Better Together's Economic Development Report Examines TIF Use
A group studying the potential for a merger between St. Louis and St. Louis County released a report on regional economic development policy Wednesday.
Among other things, Better Together’s 31-page report examines tax increment financing (TIF) in the city and the county. While the report emphasizes that some TIFs have been beneficial to municipalities, the study contends that the widespread use of TIFs is pitting municipalities against each other.
The Better Together report states that the structure of approving TIFs makes it easy for a big box store or a national chain to take advantage of cities or towns.
It pointed to a 2010 situation in which Bridgeton approved a TIF to entice a Wal-Mart to move two miles away from its original site.
“Missouri has created an economic development tool that is readily available and allows for municipalities to chase sales tax revenue. When the lack of regional or state oversight is coupled with the fragmentation of the St. Louis region, a perfect storm is created for widespread use of an economic tool that provides benefits to an individual municipality at the expense of neighboring municipalities and the region.”
Brian Murphy, who serves a co-chair for Better Together’s economic development study, said the overuse of TIFs amounts to a squandered opportunity for regional cooperation.
“We’re fighting internally instead of trying to bring new dollars in,” said Murphy, the owner of BAM Contracting. “So you lose that advantage that you have by fighting infighting and not coordinating your efforts.”
A recommendation for getting rid of TIF for Tat
One potential change the report put forward is requiring an additional level of approval for a TIF. As it works now, a TIF Commission's decision can be overridden by a two-thirds vote of a city council. The report suggests requiring another entity -- such as a school board or a county commission -- to approve a TIF. Not just a municipal governing body.
Another alternative would be to make it more difficult for a municipality to override a TIF Commission. For instance, St. Louis County’s TIF Commission could reject TIFs, but that decision could be overturned with a two-thirds vote from a municipality’s governing body.
“When we talk about a commission with teeth, we’ve got to talk about what are those ways to override,” said Better Together’s Marius Johnson. “And maybe that’s a vote of the people, maybe it’s some other scenario where it’s not just incumbent on six people in a room who already said ‘Yeah, we want this TIF,’ to override the vote of the commission.”
Former Sen. Scott Rupp, R-Wentzville, has introduced legislation to Missouri's General Assembly requiring a vote of the people – as opposed to a two-thirds vote from a city’s governing body – to override a TIF commission. But that proposal has faced stiff opposition, including from the St. Louis County Municipal League.
Not all TIFs are bad
St. Louis County Municipal League executive director Tim Fischesser said TIFs have been a useful economic development tool for cities.
“If you look at who has done suburban renewal in St. Louis County, it’s not been much on the part of the county, school districts, fire districts or others that enjoy tax benefits – it always falls to the cities,” Fischesser said. “You look at the TIFs that have been done and you say, ‘Well, let’s start taking those away as if we could have prevented them,’ would we be happy then with lower property uses in those areas that have initiated TIFs?”
Fischesser said he’s not convinced the evidence shows that TIFs pit municipalities against each other. He also said St. Louis County municipalities have generally used TIFs properly.
“Most of the TIFs, I think, people would say have helped the communities and helped the county and helped all of the other taxing jurisdictions,” Fischesser said. “You could argue over some of them. But most of them took underutilized property and took them to a higher use. They produced more taxes and they produced more jobs.”
Better Together’s study also suggests adopting uniform workforce diversity goals across the region. It also recommends that municipalities provide checklists for starting businesses and for the establishment of a “welcoming center” that could help new business owners set up shop.