ST. LOUIS • Gov. Jay Nixon on Wednesday signed legislation that he said will rein in what he called "abuses" by some suburban St. Louis municipalities in handing out lucrative tax-increment financing benefits to developers.
The new restrictions will come into play only when a TIF commission with members from other affected governments recommends that a project be denied TIF benefits.
Under the bill, a city governing body could still issue the TIF in such a situation but tax revenue diverted to the project could only be used to demolish an existing building on the site or to clear and grade the land. The old law set no such restrictions.
The changes, which the Legislature passed on the final day of its 2016 session last month, will apply only in St. Louis, St. Charles and Jefferson counties.
"When it's done right, these incentives can be a useful tool for communities to bring additional investment to blighted areas," Nixon said.
"But too often, TIF can draw municipalities into a race to the bottom - competing over who can offer the most generous giveaways to retail developers, at the expense of other pressing priorities."
Nixon signed the bill at a meeting of the East-West Gateway Council of Governments downtown.
Research by the council has been sharply critical of the way TIF has been generally used.
St. Charles County Executive Steve Ehlmann, a longtime critic of TIFs, pointed out that the effort to pass meaningful TIF restrictions had gone on for 16 years. Now, he said, "we are finally headed in the right direction."
Ehlmann said the TIF process over the years had moved from economic development to economic relocation.
"While new shopping areas have been subsidized, older shopping centers have declined or closed," he said. "Companies have simply relocated to more desirable areas with the assistance of TIFs."
Ehlmann's St. Louis County counterpart, Steve Stenger, also was supportive of the new law. "A community approach to TIF decisions will benefit our region," Stenger said.
The bill was opposed by the Municipal League of Metro St. Louis, which represents most St. Louis County municipalities. League officials have complained that the bill takes away control of TIFs from officials of cities that want to use them.
Supporters of the arrangements say they're a key factor in ensuring that cities have enough future tax revenue to support municipal services.
Pat Kelly, the league's executive director, also has said it's unfair to single out the three St. Louis area counties for the new restrictions.
The new restrictions, which go into effect Aug. 28, may have an impact on plans in Maryland Heights for developing a 1,800-acre flood plain area into a mixed commercial and residential development.
One proposal is coming from attorney Alan Bornstein and Los Angeles Rams owner Stan Kroenke.
Craig Workman, a spokesman for Maryland Heights, said the new law "could very well affect what Maryland Heights does" since city officials won't decide until mid-September what projects for the site to proceed with. The city is considering TIF and other tax breaks for the site.
TIF incentives allow developers to divert part of the new local tax revenue that a development generates to pay for development-related costs.
Local governments and schools receive the same base taxes as before, but forgo part of the revenue generated by the development for up to 23 years.
Under state law, county executives in St. Louis, St. Charles and Jefferson counties appoint six members of the 12-member TIF commissions set up in cities. Cities, school districts and other districts also are represented.
A municipality can approve a TIF despite a negative commission recommendation with a two-thirds majority of its council members or aldermen. Under the new law, such TIFs approved over commission opposition will be more limited in what they can fund.
The bill signed Wednesday is House Bill 1434.
Steve Giegerich of the Post-Dispatch staff contributed to this article.
Mark Schlinkmann • 636-255-7233
@mschlinkmann on Twitter
mschlinkmann@post-dispatch.com
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