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Tax Abatements and Tax Increment Financing

Policy #G092 was initially approved in 1990. Modifications to policy have been made to reflect statutory changes to RSMo. 99.800 to 99.865.

The St. Charles City-County Library District is a political subdivision which has traditionally relied upon property tax revenue for approximately 90% of total income. It is also a political subdivision which serves citizens of all of St. Charles County. The purpose of this document is to provide trustees and administrators with a uniform set of public policy criteria with which to measure tax abatements and tax increment financing measures undertaken by municipalities. Although the District recognizes that the ultimate responsibility of undertaking such programs rests with the individual city in which the project is located, the District is also mindful of the problems inherent with such programs.

In general, the District shall support only such programs which have as their purpose the reclamation or development of blighted or undeveloped property and the return to the tax roles of such property in as timely a manner as possible. These programs should only be undertaken when any infrastructure improvements consist of elements which are not normally the responsibility of either private developers or by local, state, or federal government.

In general, the District shall support only such developments which create permanent improvements which will enhance surrounding property and produce additional, surrounding improvements which will be fully taxable. Cooperative civic centers, convention centers and arenas would be acceptable uses of tax increment financing if such a plan involved the restoration of neighboring, blighted property to the tax roles.

With rare exceptions, the District believes that tax increment financing is a far fairer and more powerful development tool than tax abatements, and believes that abatements primarily shift tax income away from schools and libraries and to municipal budgets while destroying the fiber of a community. Neither abatements nor tax increment financing should be used to "bail out" a development that is blighted through neglect of a developer nor to provide developers with a stated rate of return which will cause them to make an investment in a community.

In evaluating properties which purport to be blighted, the District would request the enacting municipality to supply the District with data showing that the project area has actually been losing valuation for a prolonged period of time and that enacting a project in such area would result in a stabilization of such property tax base, or that the property in questions would be brought from one classification to another, resulting in an actual increase in valuation when the property is returned to the tax roles. The District would request projections of personal property increases for each project.

Although existing statute provides excess sales and utility tax revenues to a tax increment financing project maybe returned to the taxing entities, the District requests that the enacting municipality concentrate such programs which create new jobs within the St. Louis metropolitan area, and do not simply move existing jobs from one municipality to another. The District would ask that the enacting municipality be extremely cautious in blighting property which would cause other competing property to become blighted, thereby increasing the rate of decline of the property tax base within a municipality.

As an institution with a county-wide tax base the District realizes that it will not be as injured by extensive blighting or tax increment financing activities occurring with a single municipality as would a school district located within that municipality. As an educational partner with school districts, the District is concerned with how extensive blighting and tax increment financing may affect individual school districts within the County.

The District requests that the municipality enacting blighting or tax increment financing proposals balances the needs related to a specific project with the realization that both low property tax rates and excellent education are also an inducement for economic development. As the property tax base of a school or library district contracts through abatement programs, either the educational component of the community suffers or the erosion is offset by asking the voters for a higher tax rate. Municipal governments, in enacting such programs should measure the value of the individual project against any declines within their communities of this valuable educational fabric and the resulting offset for economic development for their community as a whole.

(Revised 8/14/95)