa and Europe. Supporters say this hub could help "re-internationalize" St. Louis' economy, create jobs by the thousands and position St. Louis as a portal to the East, much as it was the Gateway to the West a century and a half ago.
But some critics call the idea a mirage, and the Aerotropolis credits have drawn fire from both right and left. On Thursday, Sen. Jason Crowell, R-Cape Girardeau, called it a "cancer" that must be sliced from the bigger economic development bill, arguing it will boost imports and move jobs overseas.
Skeptics wonder about what's going to be flying on all these planes, asking why there has never been an independent study of the demand for a Lambert cargo hub. They question a provision setting up special funds to market the hub and wonder whether it's there to reward business groups that have lobbied for the bill. They read that Aerotropolis would set up 100-acre "gateway zones" — where buildings will get tax breaks to house foreign trade — and see giveaways to developers like Paul McKee, who controls big sites around the airport and helped devise the entire hub plan, in the works now for four years.
"It just seems like there are all these loose threads," said Audrey Spalding, a policy analyst with the Show-Me Institute who has followed the bill for months. "When you pull on them, it keeps unraveling."
Sen. Eric Schmitt, the Glendale Republican who authored the bill and has guided it through talks in both houses of the Legislature, has heard all these critiques many times. It's a complicated bill, he said, but its aim is true.
"There really is not a bogeyman here," Schmitt said. "This is about growing the region and attracting facilities and operations and jobs."
Aerotropolis has already been slimmed down.
As first written, the bill contained $480 million in credits, including $120 million to pay back interest on construction loans. That money was sliced out. Also eliminated were exemptions from state corporate income and franchise taxes for businesses in the zones. The only income tax break left is an exemption from St. Louis' 1 percent earnings tax.
The boundaries of gateway zones were tightened, and oversight by state officials was strengthened. A clause was added that requires any business receiving credits to create at least 10 jobs — though they have until 2018 to do so.
These changes have won over some skeptics, Gov. Jay Nixon among them. Early on, he was lukewarm toward Aerotropolis, but since agreeing last month to call the special session, he has stepped up support. Talking to reporters Wednesday, Nixon said he's confident the bill has "adequate protections" for taxpayers.
"I think we've made significant progress on that," he said.
But some critics say there's still a ways to go.
Spalding, for instance, is worried about the amount of discretion it gives local officials — the mayor of St. Louis and St. Louis County executive — to dole out state tax credits. And she pointed to that provision allowing credits — worth one-fifth the cost of construction — for factories even if they don't export. It's a loophole that could cost the state a lot of money, she said.
"There's all this talk about international cargo, yet businesses can get the credits without any level of international cargo," she said. "If we pass this bill, and unfortunately negotiations with China don't go through, we're still going to be using these credits."
But if those credits are used that way, they'll be used building factories, said Schmitt. Factories create good jobs, he noted, and tend to drive transportation, creating more demand for cargo flights and shippers. And Aerotropolis credits are richer for the construction of warehouses in which at least one-fifth of the contents are shipped internationally by air.
"We're filling in the missing piece," he said. "You can't dismiss the importance of assembly."
Still, some people question the demand to ship things internationally via St. Louis.
Underused airports from California to Ohio have seen their cargo efforts fizzle. Industry analysts point out that freight forwarders — the so-called travel agents of air cargo, who route freight across the globe for manufacturers — like to operate at big gateways like O'Hare, New York's JFK and Miami. Those places have many overseas flights — both passenger and cargo — and experienced networks of shipping companies. A fledgling operation, with just a few flights a week to one city, will find it hard to compete, said Michael Webber, a Kansas City-based cargo analyst. Freight forwarders send goods from factories to many destinations at once. They put it on a truck to the airport with the most options.
"Some of it's going to Beijing, and some of it's going to Frankfurt," said Webber, whose clients in the past have included O'Hare and Kansas City International, but who says he's not working for them now. "It's extremely tough to convince them to send all that through Chicago, except what's going to Shanghai — that you send through St. Louis."
The Aerotropolis bill is designed, in part, to deal with this. It includes $60 million in subsidies to make it cheaper for forwarders to export through St. Louis, though Webber argues that just highlights how much cash St. Louis must put up to compete.
To address of the broader issues of demand, Lambert's supporters point to their negotiating partner. The Chinese government plans big investments in aviation in the next five years. It has said it wants to triple its share of U.S.-China air freight traffic, now dominated by a few American carriers. It needs a landing spot in the Midwest. St. Louis fits.
They also point to a pair of studies — both of which are near completion — that suggest how a hub could grow.
One by Emerson, which has been closely involved in talks with the Chinese, suggests that capturing 22 percent of China-bound air cargo from within 500 miles would support three profitable flights a week between Lambert and Shanghai. Taking just 8 percent of the market would support one flight — which is what will start later this month.
The other, by a pair of consulting firms hired by the Regional Chamber and Growth Association, lays out ways St. Louis can leverage its rail, road and river connections to boost its air cargo efforts, particularly as a wholesale freight hub.
"They see tremendous potential for St. Louis to brand itself as the leading wholesale trade center in the Midwest," said Steve Johnson, vice president for economic development at the RCGA. "There's nobody claiming that space."
Still, it's not quite clear what all these planes would carry. The exports that move most through St. Louis — such as coal, grain and scrap metal — don't fly. U.S. beef, often mentioned as a likely east-bound export, is still banned in China, though experts say that could soon change. There has been talk of shipping high-tech farm equipment, medical devices, perhaps even Asian carp pulled from the Illinois River.
Frankly it's too soon to know, said Schmitt. The goods carried on the Erie Canal 30 years after it opened were far different than on its first barges. The key is to have the pieces in place to be ready for what comes. That's why he's pushing Aerotropolis so hard.
If nothing happens, Schmitt said, it won't cost Missourians much. Unlike some programs, the credits won't get issued until businesses are up and running.
"If it's not feasible, it'll never happen," he said. "But we have the second-largest economy in the world taking a very serious look at it, and that's why Aerotropolis was designed the way it was."