Tax incentives in St. Louis have come under increasing scrutiny in recent years, both from within city government and among citizens' groups.
Now the St. Louis Development Corporation, the agency that recommends whether a development should receive the city’s help, is proposing some reforms.
Executive Director Otis Williams says a new city-wide economic development plan is needed. While SLDC and the Board of Aldermen look for ways to cover the more than $1 million expected cost of developing such a plan, he and other city officials want to move forward with interim reforms.
Those could include lowering tax incentive levels in areas of the city where the market is stronger.
For instance, rehabbers or developers on residential projects likely would not receive 100 percent tax abatements in thriving areas of the city.
“There may be a few neighborhoods that may be 100 percent but most will be a fraction of the 100 percent based on need,” Williams said.
Other notable proposed reforms:
- Any project with development costs over $1 million would go through a comprehensive project review.
- The city would not allow sales tax revenue from hotel room sales to be captured for TIF.
- Lowering the cap on tax increment financing based on the city’s Market Value Analysis. So areas with a strong market will require less incentive.
- Projects with development costs greater than $50 million will be encouraged to execute a Community Benefits Agreement in collaboration with community stakeholders.
- Only allowing Community Improvement Districts or Transportation Development Districts if the projects include public improvements (parks, streetscape improvements or shared parking facilities.)
Williams submitted a draft of the proposals last month to Mayor Lyda Krewson and to the Board of Aldermen’s Housing, Urban Development and Zoning Committee. HUDZ Chairman Joe Roddy, D-17th Ward, said the reforms would give a better framework for both SLDC and the Board of Aldermen on what the city should offer developers.
“I think there are a lot of aldermen who are well-intentioned and have been wanting to do the right thing, except there’s been 28 different policies,” Roddy said. “Each alderman’s approach, using a development strategy in their ward, has been their own.”
Roddy said the HUDZ committee, as well as SLDC, has been working to change that over the last two years. In 2015 SLDC commissioned a study on the city’s use of tax incentives over a 15-year period. The development agency also created a new model to analyze proposed projects and score them.
Roddy said what’s missing now is a comprehensive economic development plan. But while officials figure out how to pay for it, they want to move forward with incentive reforms.
“Not that this will be the ultimate solution, but this would be more of an interim step that we could start sharing with people and the hope the Board of Aldermen would then adopt that and then that would give clear guidance to SLDC on what they can offer to developers,” he said.
The first public hearing on the proposed reforms is June 8 and 6:30 p.m. at Ascension Lutheran Church, 5347 Donovan. The door will open at 6 p.m.
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