Projects with $30+ million in subsidies encounter opposition, but still pass

Projects with $30+ million in subsidies encounter opposition, but still pass

CITY HALL – Debate on legislation shelling out more than $30 million in tax subsidies for three separate business developments  drew criticism during two recent Board of Aldermen meetings that the city is giving away too much. 

The board overwhelmingly gave its final approval for the three projects at its meeting Friday, but not before a few aldermen sharply criticized them.  

In discussion at the Dec. 6 meeting, 23rd Ward Alderman Joseph Vaccaro repeatedly used the words “corporate welfare” in criticizing a proposed $100 million project on the Anheuser-Busch brewery Soulard property. He asked whether Ninth Ward Alderman Dan Guenther, the sponsor of legislation providing nearly $5.2 million in tax abatements for the project, favored corporate welfare.

Vaccaro said he had sponsored bills abating taxes on only two properties, including one for a derelict house after Guenther was elected. Guenther opposed it. 

“You’re the one that told me that my neighborhood doesn’t deserve any kind of breaks, and you were the one that told me you were against corporate welfare, except you’re up here saying you’re for corporate welfare,” Vaccaro said. 

Guenther didn’t dispute Vaccaro’s version of what happened, but he did say the deal he and the city had worked out was a good one.

Guenther said a subsidiary of Anheuser-Busch planned to manufacture an unspecified product using spent brewing material. He said other cities were competing for the project, which would bring with it 40 high-paying jobs. A location hasn’t been chosen for the project if it comes to St. Louis.

The project would cost $85 million for equipment and $15 million for construction. The city would issue $100 million in bonds for the project, which Anheuser-Busch would pay off. 

Also, the city would abate (eliminate) 50 percent of the new real estate tax for five years and 75 percent of the new personal property tax, saving nearly $5.2 million. A waiver of sales and use taxes on construction material would save the company $343,680.

“Manufacturing jobs have fled our city for years, and we’re in the position of being able to look at bringing new revenue to our city, new jobs to our city, being able to rebuild certain areas,” Guenther said. “I think we absolutely have to look at how we are able to bring good, high-paying jobs to the city.”

Guenther also said a number of meetings had been held to come up with a fair proposal by the city.

In a separate matter at the Dec. 6 meeting, Ninth Ward Alderwoman Annie Rice said it was good that Square was moving into the building at 900 N. Tucker Blvd. formerly occupied by the Post-Dispatch and spending $69 million on renovations.

The former St. Louis Post-Dispatch building at 900 N. Tucker Blvd. (Photo by Tyrone Z. McCants / for MetroSTL.com)
But she questioned whether it was excessive for the city to issue $11.85 million in tax increment financing for the project. In TIF financing, a portion of the increase in tax collections brought by a project is used for the cost of that project.

Rice noted that the state and federal governments were giving $20.6 million in historic tax credits, and the state was issuing $4 million in brownfield tax credits for cleaning up environmental hazards.

“I don’t think that we need to be giving this type of incentives away,” Rice said. “I think we could have done better on this project.”

Rice’s comments prompted Vaccaro to comment that Anheuser-Busch had even more money than Square. He said that it seemed that his ward in southwestern St. Louis was too rich to receive subsidies, while the north-side ward of Fifth Ward Alderwoman Tammika Hubbard was too poor. Hubbard is the sponsor of the TIF legislation for the old Post-Dispatch building, which is in her ward.

“We don’t need to spend money over there or in my neighborhood; let’s just keep going downtown,” Vaccaro said.

Bills for a third tax subsidy project – in the Skinker-DeBaliviere neighborhood – brought sharp negative comments from First Ward Alderwoman Sharon Tyus on Dec. 13.

The MetroLink commuter parking lot at the Forest Park-DeBaliviere station. (Photo by Tyrone Z. McCants / for MetroSTL.com)
That legislation would partially fund a $91 million building including 290 apartments with average rentals of $1,555 and a grocery store and other commercial space. It would be at a site now occupied by parking spaces for the Forest Park-DeBaliviere MetroLink station at 272-276 and 301-333 DeBaliviere Ave.

Out of $14.1 million in tax subsidies, a total of $12.7 million of the subsidies would be tax increment financing, while $1.4 million would be a community improvement district financed by a 1 percent sales tax.

Twenty-Eighth Ward Alderwoman Heather Navarro said at the Dec. 6 meeting that she didn’t think the project would happen because the developer, Pearl Capital Management LLC, must pay to replace a MetroLink parking lot. That parking would be underground or on the ground level.

Navarro is the sponsor of the bill, with 26th Ward Alderwoman Shameem Clark-Hubbard as co-sponsor.

“That’s why I think we have gotten into a quandary, because every neighborhood can argue that,” Tyus said. “They’ll say this wouldn’t have happened.”

“When you look at where the TIFs are at, they have not occurred to spur economic growth where they’re supposed to. People just go where it’s easier, and they can make the most money,” Tyus said.

“At some point, we are going to ask for a map, look at where those TIFs are, and ask why if it was supposed to spur economic growth here, it’s just spurring economic growth in the Central Corridor and downtown and have to admit that we’re not using TIFs the right way,” Tyus said.

Two alderwomen kept up their fight at the Dec. 13 meeting before separate votes on final action.

Tyus said pictures in literature about the MetroLink project meant to show blight in such things as overgrowth and damaged curbs were laughable.

Talking about the Square project, 15th Ward Alderwoman Megan Green said she thought Square’s presence was overall a good thing for the community.

“The questions I have are really what the level of tax subsidy is that is necessary,” Green explained. “In all of these deals, we have to figure out what is that balance. How do we grow our tax base while also growing business here?”

Hubbard said she trusted the people who had negotiated the Square deal for the city.

“Anyone that’s coming to my ward to try to transform what the city has left blighted and in decay and in ruins, I’m going to bless,” she said.

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