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New DED regulations poised to kill successful economic development program

  

JEFFERSON CITY, Mo. – This morning, thousands of workers walked into the headquarters of Express Scripts at the intersection of Interstate 70 and Hanley Road in St. Louis to start their day, never thinking about a tax credit program that proved the difference in their jobs being in located in St. Louis, instead of another city thousands of miles away.

The Department of Economic Development is proposing rule changes that would effectively kill the program. This is the first in a series of stories about the program – its successes, its failures, elected legislators reactions to the effort to kill the program, and how media coverage could be behind the effort to end a program that was essential to several Missouri economic development projects.

For Express Scripts, after breaking ground on the first building in 2007, the developers of the site found an illegal dumping site that had been covered for years, placing the Express Scripts project in jeopardy of failure.

Charlie Dooley
Charlie Dooley

Between Christmas and New Years, state leaders, along with a local delegation led by St. Louis County Executive Charlie Dooley, tapped the Brownfield Tax Credit program to fund the clean up of the site and save the development.

In past years, Missouri led the nation in partnering with this federal program to clean up hazardous sites in the manner in which the Express Scripts project was saved. However, economic development projects using the program have slowed to a trickle.

Most successful Brownfield projects have used the design/build method to project the costs and mitigate the risk to the state and the site. However, new rules introduced by the department of Economic Development would require applicants to use the program to bid out each specific piece of the project making most of these cleanups impossible to finance.

The Department of Economic Development states the Brownfield Redevelopment Program currently serves the purpose of providing, “Financial incentives for the redevelopment of commercial/industrial sites that are contaminated with hazardous substances and have been abandoned or underutilized for at least three years.”

An attack on the design/build aspect of the program is likely its death knell.

However, reactions to the new rules has met with opposition from other members of the committee. The program is chiefly used by owners and developers to re-position contaminated properties. Environmental Operations Inc. is a major player in that area and has recently been attacked by some left-leaning media outlets. The head of EOI Stacy Hastie declined to comment at this time for our series of articles.

Ahren's equipment working on the clean up of the National Lead site in South St. Louis County.
Ahren’s equipment working on the clean up of the National Lead site in South St. Louis County.

The attack on the design/build method was detailed in a St. Louis Post-Dispatch in 2012. In that article is a quote from Roger Kent with Ahren’s Contracting saying he wished he had the chance to bid Brownfield work. They were not only allowed to bid the work, yet they were awarded the demolition package.

The new rules will have to be presented to the Joint Committee on Administrative Rules for their approval. That committee is chaired by the traditionally pro-economic development Sen. Eric Schmitt, R-Glendale.

Rep. Mike Colona
Rep. Mike Colona

Rep. Mike Colona, D-St. Louis, who sits on JCAR commented, “Brownfield tax credits have been vital to the growth of St. Louis. They aren’t used often – but let’s be real here – to clean up contaminated sites and better our community, I believe we need to keep them in their current form”.

As to the pending hearing on the rules in JCAR, “There is a procedure involved here and my constituents can rest assured that I will demand it be followed to a tee before damaging this program. I will be very interested in scrutinizing these new rules”.

Fellow JCAR member Sen. Scott Sifton, D-St. Louis, commented, “Brownfield credits have proven pivotal in some of the most impactful redevelopment efforts throughout our state. Turning an unused, contaminated property into a driver for economic growth makes an enormous difference in our communities.”

The program also has support of labor groups, several of whom oppose regulating the program out of existence. Jeff Aboussie of the St. Louis Building Trades Council said, “Brownfield tax credits are good for the environment and create many jobs – construction and full time in their current form. Why would we want to change a proven program?”