Calls for tax incentive moratorium grow following federal indictments of three St. Louis City BOA members

Calls for tax incentive moratorium grow following federal indictments of three St. Louis City BOA members

St. Louis City politics dominated the local news cycle on Thursday when current Board of Alderman President Lewis Reed along with current Alderman Jeffrey Boyd and former Alderman John Collins-Muhammed faced federal indictments for racketeering and bribery. Per the indictment, it appears that all three members of the Board of Aldermen were receiving payments in exchange for tax abatement for developments. Tax incentives for development are intended to be used in “but for” situations where the project would not be feasible otherwise. They certainly aren’t intended to be used for the financial gain of elected representatives. This textbook illegal quid-pro-quo raises some serious questions surrounding tax incentives for development in St. Louis City.

During the middle of the day, one of St. Louis’ most active government transparency advocates, Gerry Connolly, suggested that a hold should be placed on all tax incentives for projects in the city pending an outside ethics audit. Later in the evening, freshman Alder Bill Stephens announced that he has submitted a “draft resolution calling for a self-imposed moratorium on TIF/TA legislative measures for the remainder of the 2022-2023 legislative session.”

There has been much discussion around the use of tax incentives to better St. Louis in recent years. While some argue that it should be used liberally to breathe life into the city, others question the fiscal responsibility of potential lost tax revenue for St. Louis Public Schools and the children it serves. Furthermore, the sheer volume of tax incentives concentrated in the Central Corridor (the city’s most affluent area) have drawn widespread criticism about how tax incentives are approved and its impact on equity in the city. Mayor Jones’ administration has promised to be more critical than past administrations in its support of tax incentives and has already renegotiated tax incentive deals securing affordable housing funds in exchange (a legal quid-pro-quo).

Prior to today’s news, Mayor Jones’ administration was already working to create guidelines for tax incentives for developers. A move that would improve transparency, consistency, and expedite the development process, such a guideline is a welcome policy change. Within the context of today’s news, creating clear guidelines is more important than ever to help prevent development related corruption in St. Louis.

But should the city go further in its development tax incentive reform?

With guidelines being created surrounding the approval of tax incentives, one might question whether alders should even decide a development’s worthiness. Such a system opens the door to potential corruption as evidenced by the federal indictments announced today. Perhaps letting alders approve development tax incentives could work better without aldermanic courtesy, an outrageous unwritten rule that encourages alders to ignore their conscience in deference to the alder representing the ward where a development is seeking incentives. The role of alders in the approval of development tax incentives should be questioned and reevaluated to ensure a high level of fiscal responsibility to constituents.

The city’s forthcoming development tax incentive guidelines will hopefully mandate a “but for” clause in the approval of any tax incentives. But even that may not be enough to ensure the best possible outcomes when foregoing tax revenue. Tax incentives should be given to projects that benefit the city’s residents (both current and future). Large TIFs given out in recent years to developments like the Expo at Forest Park for the purpose of parking is questionable. Tax incentives should support developments that create a healthier and more sustainable St. Louis. If tax incentives are going to be handed out in “but for” cases, they should also contribute to the public good.

Thursday was a disappointing day in St. Louis. The spotlight on corruption in city government to the detriment of St. Louisans is an unfortunate moment. But it opens the door to change policies and procedures in a way that paves the way for a better St. Louis.

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