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Issue: 1075 Date: 3/31/2011
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New tax credit (SB390 - Aerotropolis Tax Credit) key to China hub
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| A nine member trade delegation from Shanghai visit d St. Louis and signed a memorandum of understanding (MOU) with RCGA and St. Louis Would Trade Center on Jan. 22, 2011. It is the latest development of China Hub project from China side. |
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St. Louis' dreams of becoming a gateway for Chinese air cargo are going to need some more state funding to become reality.
That was the message this week from supporters of the region's China Cargo Hub project, who visited the Post-Dispatch to tout the so-called Aerotropolis Tax Credit. The measure, proposed this month by state Sen. Eric Schmitt, R-Glendale, would create up to $480 million worth of tax breaks over 15 years to spur foreign trade through Lambert-St. Louis International Airport.
The bill comes as St. Louis leaders enter their fourth year of negotiations with Chinese officials about a Lambert freight hub, and two months after the Chinese directed their largest freight carrier - China Cargo Airlines - to begin direct talks with the airport. But it also comes amid tight state budgets and a pointed debate about tax credits in Jefferson City.
It appears to have caught the eye of the Chinese.
In early March, Lambert Director Rhonda Hamm-Niebruegge and Steve Stone, a lawyer for developer Paul McKee who has been deeply involved in the hub project, visited Shanghai for talks with China Cargo. The two sides were negotiating over flights, said Stone, but were far apart on costs.
"China was losing patience because we were not coming in with anything," he said. Then Stone brought up the Aerotropolis package, which would create $60 million in tax breaks for shipping companies that export by air from Missouri, and $420 million in credits to build cargo warehouses and other facilities in certain spots, like the region's now-closed auto plants or the North Park business park east of Lambert. It would lower the cost of flights, and help draw more companies to locate around a cargo hub, Stone said.
"The mood changed," Stone said. "They see a way here for them to succeed."
After Stone and Hamm-Niebruegge returned home, a top China Cargo executive sent a letter to Mayor Francis Slay. He called the proposal "truly wise and innovative," according to a copy supplied by Stone. He also said that without Aerotropolis or something like it, "opening a new air route to St. Louis will be very difficult, or even inconceivable."
"I think this needs to get done," Stone said.
It remains to be seen whether the people who control Missouri's budget will agree. While it has long been suggested that closing the deal with the Chinese would require some incentives, this is the first time a dollar amount has been proposed.
Last week the package sailed out of the Senate's Economic Development Committee, which Schmitt chairs, on a 9-0 vote, and Schmitt said he expects a floor debate in early April. Yet Gov Jay Nixon has taken no position on the bill, and a spokesman said this week that his office hasn't seen the letter from China Cargo.
The governor has had a sometimes-sticky relationship with the hub project. In 2009, its supporters had to lean hard on him to free up $1.1 million to fund feasibility studies. Then last fall, at their urging, he canceled a trade trip to Taiwan at the last minute, lest he offend the Chinese.
The Aerotropolis bill also is likely to be drawn into the broader debate about reforming Missouri's economic development programs, a key issue for Nixon lately. Several conservative lawmakers have fought most new tax credit proposals in recent years and are pushing for sharp cuts to big-money programs such as the historic tax credit, cuts that a statewide panel recommended last year. At least one senator last week indicated that he would likely oppose the Aerotropolis bill unless broader reforms pass.
As chairman of the Economic Development Committee, Schmitt will likely be a key player in all these debates. While he didn't say he supported cutting the historic credits, he said the cargo hub should be a priority.
"With a lot of our incentives, we're moving stuff around. This is so much bigger than that because it helps re-internationalize our economy," Schmitt said. "If we actually get to where we're spending $30 million a year on this, our region doesn't look anything like what it looks like today."
(By TIM LOGAN, St. Louis Post-Dispatch, 03/25/11)
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