St. Louis Incentives Nexus Study
The St. Louis Development Corporation (SLDC) engaged Baker Tilly to conduct a nexus study to understand the intersectional relationships between the use of tax abatements and tax increment finance (TIF) and the effects of these programs on property tax revenues flowing to the City and the St. Louis Public School District (SLPS). Additionally, the analysis sought to understand the external demographic and market factors concurrently exerting an influence on the City’s economic vitality and revenues and SLPS enrollment trends and financial stability.
The study identified a set of macro-level demographic and economic trends in St. Louis City. The City has seen a growing structural demographic deficit of households with children that reflects national trends, the early signs of a re-population of city neighborhoods with households without children, a growing reliance by SLPS on property tax revenue as a funding source amid precipitous drops in state revenues, and positive economic and financial impacts from economic development projects driving new capital investment, job creation, and overall economic activity in the midst of difficult market conditions that make market-rate development unfeasible in many areas of the City.
Given market headwinds challenging the financial feasibility of projects, the SLDC has continuously utilized incentives to support new development facing financing gaps. Market conditions in the City are materially more difficult than in the surrounding suburban areas. Due to lower market rents and higher vacancy rates, most projects struggle without assistance. As a result, the SLDC plays a key role in supporting new development as outlined in these estimated outcomes of incentivized projects:
A total of 275 incentivized projects have occurred from 2017-2024, which are delivered or near-delivered and have fully approved incentives that have positively impacted multiple neighborhoods. These projects were estimated to have generated an overall capital investment of nearly $5.2 billion.
An incentive analysis indicates the use of tax incentives in St. Louis City plays a critical role in generating market activity.