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Executive Summary (7)

The PFM Group – St. Louis Comprehensive Revenue Study

Evaluation of TIF Program

St. Louis’ use of TIF has been driven by its need to redevelop older, vacant properties into more profitable developments. The City has been successful in catalyzing developments that have led to above average increases in City job and wage growth. However, in the process, whether these projects actually achieve City development goals and produce satisfactory financial results has not been actively considered.

The City also maintains very broad standards for the use of TIF funds. In St. Louis, TIF funding is restricted to uses specified in the state TIF Act, which lists a very wide array of eligible uses. Currently, City TIF policy expresses a preference for public infrastructure expenditures. Beyond these, there are no meaningful requirements for the appropriate use of TIF funds.

Recommendations/Options

  1. Regular Reporting and Evaluation of TIF Performance
  2. Align Projects with Specific Development Goals
  3. Undertake More Rigorous Cost Benefit Analyses
  4. Restrict Use of TIF Funds
  5. Solicit Community and Stakeholder Buy-in and Feedback
  6. Consider Use of Pay-as-you-go Financing
  7. Establish TIF Property Assessment Value Limits
  8. Consider New Methods to Recoup City Costs

Tax Abatement

Tax abatement is another incentive commonly employed by the City as an economic development tool. In St. Louis, tax abatements freeze the tax assessment of new improvements at the pre-development level. By statute, tax abatements can last up to 25 years, with the first 10 years eligible for full abatement and the remaining 15 years eligible for 50 percent abatement. Those greater than 10 years are required to show extraordinary cost, development obstacles, or extraordinary impact.

While TIFs tend to be used more selectively to finance particularly important downtown development projects, tax abatements have been applied throughout the City on a widespread basis in broad redevelopment areas. Tax abatements also tend to be approved more quickly than TIFs and are typically subject to less scrutiny and review. However, like TIFs, the use of tax abatement can have a significant impact on a city’s property tax revenue stream.

Tax Abatement Policy and Requirements

Tax abatement is available anywhere the City has designated by ordinance as a redevelopment area. Those that are not must be approved as a redevelopment area by either the Land Clearance for Redevelopment Authority or the Planned Industrial Expansion Authority in addition to the Board of Aldermen. In practice, properties in areas of the City that are part of the State Enterprise Zone or Federal Enterprise Community Area are almost always able to secure property tax abatements.



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