Slay Says Centene “taking advantage of the state incentives”
Last month Mayor Slay got a bit ticked at a board meeting of the East-West Gateway Council of Governments. These meetings are recorded and below is Slay’s comments as they were transcribed and sent to me. This was following a staff report on the use of tax incentives:
“We have a situation that I hope you look at. There is a Modesa that is being used, I think the way the statute is written I’m not suggesting anyone did anything wrong. It’s available and people are going to take advantage of whatever is available. But we have a situation now that there is a long time law firm that’s been in downtown St. Louis and they have announced they are moving to Clayton* The reason they have given me is because that they threw so much money at this law firm that they had no other choice other than to leave the city even though they like being downtown and it was actually pretty controversial within the firm itself.
“They are moving to Clayton because they threw so much money at them, and I’m not saying it was Clayton who did it, but through the state, Centene who went to the state and got some incentives to build spec office space. They want to build their own headquarters plus they want to build their own spec office space, they want to try to fill that space and to create jobs is what they told Missouri Development Finance Corps. What they didn’t tell the Missouri Development Finance Corps is what they were going to do to create some of those jobs was to bring some jobs out of St. Louis city into St. Louis County, into Clayton, one of the wealthiest municipalities in the state if not the wealthiest, certainly from a school district standpoint, out of one of the most depressed and distressed school districts anywhere in the state.
I hope you take a good look at that one. I do think there should be some kind of changes at the state level to prohibit that from happening in the future. It is not good policy to shuffle jobs around like that, particularly from a distressed area into an area that cannot be considered distressed. That is going to have a tremendous impact on downtown by itself. There is another effort being undertaken by Brown Shoe to attract Thompson and Coburn into Clayton, using the same types of incentives. Thompson Coburn is the largest law firm in the region*we’re talking with the two firms somewhere between 800 to 1,000. Not only is it the reality of losing those jobs out of downtown, and we all agree it’s important to have a strong downtown, not only important to have a strong downtown, but it is the psychological impact on our ability to maintain a strong downtown. If people see major law firms that have been downtown forever, leaving for the suburbs. That does not bode well for the confidence level people have.
It’s happening because of one reason and one reason only * they having so much money thrown at them.
What I’m being told is that they are being offered $95 per square foot for tenant improvements — $95 per square foot. That is unconscionable. I’ve never heard anything close to that being given anywhere. They are offering $95 a square foot. They could not do that without the state incentives. Centene is not just giving it to them, they are in some way taking advantage of the state incentives to be able to offer this to the law firms to bring them out of the city to Clayton.
He’s right. Using tax incentives to move jobs across municipal & county lines is not what the programs meant by creating new jobs. Using tax dollars to move jobs out of a disadvantaged area into an affluent area is certainly wrong.
Centene is not the first nor the last to twist tax incentives to their favor. Remember West County Mall’s TIF – Des Peres blighted the old mall saying it was obsolete so they owners could get tax incentives to raze and rebuild. So now Centene is creating new jobs by stealing jobs from the city. It is a system run a muck.   Incentives should be reserved for those circumstances where the market needs a little help.
Fox2 covered the Mayor’s view on Centene on August 21st (see their story). Do we just end all the incentives to prevent the haves from using what was intended for the have nots? Better yet we get our state legislators to tighten up the criteria.
I like this Mayor Slay. Angry. Passionate. Vocal. We need more of this mayor and less of the one that is more diplomatic.
Welcome to MO! Yes incentives play an extremely important function in defining objectives/results, especially in a region divided by design. Fortunately we also have the Federal government subsidizing the New 64 so these dedicated locals can get back and forth quickly and easily to enjoy the Cardinals, Rams, the Arch grounds, Botanical Gardens and and Forest Park, etc. without much traffic or other problems typically found in urban environments. With offices in Clayton, employees quickly discover that living west of 270 isn’t so inconvenient any more, especially with a New 64. Are we finally getting to the breaking point or are we already beyond it? Interesting he made these statements to EWGCG instead of to the public.
Wow, awesome job Slay.
Thanks for the post steve.
Like I’ve said before, incentives, especially on the local level, are a zero-sum game. You end up with winners and losers but no net gain. I’m also a big believer in many small steps (incremental growth), and not focusing so much effort on that one “big win”. Successful areas are successful over the long haul because people choose to be there, not because they’ve been bribed to be there. Plus, if they’ve been bought off once, they’re much more likely to be bought off again in the future!
I wonder if Mr. Slay is ready to address the incentives offered by the City and State to move Schnucks downtown–a move that will possibly result in the closing or moving of City Grocers. Sure it’s bad when incentives are used to move an employer across county lines, but what about incentives to shut down competitors across the street? No one in St. Louis wants to see employers leave, especially with state money subsidizing the move. But Slay needs to look a little closer to City Hall before he starts taking on that martyr tone.
GO MAYOR SLAY!!
Funny to see Slay opposed to intrastate poaching of businesses. His own administration made an infamous run at getting Centene to move from the County.
Would he have been worked up if Centene chose Ballpark Village and then enticed with an assist from public financing a large law firm in the County to relocate to its new office?
Great post.
Craig wrote: “Would he have been worked up if Centene chose Ballpark Village and then enticed with an assist from public financing a large law firm in the County to relocate to its new office?”
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Probably not, given that the resulting revenue could be used to fund some of the services that poor County residents come into the City to find, because the services don’t exist in the County.
The city will continue to bleed until we get rid of that damn earnings tax….its that simple! The sad thing is that we are not working as a region to get things done. If the County and City were one entity we could have a strong Clayton and a strong Downtown, but since the region is so splintered it always creates a situation where someone has to suffer. MERGER MERGER MERGER…..when will this region learn 🙁 In a short time we will start shrinking like Detroit, Cleveland, Buffalo and Pittsburgh. It really bothers me that so much potential is lost here.
Centene is run by a bunch of crooked people – shocking. If Mayor Slay can convince both Armstrong Teasdale and Thompson Coburn to stay downtown and resist these rediculous tax breaks, that would make a huge statement. I would hope that both law firms would make the correct ethical choice, however, they are law firms so there’s probably nothing ethical about their thinking.
I’m really happy Slay is up in arms over this. However, I wish he’d make his fury public and show how companies like this are screwing Missouri taxpayers.
Hey, Phillip – can you address some of these services that the City offers to the Poor that the County does not? The one thing that I think of is subsidized/public housing (which is clearly more available in the City than County) but you say specifically ‘poor County residents’ coming to the City for services. I don’t have the foggiest notions what those may be. Health care? Food pantries? I’m completely ignorant on this one and could use some enlightenment.
goat314 – I think you can argue the earnings tax either way (especially when you consider the City’s dependence on it) but you are spot on with MERGER MERGER MERGER. The problem is convincing those in power in their little municipal fifedoms and more importantly those citizens who don’t feel any obligation to take on the City’s liabilities.
While it is great Mayor Slay is speaking up, it also demonstrates once again the corrupt partnership of government and corporations. This tax giveaway is totally absurd in every way. Mayor Slay is correct, but how could this have been approved at any level of government?
Missouri would be better off eliminating all tax credit and incentive programs and put the money into mass transit or health care. Actions that will improve the lives of everyone, rich or poor, rather than a few well connected insiders.
Of course, as Mayor Slay points out, this is all legal. Since they make the laws nothing is corrupt. The clever leaders have made corruption legal, just for them. Everyone else lives by other laws.
Ethics, forget it, you’re dreaming.
Rather than lavish praise for this on Patterson’s pages, please email Mayor Slay DIRECTLY and tell him that you are aware of the comments and impassioned plea he made and tell him to keep it up. (Not to slight the blog though Steve 🙂 Glad you’re here.)
I am disgusted by the small-mindedness and short-vision local and state leaders display through their petty actions. The city, along with St. Louis, St. Charles, Jefferson and surrounding Missouri AND Illinois counties need to work together to attract LARGE corporations’ manufacturing, call centers, headquarters and other high-employee demand facilities to our REGION, which must include the city.
It is great that O’Fallon, Missouri, has Mastercard–it helps the entire region. It is atrocious that the city lost Southwestern Bell (at least as the HQ, even though 1010 Pine, One Bell Center and the Data Center are still downtown). And, it is terrifying that the city could lose a number of jobs due the AB and AG Edwards buyouts.
We need to grow the region, that much is definite. But in that effort we cannot forget the city as a part of that plan.
Travis, call centers rarely offer high-paying jobs. Yes, we need jobs, but we need good ones – quality over quantity. And, no, we don’t need to primarily “attract LARGE corpoarations”. Small business is the backbone of America, and it’s a whole lot easier to attract 10 companies with 50 jobs each than it is to attract one with 500 jobs. Plus, the 50-person company is much less likely to be looking for a big subsidy, just fair treatment. And, if a 50-person company fails, it hurts a lot less than when 500 or 2000 jobs are lost when a large corporation (Ford!) decides to close their plant
Travis, screw large corporations, they are a major cause of the problems. They buy everyone in sight, distorting urban planning and democracy.
It is most interesting that these law firms have no ethics, for they, more than anyone, should see how they benefit greatly from the public coffers.
If McCain and Palin truly what to change abuse and corruption, this is another (I am breathless because there are so many) example of corruption.
In fact the corruption is so widespread and common, everyone seems to accept it.
If this is how they make decisions then should they be in positions of power, whether corporate or governmental?, at first blush, conducting government policy for the benefit of a few looks like corruption, I’m not sure but maybe a few of the silver tongued lawyers from Thompson Coburn can explain why it is not corruption.
I applaud the Mayor also, speak up!
I am failing to see where ethics come into play with the law firms deciding to take advantage of money being given to them in an entirely legal fashion. I entirely disagree with their decision to move, but I don’t see how it’s an ethics issue.
How ironic if Thompson and Coburn left. The owners of One U.S. Bank Plaza, where they lease many floors, had the Ambassador Theater torn down for that disgusting concrete plaza. Perhaps we should remember, in the long term, that sacrificing our buildings in the name of “economic development” will not sustain Downtown growth. Suburbia will always be able build new and issue their TIF’s until, as Slay says correctly, we have some actual State legislative reform! Until then we must use existing financial mechanisms and promote our historic office space.
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How ironic also that Real Estate Row was demolished partly in order to eliminate competition for office space! Yes, Pride of St. Louis Redevelopment Corporation members also owned bordering buildings and, in order to ensure their price, wanted to eliminate cheaper competition. However these buildings housed smaller firms thereby diversifying our downtown work force through promoting small business.
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If perhaps we didn’t always think of Mega-Projects and “Big Players,” while provided affordable office options for smaller firms, we wouldn’t be so dependent on this guys, who obviously have questionable Civic Pride!