Wait … Shouldn’t Missouri Have a Firm Commitment From China Before Awarding $480+ Million?

Several Missouri legislators are looking to pass a tangled package of state tax credits and other subsidies for developers, cargo warehouse operators, and others in the hope of spurring increased trade with China.

I’ve been reading current and past news coverage carefully, though, and I can’t seem to find a firm commitment from China or from Chinese flight companies to increase freight traffic to the Saint Louis airport if these tax incentives are authorized.

More troubling, the “aerotropolis” legislation, the bill that details all of the various state subsidies relating to the “China Hub” dream, does not specify that the subsidies are void if there is no commitment from China. (And, actually, I can’t seem to find the word “China” used even once in the legislation itself.)

Yet that potential trade with China is the justification provided by China Hub proponents for the subsidy.

From the St. Louis Post-Dispatch:

“China was losing patience because we were not coming in with anything,” [Steve Stone, an attorney involved with the negotiations,] said.

Then Stone brought up the Aerotropolis package, which would create $60 million in tax breaks for shipping companies that export by air from Missouri, and $420 million in credits to build cargo warehouses and other facilities in certain spots, like the region’s now-closed auto plants or the NorthPark business park east of Lambert. It would lower the cost of flights, and help draw more companies to locate around a cargo hub, Stone said.

“The mood changed,” Stone said. “They see a way here for them to succeed.”

Am I missing something? When I wrote about the great deal of public subsidy slated for warehouse construction, Post-Dispatch reporter Tim Logan pointed out on Twitter that, in fact, there are no agreements, just negotiations.

The Post-Dispatch reports that, according to a letter supplied by that attorney:

[…] a top China Cargo executive sent a letter to Mayor Francis Slay. He called the proposal “truly wise and innovative,” according to a copy supplied by Stone. He also said that without Aerotropolis or something like it, “opening a new air route to St. Louis will be very difficult, or even inconceivable.”

That hardly sounds like a commitment. If Missouri is willing to create incentives for this project for a specific duration of time, why isn’t China willing to commit to sending a certain number of flights to Missouri for a specific duration of time?

And, if it is the case that Chinese representatives won’t agree to sending more planes to Missouri without the subsidy, why aren’t they saying so in a clear, verifiable way? Why is an attorney with a vested interest in the project speaking for the Chinese?

Here’s another equivocal statement from Lambert Airport Director Rhonda Hamm-Niebruegge, as reported by Channel 4:

“I think if we really want to build an international cargo hub, if we don’t get this, we could see it not happen,” Hamm-Niebruegge said.

Could? Is there a commitment or not? Is China depending on this bundle of tax credits and incentives or not?

Readers of Show-Me Daily know that I prefer for government to state such claims in writing. Written documents provide some level of transparency and accountability, as opposed to unsubstantiated opining.

As the proposed legislation stands, it will likely cost more than $480 million — which is already close to half a billion dollars — and, as Christine Harbin pointed out, the benefits of the China Hub will be concentrated in the Saint Louis area.

If Missouri legislators are going to continue to push to give out a great deal of taxpayer money, the least they can do is get a real commitment from Chinese representatives, or write  safeguards into the aerotropolis legislation. Is that so much to ask in exchange for about $80 in taxpayer money for every Missourian? Or is it all too tenuous to put in writing?

It isn’t good public policy to subsidize warehouse construction and operation with no real likelihood of increased freight traffic.