For years, St. Louis has been willing to offer a decade or more of property tax breaks to developers building something new in the city.
Only recently, after a big report showed hundreds of millions in forgone revenue, has it begun dialing back its property tax abatements. Now, it tries to set up deals so there’s at least some new property tax money up front when developers put up new buildings or rehab old ones. Even so, those deals still amount to big discounts on the property taxes that would otherwise be paid on land improvements, generally 75 percent or more.
This week, the agency that oversees tax abatement requests, the Land Clearance for Redevelopment Authority, indicated a new approach. Instead of tax abatement, it wanted to offer tax assurance.
The first case appears to be the developers of the 192-room AC Hotel by Marriott in the Central West End. The project, slated to be built on the site of the old KPLR studio on York avenue near the Chase Park Plaza, would still pay full property taxes on the value of improvements when it’s completed around mid-2019. But the deal would be structured so the property assessment doesn’t rise more than 2 percent during each biennial reassessment.
That move gives the developer of the $40 million project at least 10 years of property tax certainty, officials say, while not offering a big tax break in a neighborhood that many argue no longer needs subsidies. The approach may well be back, especially as the city looks to dial back the incentives it offers to builders in its strongest neighborhoods.
Read more: St. Louis Post-Dispatch