In the words of my Washington University colleague Jason Purnell, Saint Louis has been a true “innovator” when it comes to segregation. Purnell and a number of community partners recently released the report “Segregation in St. Louis: Dismantling the Divide.” The report demonstrated segregation tools did not stop with the racial zoning of the 1910s or the restrictive covenants that followed. One of today’s frontiers for innovation in segregation is the misuse of tax incentives, such as TIF and tax abatement, created to support “blighted” areas.
“Blight” is a fraught term. When most people think of blight, they think of neighborhoods with abandoned homes and storefronts: places truly in need of public and private investment. Unfortunately, what passes for blight in the St. Louis region includes St. Charles ($55 million in TIF for the “Streets of St. Charles”), downtown Clayton ($75 million in TIF for the Centene Corporation), and the Central West End (where the Citizen Park, One Hundred, and Whole Foods/Orion projects sum to more than $40 million in incentives).
These are just a few recent examples of the broader pattern incentive use, in which public investment flows disproportionately into the City’s central corridor and westward from there. How on earth could the truly disinvested parts of our region compete for investment, when the wealthiest corporations in our region are benefiting from tax incentives in the places that are least in need?
Moreover, our ability to invest equitably in the people of St. Louis—for instance through education, public health programs, and support for small businesses—is hampered by the loss of tax revenues to incentive abuses. Public education, which relies overwhelmingly on property taxes, is particularly hard hit when TIF and tax abatement are misused.
Reform of TIF and other tax incentives would work best at the state level, so that all municipalities on the Missouri side of our region are playing by the same set of rules. Unfortunately, when a piece of TIF reform legislation (HB 1236) started moving in the Missouri house last session, the City sent its lobbyist there to oppose it. Among other things, this bill would have given school districts a stronger voice in TIF decisions.
Additional reforms could increase transparency to the process of allocating tax incentives. Reform measures could include posting applications online, disclosing revenue lost and gained, and recording all relevant hearings.
Perhaps most importantly, reform efforts should target incentives to the areas most in need of investment. A project’s eligibility for incentives should be a function not only of the physical conditions on the site, but also the economic conditions of the surrounding area.
We have gotten skilled in this region at dropping the term “racial equity” when politically expedient. It is time to back that language up with some action on tax incentives. The growing number of St. Louisans who care about racial equity can tell the difference between empty rhetoric and tangible results.
Molly Metzger is an assistant professor in the Brown School at Washington University. She is also a member of “Team TIF,” a volunteer group working to bring transparency and a racial equity lens to tax incentives and other matters of public finance.
