When two longstanding businesses in the city of Jennings outgrew their facilities, they contemplated moving elsewhere. The exodus would have eliminated hundreds of jobs and represented yet another blow to the North St. Louis County municipality, which has seen its economic base decline in recent years.
Instead, municipal officials went to work and created two tax-increment financing (TIF) districts, which lured the companies into staying put and expanding their operations at their current locations. The Jennings projects are good examples of how TIF can be used effectively for its intended purpose.
Stout Industries, 6425 W. Florissant Ave., and Louisa Foods, 1918 Switzer Ave., were running out of room. Stout, which employs 135 people, needed to increase its office space. The firm makes metal advertising signs for PepsiCo, Miller Brewing and other companies. Louisa, a maker of ravioli and other Italian specialties, had a shortage of freezer space, which jeopardized the future of another 125 jobs in Jennings. To alleviate their problems, both companies anticipated leaving town.
After negotiating with the businesses, the city offered to provide $500,000 in TIF to Louisa and more than $800,000 to Stout. As a result, the two enterprises decided to reinvest millions of dollars to upgrade their current quarters. Stout has poured $5.5 million into adding a 30,000-square-foot complex to the front of its West Florissant location. Meanwhile, Louisa has upgraded its operations by building a 15,000-square-foot freezer.
"The developers are Stout (or) Louisa," says Richard Perry, the Jennings director of public works. "These are self-generated projects. There was no outside development company involved in either one of these. The investment was made by each company themselves. That's the whole point."
The TIF projects in Jennings take existing businesses and foster their expansion. This, in turn, preserves the tax base and employment opportunities in the community. At the same time, Jennings is bolstering its commercial status and staves off the real blighting that would be caused by the abandonment of industrial property. In Stout's case, the company not only invested in new office space but also acquired vacant property adjacent to the plant, which required hazardous-waste remediation.
Developers didn't profit at the public's expense in these cases, and none of the TIF funds went toward displacing residents through expensive housing buyouts. By definition, these were the appropriate uses of the TIF statute.
"Tax-increment financing, in my view, was created, in part, for the purpose of stabilizing communities like ours," says Perry. "That's what it's all about: reinvesting and instilling a new confidence in an area that may be somewhat depressed.
"Both of these companies had been in Jennings for quite a few years," he notes. "We're glad they stayed. We're proud of it. It's really going to make a big difference in the future. We're very pleased with where we are right now and, hopefully, where we're going."
-- C.D. Stelzer