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

Downtown St. Louis

Downtown St. Louis

Downtown St. Louis

Downtown St. Louis

Downtown St. Louis

Downtown St. Louis

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

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.

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

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

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

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

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

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

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

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