ST. LOUIS 鈥 For years, St. Louis Public Schools representatives were mostly quiet as city aldermen routinely approved developer tax incentives that have more impact on school budgets than on the city鈥檚 own revenue.
But the St. Louis School Board鈥檚 recent decision to shutter as many as nine city schools amid continued drops in enrollment has reinvigorated an old debate on the use of developer property tax breaks. That discussion could lead to a more active role for the school district on city decisions that would affect its revenue.
Aldermen have spent hours in recent meetings debating what are normally routine bills granting property tax abatements, which freeze tax collections for years before developments yield much new revenue for the school district. A new group, Solidarity with SLPS, has emerged, advocating for a halt to new charter schools and more scrutiny of development incentives.
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In its resolution last month on the school closure plan, the St. Louis School Board called for a review of the city鈥檚 use of development incentives along with a moratorium on new charter schools. Last year, $35 million in property tax revenue that would have gone to schools was not collected because of city-approved tax breaks for developers, About 60% of property taxes in the city go to public education.
Some aldermen are calling for the next mayor to appoint school representatives to the city鈥檚 Land Clearance for Redevelopment Authority board, which vets tax abatements. Schools already have two members on the city鈥檚 tax increment financing commission, which considers TIF requests.
鈥淚 do see this as a real turning point as far as the role that the school district and the School Board play,鈥 board president Dorothy Rohde-Collins said about the incentive debate. 鈥淚鈥檓 hopeful that the next mayor of the city of St. Louis will take an active role in the school district. I think that鈥檚 been missing for a very long time.鈥
Indeed, the issue has found its way into the current mayoral race. Two candidates in the upcoming primary election, Alderman Cara Spencer and Treasurer Tishaura Jones, have signed the Solidarity with SLPS petition. The two candidates who haven鈥檛 signed the petition, Board of Aldermen President Lewis Reed and utility executive Andrew Jones, argued that incentives are too simple of a talking point for what ails the school district, pointing out the school district鈥檚 budget is in fine shape, with reserves of over 30% and slow but steady growth in local tax revenue.
Still, all four candidates agree that it鈥檚 important to continue improving the city鈥檚 scrutiny of developers鈥 requests, dialing back approval in areas that would attract development without incentives, while keeping them available to encourage redevelopment in the city鈥檚 poorest neighborhoods. And they say incentives are only one of the issues facing the school district, which also has to contend with charter schools siphoning away state aid and a drop in support from the state funding formula.
Rohde-Collins acknowledged that the school district鈥檚 budget is far healthier than it was a decade ago. But she said the impact of uncollected property taxes awarded to developers is one thing the city can control locally. And she said it still affects the resources the district can provide to students and teachers when public schools are competing with charters and private schools for students.
鈥榃e aren鈥檛 taking money away鈥
Otis Williams, head of the St. Louis Development Corp., the city鈥檚 economic development arm, pushed back on the notion that the incentives his office vets deplete school resources. Tax abatements and tax increment financing, or TIF, freeze property taxes at current levels for a number of years. It鈥檚 the taxes on the property鈥檚 increased value, generated by redevelopment or new construction, that are abated. Abatement periods can stretch for as long as 20 years.
鈥淲e aren鈥檛 taking money away from taxing districts,鈥 Williams said.
He noted that his office has instituted a new evaluation system in the last five years, hiring analysts that scrutinize developer requests far more than previously was the case. Often, SLDC officials negotiate down developer incentive requests. Most tax abatements now start at 95%, down from the full abatement that had been standard. Big projects in stronger neighborhoods often receive less.
鈥淭he only way that what people are saying is true is if a project would happen without incentives,鈥 Williams said. 鈥淎nd I can tell you that the environment that we鈥檙e in the city of St. Louis, given the differences on the return on investment, all of the social issues that we deal with, you aren鈥檛 going to find this plethora of developers coming to the table to do a project without having a discussion about some assistance to make a project work.鈥
Rohde-Collins, though, doesn鈥檛 buy that all the developers who receive incentives needed them to make their projects feasible.
鈥淭hat may be true in some places or some locations,鈥 she said. 鈥淚 don鈥檛 think that argument should go unchecked.鈥
There are examples of projects that finance construction even without the tax abatement developers initially told the city they needed. For instance, Lux Living鈥檚 $29 million 150-unit apartment complex on DeBaliviere Avenue broke ground despite a dispute with another developer and the city that has kept SLDC from finalizing an 80% property tax abatement. Other times, rehabs have already begun by the time aldermen approve the incentives.
Williams pointed to several projects key to the city鈥檚 future that he believes truly needed incentives to close on financing: the rehab of a shuttered Midtown factory into the City Foundry food hall and entertainment complex; the Union Station renovations adding an aquarium and Ferris wheel; and Ballpark Village鈥檚 new downtown apartment high-rise and office building.
Still, some aldermen say they need to take a harder look at incentives. That notion bumps up against the long held tradition of aldermanic courtesy, by which aldermen are supposed to vote for projects in another alderman鈥檚 ward, no matter what. Those who don鈥檛 are often retaliated against by fellow board members.
Keeping that in mind, Alderman Christine Ingrassia, D-6th Ward, last month amended one of her own abatement bills, reducing to 50% from 90% the 10-year tax abatement for a $900,000 rehab of a former auto repair shop into office space.
鈥淚t鈥檚 very symbolic, but it does demonstrate the fact that I鈥檓 committed to making sure we are much more thoughtful about the taxes that are being taken away from the school district,鈥 she said.
The developer, Jassen Johnson, who has been chipping away at redeveloping the Midtown corridor with rehabs for years, said he understands the school debate and didn鈥檛 鈥渨ant to be greedy.鈥 But he said SLDC has come a long way with its evaluation system. 鈥淚t鈥檚 not just hearsay from a developer,鈥 Johnson said. 鈥淭here鈥檚 real data behind it.鈥
He cautioned against dialing back incentives too quickly.
鈥淚f incentives go away,鈥 Johnson said, 鈥渢hen development would come to a screeching halt.鈥