Tax abatements are a time-honored economic development tool to lure developers and stop homeowners from migrating to the suburbs. For troubled neighborhoods, they help combat blight. But they were never meant to be used as perks to be dispensed by St. Louis’ 28 aldermen for political gain, particularly in stable neighborhoods that don’t need financial incentives.
The city’s tax-abatement formula needs a thorough review because unworthy recipients are draining significant amounts of money needed to bolster . With all the attention aldermen and activists direct at the tax increment financing incentives awarded in St. Louis for large-scale projects, few are scrutinizing who receives property tax abatements.
They should. According to a report in May, the value of TIF incentives awarded from 2000 to 2014 was $401.6 million, while property tax abatements over that same period were valued at $307.5 million.
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Particularly troubling is that more than half the money exempted by tax abatements would have gone to the St. Louis Public Schools. That would be about $12 million a year for the district, or roughly 3 percent of the schools’ budget.
That’s serious money that could be used for programs that help elevate student performance and attract middle-class families with children to the city.
In the August edition of St. Louis Magazine, staff writer says that when federal dried up as a way to reclaim blighted chunks of the city, local authorities began “spot-blighting” property one parcel at a time. The practice opened the door for single properties to qualify for abated taxes.
Questionable abatement justifications flourished, such as a cracked sidewalk in the Central West End. She quotes , author of “Mapping Decline: St. Louis and the Fate of the American City,” as saying that spot-blighting undermines the basic logic of rebuilding neighborhoods and does nothing to fight blight.
Too often, the result is that well-connected homeowners or developers buy property in healthy or upcoming neighborhoods and, because of abatements, avoid having to pay taxes on improvements often for five or 10 years. It further compounds the lack of investment in truly blighted areas.
Aldermen don’t ask many questions when one of their colleagues requests a tax abatement. All honor a practice known as “aldermanic courtesy” — I won’t question what you want in your ward if you don’t question my requests. Cooperman wrote that she checked approximately 100 tax abatement votes, and every one passed unanimously.
Aldermen must scrutinize every request to ensure all abatements are consistent with the city’s development goals. If the incentives don’t encourage investment in struggling neighborhoods, reject them. It’ll take courage. But we cannot continue robbing public schools to feed such abusive practices.
