So, Does This Mean Taxpayers Will Own Half of Stifel Nicolaus’ New Building?
For Saint Louisans, it’s a Good News/Bad News/Worse News sort of situation. The Good News? One of the region’s big employers, Stifel Nicolaus, is expanding its operations downtown and buying its building. So far, the situation sounds very good indeed. The Bad News? It means that Stifel won’t be moving into Ballpark Village, a development headache that’s plagued the downtown area for years.
The Worse News? It looks like taxpayers could end up paying almost as much for Stifel’s new business plan as Stifel is.
In this case, according to the application, Stifel is seeking $2.8 million in Build Missouri Bonds, a state program designed to defray the cost of expansions. That request will go before the Missouri Development Finance Board next week.
The company also plans to apply for $2.6 million in Missouri Quality Jobs tax credits, which reimburse companies that create jobs paying above-average wages.
Stifel predicts the average new employee will earn $65,000 a year.
From the city of St. Louis, it plans to request a $15 million allocation of federal New Markets Tax Credits, which translates into $3 million in equity for the project. Stifel also will seek property and earnings tax breaks worth $5 million over 10 years, and up to $500,000 a year in breaks on other local taxes — though Stifel agreed to make payments to St. Louis Public Schools.
Much of that aid, including all the state incentives, are dependent on Stifel actually creating the jobs it is promising. All of it, after expenses are counted for, will amount to $17.1 million in public financing for the $35 million project. The rest will come out of Stifel’s pocket. (Emphasis mine).
“The rest will come out of Stifel’s pocket.” Thankfully.
The Post-Dispatch’s Bill McClellan highlights the contradiction at play here.
Of all the businesses that ought to understand the business of business, it’s Stifel. It’s a brokerage and investment banking firm. The people who run Stifel profess a belief in capitalism.
Except, of course, when it comes to their own affairs. Risk and reward? Nonsense! No investment without incentives.
Well, fine. I can understand the sentiment. If you can get public money, why not get it? What I can’t understand is the way the public always goes along with this stuff.
Just two days ago, David wrote a blog post about how some young entrepreneurs are looking for government assistance to get their businesses off the ground. Unfortunately, it seems they learned the wrong lessons from their predecessors.