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Chesterfield officials disagree with ‘think tank’ rep over tax subsidies

The Show-Me-Institute has long been the self-proclaimed watchdog for local governments giving tax incentives to private developers as a way to lure business. So it’s no surprise that the potential tax incentives for developments in the southwest quadrant of I-64 and Chesterfield Parkway West, which includes Wildhorse Village and Chesterfield Mall, have drawn its attention.

David Stokes of the Show-Me-Institute speaks during the Chesterfield City Council meeting on June 7. (Photo: Cathy Lenny)

At the Chesterfield City Council meeting on June 7, David Stokes, director of municipal policy at the Show-Me Institute, spoke about what the Institute sees as the ramifications of using financial incentives such as transportation development districts (TDDs), community improvement districts (CIDs) and tax increment financing (TIFs).

Each of those tax incentives is designed to help pay the costs of development. However, Stokes said studies show that special taxing districts and subsidies don’t really succeed. He cited the Olive/Graeser TDD in Creve Coeur, which was established to fund improvements to the intersection at Olive Boulevard and Graeser Road through additional sales tax revenues and which has had numerous financial deficiencies.

He also noted what he referred to as the waste of taxpayer dollars and federal funds on the now-defunct St. Louis Loop Trolley in University City.

Stokes claimed that it requires $370,000 in subsidies for every job created, which he said is not a successful use of economic development tools.

“You don’t need tax subsidies to get businesses to come here,” he said. “The reliance on future subsidies is very dangerous.”

Stokes spoke in response to a presentation regarding economic development tools, given by Rob Klahr, a partner with St. Louis law firm Armstrong Teasdale LLP, during the Finance and Administration Committee meeting on June 7.

Council member Dan Hurt (Ward 3) did not agree with Stoke’s condemnation of tax incentives. He pointed out that the TIF used to establish Chesterfield Valley as a consumer destination following the flood of 1993 was quite successful. It was overseen by a commission and concentrated on infrastructure, including rebuilding the Monarch-Chesterfield Levee, Hurt said. It was able to grow the area from $1 billion to $3 billion, which could not have been done without the existing infrastructure, he said.

Mayor Bob Nation responded to Stokes’ comments by saying that he was proud of the financial management of the city and “to throw the city in with everybody else,” was not fair. Nation called it “contempt prior to investigation.”

But Council member Tom DeCampi (Ward 4) suggested that Stokes be invited to a future Finance and Administration Committee meeting. An action that committee chair Michael Moore (Ward 3) said he approved as long as Stokes sticks to specifics about Chesterfield and not include other cities.

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