St. Louis aldermen and economic development officials have proposed new guidelines for the city’s construction incentives, the latest effort to reform the common tax breaks amid calls to better manage their use.
The incentives have become a flashpoint in recent years and were a big issue during the most recent mayoral campaign, with most candidates calling for curbs on their use in stable neighborhoods. The city helped start the debate with a report it commissioned last year that put the value of the tax breaks over 15 years at roughly $709 million. It has since hired a financial analyst and begun more stringent reviews of proposals seeking tax breaks.
The proposals call for capping development incentives in stronger neighborhoods and requiring large projects to undergo reviews by the St. Louis Development Corp., the city’s economic development arm. Other measures aim to protect the city’s existing revenue streams and keep new voter-approved taxes from being captured by tax-increment financing, or TIF, which lets developers use the increases in property and sales taxes generated by their project to help finance it.
Those who support the use of incentives argue many projects wouldn’t have been built without them and that much of the forgone tax revenue never would have been generated. But critics say the city has historically put few limits on incentives, unnecessarily subsidizing some projects in vibrant areas and costing a cash-strapped city millions in annual revenue.
Read more: St. Louis Post-Dispatch