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  • Nathan Duvall

Public Goods for Public Dollars

Updated: Jan 7, 2022

Blogger's note: It's a big change: Eco Devo being held accountable for delivering equity and public benefits. Not easy but worth it. These are the appropriate goals for investment of public funds.

Dec 6, 2021- ST. LOUIS POST DISPATCH: Less than three weeks after taking office, Tishaura O. Jones put developers on notice. The city’s new mayor vetoed two developer tax breaks that she said were too generous. And then she held up final approval of incentive packages for two other projects that had long enjoyed almost unwavering political support — the City Foundry food hall complex and another phase of development in the Cortex tech district.

The moves forced the developers back to the negotiating table and quickly demonstrated what anyone who had been listening to Jones campaign early this year should have expected:

The old way of doing development in St. Louis was over.

Directing this shift in the city’s approach is Jones’ 28-year-old director of policy and development, Nahuel Fefer.

Joining Fefer at the helm of the city’s economic development team is Neal Richardson.

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The two hold among the most powerful jobs in city government, roles where millions of dollars and generational investments into the urban fabric of the region are on the line. Now, they’re leading an experiment from a more progressive administration that believes development can still occur with less public subsidy.

“Developers should no longer assume abatements and incentives into their capital stack — we need to have a conversation and they need to earn these incentives,” Fefer told the Post-Dispatch in a recent interview in which he likened the city’s role to that of any other investor or lender. “This may be a novel concept for city government, but it is not a novel concept for the financial sector,” he said.

The point of the harder negotiating stance, Fefer and Richardson say, isn’t just to protect tax dollars, but to promote more equitable development policies across the city, encouraging mixed-income communities and leveraging the economic strength of the central corridor to spur social change.

Privately, people in the development community worry that the new regime could choke off investment in a still-shrinking city that can ill-afford to discourage a limited pool of active developers free to chase higher returns elsewhere in the region or in other cities. The uncertainty over what City Hall will provide, what it expects in return and the amount of profit a developer can make before the city recaptures some of the public incentive, is making some hesitate to propose new projects.

Indeed, the number of major new projects proposed at the city’s economic development boards has slowed in recent months.

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There are still developments, particularly in the relatively strong central corridor, already under construction. Yet whether momentum continues and new projects break ground, with or without city subsidies, remains to be seen. “The core is as strong as St. Louis has,” said one member of the development community. “But that doesn’t mean it’s Austin, Texas, either.”

‘Hard to understand’ A new approach from a new administration is to be expected, those in development say. But even more so than the amount of incentive, it’s uncertainty about what the administration expects from developers and is willing to offer in exchange that could be the biggest drag on new investment. Does the city want affordable housing incorporated into a project? How much? Are contributions to the school district required? How much profit can an investor make before the city tries to claw back any incentives? “It’s hard to understand what their position is,” said one person who has been involved in the negotiations but who spoke on the condition of anonymity for fear of jeopardizing future deals with the city. “It was a constantly moving target.”

Fefer acknowledges developer uncertainty about the city’s future role in deals, saying during an SLDC board meeting in September that the city has “heard the development community loud and clear” that they want “clear processes and policies.”

“I think it’s undeniable to say the transition created a disruption,” he told the Post-Dispatch.

While developers and City Hall take a cooperative tone in public, behind the scenes, negotiations grew tense over the Butler Brothers and City Foundry projects. The new administration inherited those projects midstream, and Fefer said negotiations on future projects can start much earlier, hopefully leading to better outcomes for both the public and developers.

“I recognize that we have slowed down some deals and that’s unfortunate, and it’s unfortunate we couldn’t reach agreement more quickly,” he said. “But I think moving forward what we’re looking to do is build a process that actually allows us to make strong community benefit agreements and strong commitments on the part of developers in a more expeditious manner.”

Even so, Fefer and Richardson say developers should still expect to negotiate deals on an individual basis with the mayor’s office and staff at SLDC. That’s not a complete departure from past practice, but for the last 20 years, some degree of city support for anyone willing to invest in development here was all but a given. City Hall routinely granted tax breaks to developers with little to no controversy.

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