The Non-Profit Paradox. 40% of Real Estate in St. Louis is Government Owned or Tax Exempt

By on November 8, 2018

From NextSTL:  St. Louis faces a growing paradox few other cities face to the same degree: growth in land ownership of non-profits, hospitals, universities, and government owned parcels is depleting an already constrained tax base. While post-industrial cities have benefited from the growth of the “Eds and Meds” economy, the physical growth of these institutions has removed significant land from the property tax rolls.

The situation is particularly challenging in St. Louis due to a confluence of factors, some obvious, some unique to Missouri and St. Louis. State government exempts non-profits from paying property taxes, which is common. State law also exempts non-profits from paying sales and use taxes, which is unusual nationally. Local law exempts non-profits from the St. Louis payroll tax, a .5% tax on payroll paid by for profit companies. As a result, even if universities and hospitals are thriving, both the St. Louis Public School District, and a variety of programs funded by sales and use taxes in St. Louis do not see additional revenue. With the exception of the payroll tax, these tax exemptions are determined at the state level, out of the hands of local lawmakers.

St. Louis faces the added challenge of six decades of population decline, leaving in its wake a large surplus of government owned parcels. Extensive federal highway infrastructure, a large parks system, and several large cemeteries within city limits have further permanently reduced the amount of taxable land within St. Louis.

While there has been speculation on the topic, prior to this article the extent of this problem had yet be mapped. Today fully 40% of St. Louis’ 62 square miles are exempt from property tax. Only the remaining 37.2 square miles in the City generate property tax revenue. The City of St. Louis has one of the smallest total areas of taxable property of any major city in the United States. There are a few comparable cities. Places like San Francisco, Seattle, Minneapolis, Boston, Miami, Baltimore, and Buffalo, New York all share a small geographic footprint. But all of these places, except Baltimore, have either exceptionally high property values or are part of a larger surrounding county, or both.

St. Louis stands almost alone nationally as a low real-estate value central city with scarce land available to tax, separated from the surrounding county.

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