Subsidies in Saint Louis: Part 1

By Graham Renz on Oct 21, 2016

What would you think if your city officials had gambled with nearly $1 billion in taxpayer dollars? What would you say if I told you that City of Saint Louis has put that amount of money at risk over the last 15 years?

Tax-increment financing (TIF) and property tax abatement (TA) are incentives used across Missouri to encourage development and economic activity. In short, these tax breaks subsidize private developers with tax revenue. When city leaders hand out these incentives, they’re betting that the resulting development will stimulate the local economy and increase long-term tax revenue. Unfortunately, the gamble rarely pays off.

In 2015, the 504 TIF projects in the state diverted $2.49 billion in tax revenue away from schools, libraries, and other taxing jurisdictions. Instead of funding core government services, these revenues went to private developers. Heavy use of TIF and other incentives in cities like Kansas City and Saint Louis has prompted officials, citizen groups, and researchers to investigate the effectiveness of these development subsidies.

This May, a comprehensive report on incentives in Saint Louis was released by the Saint Louis Development Corporation (SLDC), the agency that administers TIF and TA in Saint Louis. In a series of blogs, op-eds, and other outlets, we will explain and analyze the findings of the report.

Here are a few of the findings we’ll touch on:

Development incentives have little or no positive economic development benefits. The $709 million the city has spent on TIF and TA have not created jobs, revitalized neighborhoods, or increased long-term tax revenues.
Rather than being used in economically depressed areas, TIF and TA are used mostly in neighborhoods with strong housing markets. In fact, nearly two-thirds have been used in just three neighborhoods in the central corridor.
The level and quality of reporting on incentives is so poor that officials and the public “cannot readily determine what may or may not be deemed a project worthy of consideration for a City tax incentive” (p. 7).

In short, it looks as if the use of incentives in Saint Louis has been a disaster. Look for more commentary on incentives in Saint Louis and across the state in the coming weeks.