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Downtown St. Louis
International Downtown Association World Congress
Priming the Pump:
Economic Development Incentives
New York City, October 2013
Maggie Campbell, Sagacity Consulting Former President/CEO, Partnership for Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
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Downtown St. Louis
History behind HTC’s in Missouri:
National HTC reduced
Measured reduction in Historic projects nationwide, and in STL particularly
Jerry Schlicter, Passionate Advocate
Final twist changes history
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Downtown St. Louis
MISSOURI’S BEST TOOL
The State of Missouri created Historic Tax Credit
legislation in late 1990’s – single most important incentive used in Downtown St. Louis’ revitalization.
Model legislation – other states with similar legislation include Iowa and Minnesota, pending in Wisconsin and Illinois, variations in multiple other states.
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Downtown St. Louis
o In a go-go economy, incentives
provide regulatory relief and
additional development rights
o In a no-go economy, incentives
close funding gaps – avoiding
the death of projects
Real Estate Market and Need Determine Incentives
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Downtown St. Louis
In St. Louis, developers can expect for a single project:
o HTC’s, if eligible
o Potential for Federal HTC
o CID, likely sales-tax based but can be property,
even both
o Tax-Increment Financing or Tax Abatement
o Urban Enterprise Loans, small business support
EXPECTATIONS AND ENTITLEMENTS: Making the deal work
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Downtown St. Louis
Project Eligible for HTC if: • Listed as a single building or
contributing in a National Register District
• Located in local historic district certified by US Dept of Interior
• Renovation costs must be at least 50% of acquisition cost of the entire project
• Plans approved by SHPO
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Downtown St. Louis
HISTORIC TAX CREDIT – HOW IT WORKS: • Equal to 25% of the eligible expenses of renovation
• Used to offset Missouri income tax liability in year provided
• Applicable back three years or forward five years
• May be sold or exchanged by eligible applicants
• Transferability is key component – allows developers to cash out,
bring equity to deal
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Downtown St. Louis
Leveraging Incentives
Projects not done with HTC alone • Combined with TIF, CID, tax abatements,
multi-layers of incentives • When MO’s HTC is combined with Fed
HTC – provides upwards of 35% of total development cost brought in as equity
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Downtown St. Louis
RESULTS
• Progressive incentive changed difficult
historic renovations from real estate gamble to credible investment
• $448 Million in HTC’s allocated for
$1.7B worth of development since 1998
• Success of HTC program has shifted development patterns and public policy in STL
• Has transformed Downtown St. Louis into a mixed-use, residential neighborhood
• Success has brought opposition – under fire by Republican State Legislators since 2009
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Downtown St. Louis
EAST WEST GATEWAY COUNCIL OF
GOVT STUDY 2011 FINDINGS
REGIONAL IMPACT OF INCENTIVES
o 80% of spending on TIFs and TDD’s in the region
funded retail projects
o Local governments were foregoing $3.6 Billion in tax
revenue over the last 20 years
o Region only added 5,400 retail jobs from 1998
o Taxable sales basically flat since 2000
o Basically concluded not providing return on investment
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Downtown St. Louis
Policy Priorities
o Strengthen coalition and Advocacy
efforts to continue to protect HTC from legislative attack, caps, potential loss of entitlement
o Explore policy priorities for other/new incentives, leverage support for more entrepreneurship, innovation, immigration