A Taxing Matter

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Our daughter is a longtime theater aficionado, and works in backstage roles for the drama program at the STEAM Academy. So of course, we attend one performance of every show. When we attended the show last spring, two things were particularly striking: the students were both talented and had clearly worked hard to prepare for the production, and, it was basically impossible to follow the show, much less enjoy it, because the performers were inaudible. When my daughter worked shows while attending Wydown Middle School, in the Clayton school district, the audio was perfect. The difference? A few thousand dollars worth of equipment, which Clayton can afford for a middle school, but Ferguson-Florissant can’t afford even for a high school.

It’s things like this which I had in mind when I beheld the spectacle of executives from Performance Food Group, Northpark, and the St. Louis Economic Development Partnership, at Ferguson city council last night. Our city council called a special meeting, with brief notice, no publicity, and no public comment on the agenda, to push through a boundary change which was needed for the project to proceed. After the meeting was publicized on social media, the city relented and allowed for public comment. But the deal was already done. The company will get millions of dollars in tax breaks on a $100 million warehouse in Northpark, which will replace their current facility on North Broadway near downtown St. Louis. The tax breaks include an exemption from sales tax on all building materials, and a ten year abatement of half the property and personal property taxes at the new facility.

Unfortunately, the TIF was agreed to by St. Louis county, while our cash strapped city and struggling school district had no opportunity to weigh in. This seemingly unrelated measure before our city council was our only opportunity to demand reconsideration of the tax breaks. By voting it down, they could force the developer back to the table. Only two councilors voted against the measure, Palmer and Lipka.

Can Performance Food Group afford to pay their taxes? They are a large national corporation, headquartered in Virginia, with nearly $10 billion in market cap and more than 150 locations across the country. They significantly exceeded earnings expectations in 3 of their last 4 periods. In 2019, they acquired Reinhart Foodservice for $2 billion. In 2021, they purchased Core-Mark, a convenience store food distributor, for $2.5 billion. Last year, they announced a $300 million stock repurchase program, a strategy employed by companies with excess cash to increase share price. Yet they demanded millions of dollars in tax breaks, much of which would otherwise go to our low income school district.

Rodney Crim, the $265,000 a year CEO of the Economic Development Partnership, was front and center at the meeting. He didn’t explain how it is in the best interest of the region to give a company millions of dollars to move from North Broadway to Northpark. He also didn’t mention how, by some odd coincidence, his own home appears to benefit from an unwritten tax break. Crim purchased his home, in the Gate District of St. Louis, in 2002, for $327,000. Last year, it was assessed at $292,000, and this year, at $323,000. By comparison, the house to the left of him, a smaller one, sold for $202,000 in 2002, and is now assessed at $358,000. The house to his right sold for $193,000 in 2001, and is now assessed at $342,000.

It’s unfortunate that our system of approving tax abatements allows one entity to approve and abatement that affects others. This is the heart of the problem, because while the county receives less than 8% of property tax collections, they are able to reduce taxes for everyone – the city, the school district, and others. If those seeking tax breaks had to gain the approval of every affected entity, we wouldn’t be in the situation where blocking a boundary change is our only chance to weigh in. But here we are.

This fall, there will be another drama production at my daughter’s high school. And again, the audience will struggle to follow the show. Perhaps if we demanded that businesses like Centene and Performance Food Group pay their fair share of the taxes in our community, they could afford a sound system. Perhaps the county could afford to do the work on Chambers, which cost less than one year of tax breaks on this project. Perhaps Ferguson would have a little more money to take care of our crumbling streets and overgrown parks. Because our council chose not to negotiate, we will never know. Perhaps Mayor Jones, and her four colleagues who voted in favor of giving millions in tax breaks on this project, can chip in to buy the sound system our kids need.