City of St. Louis, Missouri City Economic Development Incentives May 5, 2016

Two Logan Square, Suite 1600 18th & Arch Streets Philadelphia, PA 19103 215.567.6100 phone 215.567.4180 fax www.pfm.com

Table of Contents Executive Summary ............................................................................................ 1 I. Introduction ................................................................................................... 8 Overview .................................................................................................................................................... 9 Project Scope ............................................................................................................................................ 9 Project Background and Methodology .................................................................................................... 10

II.

Existing City Economic Development Incentives ...................................13

Background ............................................................................................................................................. 14 Tax Incentives in St. Louis: Overview ..................................................................................................... 14 Tax Increment Financing ......................................................................................................................... 16 Tax Abatement ........................................................................................................................................ 21 Tax Exempt Bonds TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT... 25

III. Benchmarking .......................................................................................... 28 Tax Structure ........................................................................................................................................... 29 State Tax Incentives ................................................................................................................................ 31 Local Tax Incentives ................................................................................................................................ 31 City Earnings/Income Tax Incentives ...................................................................................................... 42 St Louis County Cases ............................................................................................................................ 46

IV.

St. Louis Incentives Past Performance .................................................... 56

Past Incentive Use TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT54 Incentive Impacts TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT..80 City of St. Louis Neighborhood Peer (Cluster) Analysis........................................................................ 127 Key Findings .......................................................................................................................................... 154

V.

St. Louis Economic Development Incentives Discussion...................... 164

Overview TTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTTT..163 Existing Policies and Procedures .......................................................................................................... 167 Opportunities for Process Improvement ................................................................................................ 171 Opportunities for Augmenting Existing Incentives ................................................................................. 175

VI. Recommendations .................................................................................. 177 VII. Appendix ................................................................................................. 180 St Louis County Case Studies Interview List.......................................................................................