By Adam Allington, KWMU
St. Louis, MO – A report issued on Wednesday has found that development funded through tax increment financing, or special taxing districts, may be a net loss for the St. Louis region.
An interim report by the East-West Gateway Council of Governments found that some $2.5 billion in development occurring in those special taxing districts from 1990 to 2007 did not create corresponding growth in tax revenue.
Former grocery chain CEO Craig Schnuck said tax deferred financing merely siphons sales tax revenue out of one community and into another.
"The big-box developers are going in and playing one small community against the other," Schnuck said. "Using the opportunity to create a big sales tax gain solves one community's fiscal problems, but it creates problems for every community around it within a ten-mile area."
However the Schnuck family has benefited from TIFs through its development company DESCO.
The new Schnuck's store in downtown St. Louis is receiving public support from the city and state. And TIF-financing was a major part of DESCO's Loughborough Commons development in south St. Louis, which includes a Schnuck's grocery store.
East-West Gateway cautioned that some of the data used in the report were not complete.
Also in the report was information that would indicate TIF financing is not an efficient way to create jobs.
The report claims that over the last 15 years more than $2 billion in TIF financing for retail projects created only 5,400 low-paying jobs. In the end that amounts to a subsidy of approximately $370,000 per job.
But Mayor John Nations of Chesterfield said tax-increment financing in the Chesterfield Valley has been crucial for regional growth.
"The benefits from the valley have flowed to the entire region," Nations said. "They make our entire region more attractive to employers. We ended up assisting the St. Louis County Airport, and other businesses; it ended up producing a lot of retail in the valley."
The study found that roughly 80 percent of all TIF-financed development went for retail development projects.