Delmar Loop at night
Graham Renz

The Delmar Loop is one of the most vibrant areas in the Saint Louis region. It’s even been listed as “one of 10 Great Streets in America.” On any given day or evening, sidewalks and storefronts bustle with activity in the popular University City neighborhood. Yet policymakers seem convinced that development won’t happen in the Loop without taxpayer subsidies.

As the St. Louis Post-Dispatch reports, a $26 million multi-use development planned for a busy intersection in the Loop was recently awarded some $4.4 million in tax increment financing (TIF). This means the developers will pay $4.4 million less in taxes over the next few decades because, apparently, the project isn’t financially feasible without tax breaks.

As with all subsidies, there is a question regarding the prudence of funneling taxpayer dollars to specific projects on the grounds that they could not be profitable on their own. I also can’t help wondering why incentives are still “needed” in the Loop when the $51 million trolley is supposed to spur economic growth. But I don’t want to focus on these issues here. Instead, I want to focus on a much larger lesson we can learn from the widespread use of development subsidies in Saint Louis and elsewhere.

The handing out of subsidies in one of the most lucrative Saint Louis is evidence that policymakers have created a “developer’s market.” In short, subsidy-granting agencies have given away so much in taxpayer money that developers are rarely willing to invest without public help. And not because their projects aren’t financially viable, but because they know policymakers will grant their requests for subsidies. Incentives are no longer about eliminating blight, or making tough projects feasible. Instead, incentives are an ordinary part of doing business, because policymakers have repeatedly shown developers that subsidy dollars are there for the taking. The use of incentives has transformed the real estate market—and not for the better.

Despite spending hundreds of millions of taxpayer dollars on developments, Kansas City and St. Louis continue down bleak economic paths. In fact, there’s evidence that incentives have reduced private investment in Missouri cities. It’s time policymakers enact meaningful incentive reforms to ensure that taxpayer money isn’t wasted and that development occurs according to the free market principles that grow the economic pie for everyone. 

About the Author

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Graham Renz
Graham Renz is a policy researcher at the Show-Me Institute.