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Is St. Louis Using TIF and Tax Abatement the Best Way?
From St. Louis Public Radio: On Tuesday’s St. Louis on the Air, we turned our attention to the use of tax increment financing (TIF) and tax abatement as an economic development tool. Is it used too much in St. Louis? Is it used in the best way possible?
We spoke with two people who have different perspectives on the subject.
Molly Metzger is an assistant professor at the Brown School of Social Work at Washington University. She’s also a member of Team TIF. Team TIF was started to improve transparency and racial equity in St. Louis through how tax incentives are used.
Otis Williams is the director of the St. Louis Development Corporation. SLDC is the economic development arm of the City of St. Louis, which oversees TIF and tax abatement implementation.
First, a definition: Tax increment financing is used all over the country. Generally speaking, it is a public financing method used as a subsidy for redevelopment, infrastructure and other projects.
The City of St. Louis defines a TIF as “a development tool designed to help finance certain eligible improvements to property in designated redevelopment areas (TIF Districts) by utilizing the new, or incremental, tax revenues generated by the project after completion.”
With a TIF, property taxes within a TIF District are frozen for 23 years and the property owners make tax payments instead into a special allocation fund which, in the City of St. Louis, is managed by the comptroller. Fifty percent of local Economic Activity Taxes (local sales, earnings and payroll taxes) also go into that allocation fund.
“For example, if there’s a project and the tax on that property is currently $100 but once that building is built, taxes increase to $1000, that increase goes into the allocation fund, in this case, $900.”