SLDC presents incentive reforms, says Millennium Hotel tax abatement removed from current board bill

Saint Louis — Representatives of the Saint Louis Development Corporation told the Real Estate Committee on Aug. 18 that the agency is revising how it evaluates and applies development incentives and that the board bill tied to the Millennium Hotel project will be amended to remove a proposed long-term tax abatement so only blighting and environmental/demolition work remain in the current measure. The changes matter because tax abatements and other incentives change how property tax revenue flows to city taxing districts, including Saint Louis Public Schools. SLDC officials said incentive packages are intended to close a financing gap that often prevents large projects from proceeding in the city. Otis Williams, interim president and CEO of the Saint Louis Development Corporation, told the committee that “the board bill that is … representing the tax abatement for the project has been will be amended by the alderman and will take the tax abatement out of that board bill.” He said the amended bill will allow environmental work and demolition to proceed without activating a long-term abatement. Zach Wilson, department chair for SLDC’s incentives division, described the agency’s updated process: applications are scored using a community scorecard and a financial model, developers are vetted, neighborhood engagement is required, and any commitments (for jobs or affordable units) are written into redevelopment agreements with clawbacks and compliance monitoring. Wilson told the committee SLDC “very seldom do[es] anything over 10 [years]” for abatements, and that incentives do not activate until projects meet prevailing-wage and minority-compliance benchmarks and construction is complete. SLDC presented a list of incentive tools it commonly leverages — real estate tax abatement, tax increment financing (TIF), enterprise zone credits, PACE financing, historic and low-income housing credits, sales-tax exemptions on construction materials, and others — and said incentives are often layered to make projects financeable. Wilson presented a fiscal model showing projected net revenue to the schools under a hypothetical Millennium Hotel redevelopment and said the agency’s packet materials will show revenue impacts to each taxing district for future projects. Committee members pressed SLDC for plain-English explanations of how abatements affect Saint Louis Public Schools. SLDC staff said their model projects that, depending on term and percentage, a large Millennium-scale project could produce roughly $4.4 million for SLPS over 10 years under one scenario and about $15.4 million over 20 years under another scenario; SLDC also said the estimate depends on final terms and that earlier board language permitting “up to” a 90% abatement for up to 20 years did not guarantee those maximums. SLDC emphasized two recurring points: the city’s current market yields lower rents and revenues than many suburban comparators, so incentives are intended to bridge that gap; and activation of abatements is contingent on compliance during construction. Wilson said SLDC is updating minority-compliance guidelines and expects new guidance in early September. Williams and Wilson also said SLDC has reduced the number of abatements and TIFs approved in recent years and that the agency now uses a community scorecard developed with outside consultants to improve transparency. No formal committee vote on incentives or on the Millennium Hotel occurred at the meeting. SLDC said it will continue to provide the committee and the district with packet materials that break down projected impacts on taxing districts and to coordinate notification and follow-up as projects advance.