St. Louis aldermen frequently employ a traditional economic development tool, voting to give up millions of dollars in taxes in order to attract development dollars. This is a useful way to improve troubled neighborhoods and stop homeowners from fleeing to the suburbs, but it’s the wrong approach without a comprehensive plan to guide redevelopment and to ensure the economic impact is a net gain for the city.
The city’s economic development arm is working on a plan, which would have better served residents if it had been in place years ago. Previously, most tax incentives were awarded in neighborhoods along the city’s central corridor that were already thriving. That left little for development incentives in north and far south St. Louis.
There’s no use lamenting lost opportunities. Moving forward, a development plan must include incentives for ensuring investment in areas of the city. Otis Williams, director of the said it will require more reporting from developers and residents who get abatements and tax increment financing deals. There must be better tracking and analysis from the city, and shorter abatement times or none at all in healthier neighborhoods.
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The plan should also encourage ending a quaint political perk known as “aldermanic courtesy,†which means an alderman doesn’t ask too many questions of a colleague requesting a tax abatement in his ward.
There should be healthy debate and lots of scrutiny about the best way to encourage balanced development. If well-connected homeowners or developers are buying property in healthy or upcoming neighborhoods yet still receiving tax abatements for five or 10 years, aldermen need to be asking why.
The upcoming development plan follows a to St. Louis’ credit rating, and the loss of about $709 million in local tax revenue to property tax abatements and tax increment financing between 2000 and 2014. The budgetary effects are real and can have serious knock-on effects.
More than half the money — about $12 million a year or roughly 3 percent of the St. Louis Public Schools’ budget — exempted by tax abatements would have gone to the schools. When schools decline for lack of funds, so does the incentive for middle-class families with children to stay in the city.
If the city had been operating with a plan, leaders might not be in the predicament they’re in now, needing to find funds to pay for $3 million to upgrade the Jefferson Avenue/Interstate 64 intersection after Gov. Jay Nixon stripped that money from the state budget. The upgrades will be needed to channel workers to the planned National Geospatial-Intelligence Agency on the city’s north side.
St. Louis has 28 wards, and all of them will improve if aldermen coordinate efforts to make the city the best it can be.
