The Office of the Comptroller has had a Tax Increment Financing (TIF) policy in place since 1999. The office uses it to evaluate prospective TIF projects and has had it adopted by the TIF commission.

The need for such a policy was obvious after the bad TIF deal made by the Schoemehl administration—the St. Louis Marketplace on Manchester which today and through 2011 costs the city’s general fund over $1 million per year—and the impending growth in redevelopment throughout the city.

The city now has some 85 TIF projects and none of them pledge the city’s credit or moral obligation to repay the debt.

The TIF policy has been to use only the taxes generated by the substantially completed projects as a benefit for the developer. That way the developer has the risk to complete the project not the city’s taxpayers.

However, the city is being asked to offer its credit to assist a developer to purchase a building as part of a redevelopment project downtown. The project is the St. Louis Center mall and the building is the One City Centre office building. The developer is John Steffen of Pyramid.

The building, One City Centre, was purchased for about $17 million 5 years ago. Today, the seller wants $37 million of which the city is being asked for upfront TIF funding of $14 million using its full faith and credit.

This moral obligation of the city will place a debt on our books with no equivalent asset. No matter how the deal is structured, it is ultimately backed by the taxpayers as lenders of last resort. Certainly if there is any default the city will be forced to pay its obligation just to maintain its credit rating. This transaction could cause the city to pay $1.2 million per year for up to 23 years.

As the Comptroller of the city of St. Louis, I’m charged with protecting the credit of the city and being a watchdog over taxpayer dollars. The credit of the city is the foundation on which the city’s financial future rests. The city’s strategic planning regarding its financial future must involve policies that safeguard the city’s assets and not place undo liability on the city’s credit capacity. The ability of the city to be successful in maintaining a strong financial position for many years to come lies in public officials’ willingness to act quickly to correct weaknesses in its processes.

This proposed development in downtown St. Louis—One City Centre—is important for the continued revitalization of downtown and I support it. I support the development, the jobs and the economic opportunities that it promises. John Steffen understands minority participation and has been at the forefront of inclusion on all of his development projects. It’s hard to vote against this development proposal, but I must, to protect the taxpayers from speculators who are not good developers like Pyramid.

There is no law protecting the city from speculators or these kinds of bad deals unless you consider condemnation law that is being used widely against hardworking homeowners, small businesses and not for profits. There is no law protecting taxpayers from the city offering up its credit backing to developers. I think it is time to stop and take steps to protect the taxpayers from these kinds of bad deals in the future.

If the TIF policy we follow was law and not just policy, it would close the door to bad deals such as this one. The absence of an ordinance is the reason we have this bad deal before us today. I recommend that we move quickly to close this loophole.