Ever since the state of Missouri informed the owners of the as-yet-unnamed St. Louis MLS expansion team that it couldn’t give them the $30 million in tax credits they wanted, there’s been a scramble to figure out how to fill that hole. And now the city of St. Louis appears to be stepping up to the, uh, penalty spot, with a package of tax breaks and dedicated tax streams that could be worth $55 million over 25 years:
The two measures, providing partial property tax abatement for the project and outlining other tax incentives, were endorsed, 7-0, by the Housing, Urban Development and Zoning Committee…
The bills, which now move to the full Board of Aldermen, call for 25 years of property tax abatement on the value of new construction. That’s expected to save the ownership about $34.5 million.
Also planned is a sales tax exemption for building materials used for the project; an estimate has yet to be released for that.
The legislation, sponsored by Aldermanic President Lewis Reed, also calls for two separate one-cent sales taxes on food, drinks, tickets and other items sold at the stadium. They would be levied by new community improvement and transportation development districts.
In addition, ownership attorney Bill Kuehling told the committee that “we are counting on” revenues from a third one-cent sales tax that would be authorized by the city’s Port Authority.
Okay, let’s run through these. The full property tax abatement had been previously announced, but without a price tag; $34.5 million over 25 years is a decent chunk of change, and worth maybe $19 million in present value (a bit less if it’s backloaded as property value rises over time, a bit more if the stadium is expected to fall in value as it ages). A sales tax exemption on building materials is a common subsidy to hand out, and typically isn’t a huge value, but it could be a few million dollars. A sales tax surcharge on in-stadium purchases was previously announced, too, and probably mostly ends up coming out of team owners’ pockets (since they have to lower prices slightly to account for the increased end price); if some of these additional taxes cover the area surrounding the stadium, though, it would effectively be taxing the team’s neighbors to finance the stadium project.
Put it all together, and we’re probably looking at around $30 million in city tax subsidies, which added to the $29 million worth of ticket tax kickbacks the team owners would be getting gets us to around $60 million of public cost, before even accounting for whatever the state manages to scrounge up in tax credits. (They’ve suggested $5.7 million as a more doable figure.) That’s not an insane amount of money compared to some stadium subsidies, but $60 million is still $60 million, and about the same as what some other cities have been throwing at stadiums to lure MLS expansion franchises. Except that St. Louis has already been awarded an MLS team to start play in 2022, and it would be really messy for the league to try to undo that, so is this really the time for the city of St. Louis to start bailing out the team owners for their shortfall in state subsidies? (Answer: It’s always time for that, apparently.)louis