ST. LOUIS — Faced with a dwindling pipeline of new projects, the city’s economic development office is moving quickly to hire a consultant to produce an incentive framework that officials hope will offer more clarity to developers and spur new investment.
The move for clearer policies comes amid a major shift in the city’s approach to development tax breaks under Mayor Tishaura O. Jones, whose administration has sought to renegotiate many development deals and leverage the subsidies in exchange for developer contributions to affordable housing or public schools.
Jones’ shift followed complaints from some in her political base that not all projects needed subsidies, most of which reduce future taxes property owners would pay, adversely affecting public schools.
But privately, those in the development community have complained the shift has led to uncertainty over what City Hall will agree to for their projects, which many argue wouldn’t ever get built and generate the new taxes without incentives.
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Neal Richardson, executive director of the St. Louis Development Corporation, said the incentive framework will provide consistency to move away from “deal-by-deal” incentive negotiations. The goal is to “keep development moving,” Richardson said, while also sticking to the administration’s policies aimed at expanding the benefits of growth by requiring public goods such as affordable housing in exchange for public tax breaks.
“It’s to set some clear lines and guidelines for the development community as well as the public at large about how the city will be making decisions around incentives moving forward,” Richardson said in an interview. “The feedback we’ve received from the development community is, ‘we just want to know what the expectations are.’ And so this is really going to get us to a place where we can communicate, ‘this is the city’s position on incentives,’ and if you’re seeking public investment there has to be a public benefit.”
SLDC in recent years established a new model to analyze developer incentive requests, giving the city a better negotiating position to minimize the cost of the subsidies. Developers grew accustomed to that model and the staff on the city’s end of the bargaining table, many of whom have left since the transition in mayoral administrations.
Some in the development community now say they’re not sure what they can expect from the city and that the mayor’s director of policy and development, Nahuel Fefer, negotiates many deals on a case-by-case basis.
The number of new projects planned in the city appears to have fallen. Last year, the number of development agenda items at the Land Clearance for Redevelopment Authority, which facilitates property tax abatement, was about half the number it had in 2020. At a regularly scheduled board meeting Tuesday, the LCRA saw only one private development item.
Richardson said there’s a misconception that the Jones administration is anti-development, and developers he’s spoken to just want a better understanding of the larger vision to “align their investment.”
“I wouldn’t say it’s slowed down,” he said of the city’s development pipeline. “I would just say there’s been deeper conversations about how do we align investment to the overall vision for the future.”
The plan for a framework originally was supposed to be part of a new “economic justice action plan” SLDC is paying $150,000 to consultants to develop. But a December rollout was pushed back to March. Now, SLDC wants to break out the incentive policy into its own subcontract, expediting that portion of the plan even before the action plan draft is released.
“It’s part of a broader plan, but this particular piece is about the incentive model,” Richardson said.
The $36,000 contract with Chicago-based accounting and consulting firm Baker Tilly would have a quick turnaround, with an initial framework out for public comment by March. A final framework could be in place by May, Richardson said, and Baker Tilly could be retained to provide third-party incentive analysis on future projects.
At an SLDC board meeting Tuesday morning, though, members pushed to limit the involvement of one subcontractor who previously had worked for the St. Louis treasurer’s office when Jones was in charge.
Though the contract itself would be held by Baker Tilly, a major national accounting firm, Mississippi-based Comer Capital Group was listed as a subcontractor in a staff report. It was unclear how much of the $36,000 it would have received.
Alderman Jeffrey Boyd, who is on the SLDC board and has sparred with Jones for years, asked why Comer was involved.
“They have some baggage behind them,” he said.
Comer served as a financial adviser to the treasurer’s office for bond financings connected to the city parking division. In an unrelated case, the U.S. Securities and Exchange Commission sued the firm in 2019 over what regulators said was bad advice and an improper relationship with a bond underwriter for a Chicago-area library district bond issue. That case is pending; Jones has said many financial advisers and underwriters face civil actions from regulators.
Richardson said Baker Tilly, not SLDC, presented Comer Capital as a subcontractor and he “trusts their judgment.” He said Baker Tilley was including Comer Capital “to bring in a social equity lens” to the project. It wouldn’t be an issue, Richardson said, if they chose someone else for that piece.
The SLDC board ultimately amended the resolution to enter into the contract solely with Baker Tilly and require any subcontractors be approved by the board.
“Regardless of who’s doing this work, it is critically important,” board member Sean Spencer said.
“There’s a lot of uncertainty in the development community, and with that uncertainty, we’re not going to see the number of projects that we want to see.”
Originally posted at 6:15 p.m. Tuesday, Jan. 25.