Racial equity and tax incentive policy in St. Louis

St. Louis is proposing a temporary reform of its tax incentive policies, until the city gets enough money to do a permanent overhaul.

While that’s how the city’s development authorities are touting it, that’s not how Aldermen Joe Roddy of the 17^th Ward is explaining it at public meetings. Roddy sponsored Resolution 33, which proposes the interim guidelines, and the board has not yet taken a final vote on the resolution.

The EYE attended one of the Board of Aldermen’s public “listening” sessions on June 13. Here, Roddy, who is chair of the aldermanic Housing, Urban Planning and Zoning Committee, started off the meeting by saying that the aldermen want to have these new “interim guidelines” so developers don’t get scared away if there is an extensive debate at the Board of Aldermen. (Aldermen have the power to vote on whether or not projects receive these incentives – not that they have ever voted down a project, to the EYE’s knowledge.)

At the June 13 meeting, Roddy said that the city needed “clear guidelines so when it gets down to the Board of Aldermen, there’s a predictable outcome. That’s what we’re hoping to do.”

Nowhere in the introduction did Roddy mention that the need for incentive reform actually came from an analysis of economic incentives – which the city commissioned – that showed the city’s current system was inefficient.

It wasn’t until a resident asked at the end of the city’s presentation why they hadn’t gone through a review of the city’s history of incentive use did Otis Williams, director of the St. Louis Development Corporation (SLDC), point to the PFM study as the reason for the reform.

Throughout the rest of the meeting, it was nauseating to hear Roddy and his vice-chair Alderwoman Marlene Davis of the 19^th Ward, continuously justify and defend their old ways of doing things any time a community member tried to challenge them.

Washington University professor Molly Metzger finally asked the question that most people in the audience were thinking when she said, “I thought that’s why we were here. Aren’t we here because we have a problem that needs reform?”

To say that Roddy and Davis are leading reform on tax incentives is about as depressing as saying Trump is leading health care reform. What would you expect? Loopholes and no teeth.

In fact, that’s the first critique from Metzger, who chairs the social and economic development concentration at Washington University’s Brown School of Social Work. She’s also a member of Team TIF, a group of unpaid volunteers who act as watchdogs on the city’s tax incentive use.

“It needs teeth,” Metzger said. “There are some parts of this resolution that are steps in the right direction, such as limiting the use of incentives in strong market areas. But I have no faith that SLDC and the Board of Aldermen will voluntarily heed these guidelines.”

Metzger said the current guidelines are routinely ignored, so this needs to be an “enforceable bill, not a non-binding resolution.”

Williams said, “Once we get through the planning, we will look at something more permanent. We are going from two years ago, not a lot of scrutiny. Now everyone is looking at what we’re doing.”

Interim guidelines 

There are 11 guidelines. First, the city said it will make developers go through more hefty application requirements and review on projects with development that costs more than $1 million. Developers like to wait until the last minute to apply for the incentives and then say it’s urgent. The new guidelines give developers deadlines on when they can submit applications.

The city said it will no longer contractually agree to contribute sales tax from hotel room sales to a TIF project. It won’t capture the new sales tax generated by the recently passed Proposition 1 for TIF projects.

The new guidelines will also consider impact on other businesses. For example, if a project is proposing to put a hotel or restaurant, the city will weigh the impact on other surrounding businesses.

“We know that restaurant A will lose to B, so we will capture that into our analysis and pass some of that back to the city,” Williams said.

The “controversial” guideline, Williams said, is where the city will encourage Community Improvement Districts (CIDs) and Transportation Development Districts (TDDs) – for public improvements only – in order to reduce TIF and tax abatement requests.

The city’s measuring stick on market value received criticism from the audience. The city uses data from the Market Value Analysis (MVA) to determine the health of the market throughout the city. And based on this data, the city will limit the amount of TIF assistance and tax abatements in some parts of the city – but not completely curb tax incentives in healthy markets. Metzger strongly opposes using the MVA as a benchmark because it’s not the best data and it costs the city money. Williams stands by it.

And finally, the city will also “encourage” Community Benefits Agreements (CBAs) on all projects with development costs more than $50 million.

Weak reform

Metzger said that the suggested limits on incentive use, especially tax abatement, don't go far enough.

“I live on the border of the Tower Grove East and Fox Park neighborhoods on the near South Side,” Metzger said. “I see rehab going on all around me. Some of it is abated, some of it is not. I do not believe that neighborhoods like mine will lose investment if we take abatement away.”

Many of the abated homes are used to convert two-family flats into single-family homes, adding to the gentrification of neighborhoods.

“This practice reflects the opposite of a racial equity lens, and it has to stop,” she said. “In short, in strong market areas like Tower Grove East, Shaw, Lafayette Square, etc. we should be extending zero abatement. The one exception in these types of neighborhoods should be for affordable housing.”

Metzger and several other residents in the audience spoke about the need for inclusionary zoning – or development policies that require a given share of new construction to be affordable by people with low to moderate incomes, if the city is subsidizing these projects.

It was a call to action in the Ferguson Commission report, and Mayor Lyda Krewson also said that she would “absolutely” move to make inclusionary zoning a policy in St. Louis during her mayoral campaign.

In an interview after the meeting, Williams said that he hasn't looked at inclusionary zoning, and that he's never spoken with the mayor about it. 

The American asked to speak with Krewson about the pending tax incentive reform. A spokesman said he would get back to us, but we had received no response a week after making the request.

In the city, the wealthiest neighborhoods are about 8 percent black, Metzger said. And the poorest neighborhoods are, on average, 80 percent black.

“The current system is clearly benefiting the Central Corridor and near South Side: disproportionately white areas of our city,” Metzger said. “As such, not just limiting, but ending the use of abatement in these areas would be one good step toward racial equity.”

Williams said that they will not do that because there are still projects within these boundaries that need incentives.

Police chief search forum 

On May 25, Krewson formed a 13-member Citizen Advisory Committee to help find a replacement for Police Chief Sam Dotson, who was retired on April 19 after leading the St. Louis Metropolitan Police Department since 2012. The committee will hold a forum to gather the community’s input on the search from 10 a.m. to 12 p.m. Saturday, July 8 at Vashon High School, 3035 Cass Ave. Visit http://www.bit.ly/stlcitycachome for more information on the Citizen Advisory Committee.

28^th Ward election 

Voters in the city’s 28th Ward who want to vote an absentee ballot for the July 11 special election may do so at the Board of Election Commissioners, 300 N. Tucker Blvd., during regular office hours of 8 a.m.to 5 p.m., Monday through Friday, or on Saturday, July 8, from 9 a.m. to 1 p.m.  The last day to send an absentee ballot application by mail is Wednesday, July 5.  The last day to vote an absentee ballot in person is Monday, July 10, at 5 p.m.