ST. LOUIS COUNTY • Economic development in greater St. Louis will continue to lag behind other parts of the country without a radical overhaul of a tax incentive system that encourages municipal rather than regional growth, according to a new study.
“We need to take a regional look at issues normally decided at the municipal level,” said Dave Leipholtz, a co-author of the economic development study released Wednesday by Better Together St. Louis, the organization conducting a year-long review of factors that could affect a future reunification of St. Louis City and County.
The report, the second of six Better Together plans to be offered by the end of the year, also outlines the negative impact that a patchwork of licensing rules has on entrepreneurs seeking to open businesses in the city and county.
But the larger issue, the study makes clear, is the $2 billion-plus in tax-increment financing districts that have subsidized retail and business development over the past 20 years.
The bulk of the tax abatement measures have been granted by communities seeking additional revenue at the detriment of neighboring municipalities, the report says.
“It is clear that such a fragmented approach and the intraregional competition it fosters should be be revisited with a greater emphasis being placed on regional growth and the ability to compete in the national and international economy,” the study concludes.
Denny Coleman, CEO of the St. Louis Economic Development Partnership, suggested strengthening the St. Louis County TIF Commission as the first step toward fostering a regional economic development approach.
The law allows a vote by an elected municipal government to nullify TIF Commission opposition to a specific project.
“A TIF Commission with teeth makes sense, but you also have to have the rules of the game defined and in place,” said Brian Murphy, president of BAM Contracting and co-chairman, along with Coleman, of the committee that studied the area’s economic development picture on behalf of Better Together.
Nancy Rice, the organization’s executive director, stressed that the report for the most part drew on existing data.
But Rice said the information gleaned in conversations with 1,500 area residents at community events, business settings and even a bar opened a door on another aspect depressing regional economic growth: haphazard business licensing.
“This was a bigger issue than we knew in terms of job creation,” said Rice.
The study found that licensing is particularly problematic among immigrants hoping to achieve the American Dream of business ownership in St. Louis.
“A person shouldn’t feel like they need to have an MBA to start a business in our region,” one entrepreneur told Better Together.
The study recommended that the city collaborate with the 90 municipalities in St. Louis County to establish a uniform business licensing procedure.
Better Together proposes that The Welcoming Center for New Pennsylvanians — a website that details the steps required to start a business in that state — as a model worth emulating at a local level.
The group formally presented the economic development study to business people Wednesday evening.