urbanSTL

pat wrote:Article about Aerotropolis tax credits...

http://www.stltoday.com/business/local/ ... 9ed87.html

This could really spur business for the cargo hub. Not everyone is a fan of tax credits, but these would be a direct correlation to new jobs. That's what St. Louis needs.

Thought it was a pretty good article and gave some insight on actually status of things. Of course, the big question? Will Gov Nixon/Statehouse come to the plate if it all boils down to an incentive package?

I hate to see the state not find a way to make this work for the sake of the state's biggest economic engine/region considering what was forked over for Ford in a special session. Okay, made my political statement.

Its going to be interesting to see how this plays out. $480 is a lot of money, but the benefits would undoubtedly be exponentially greater. The fact that the Chinese have basically been waiting for a greater commitment from the Missouri government says a lot about how non-aggressive this state is when it comes to economic development. I truly believe state leaders want Missouri to be mentioned in the same breathe as Kentucky, Arkansas, Nebraska, and Kansas.

the count wrote:Did I get grumpy after reading your post? Yes. It's just so easy to stand on the sidelines and critique everyone else after the fact. I too predicted stuff in the 90's. Sometimes I was wrong, sometimes I was right. Meh....

(snip)

My search skills must be deteriorating. I was able to discern one of your names was Frank (a mailto link or something like that), but I couldn't find the contact info. Thanks for pointing to it.

What some would call "cynical" (which I did to other people 20-some years ago for a number of development initiatives) I now look to as ten-times-bit, twice shy. I'm sure there's something on the record somewhere, for example, that shows how much I was in favor of the convention hotel, now just another in a long line of poor public investments locally. Maybe the Renaissance was a catalyst for Wash Ave, maybe Wash Ave would have happened anyway. I do remember thinking that doing something was better than doing nothing.

Now I think that's a false trap. It feels better to do something, but in the longer run, it might just be better to do nothing. We built Mid-America, and then it required operating subsidies and new warehouses and God knows what else and it's still a shell, and now they're talking about dumping more money into it. We built the new runway, and it's operating at a fraction of capacity, and one of our best-case sceanrios predicts 30 incremental weekly cargo flights in four years -- but that also seems to assume a new half-billion-dollar subsidy for new facilities. (And I found it a little weird that the legislators were falling all over each other to accuse Nixon and others of "lack of leadership" just because they wanted to see a bit more cost-benefit analysis before committing that much money.)

So here's one way I look at the China Hub right now: We're thinking about pinning a lot of our hopes on air freight. The big boom in air freight came 20-30 years ago. As was noted when this discussion began, St. Louis somehow dropped out of the hub consideration then, maybe because of TWA.

I question this in the same way I questioned the huge subsidies Hazelwood gave to the Ford plant 12 or so years ago. Auto production was never going to be a rapid growth industry and the return on investment would probably never be substantial, if there was any at all.

Something else was going on at the same time. My company provided a ton of Internet bandwidth back then, and we started several initiatives to make St. Louis a major network access point, but we were met with a major case of MEGO from the RCGA and the local civic leadership. (So I really wasn't just standing on the sidelines.)

The China hub has a better upside than car plants ever did. At the same time, however, the recent commitment to seed capital loans was all of 5 percent of what they're talking about in subsidies to the hub project. I'd submit that the seed capital loans have an even higher upside.

The other reason I'm cynical/skeptical/whatever is the point made by CS. The people pushing this latest "Big Idea" are the same people who have been putting forth similar projects as long as anyone can remember. (Not to mention: The Mid-America effort still seems to be completely unccordinated with the Lambert effort.) Why should this one have any different of an outcome?

Anyway, thanks for returning the level of discourse to a more civil level. I'd be happy to buy you a beer or three some time.

Bonwich,

I think if they came forward and said that Brazil and Argentina want in also, then go ahead with the subsidies. But we need more than just pinning our hopes on China...my opinion.

I don't think they're pinning all their hopes on the China Hub. They're just giving it the best chance to succeed. They're not giving tax credits (what you're calling a subsidy) to just one company (like Ford). They're making it available to anyone who wants to do business with the cargo hub. Its an incentive. They're not giving money to a company with the risk of their business not doing anything with their money. They're only giving credits to those companies that bring business to or around the hub.

^^ so when do we start talks with Brazil and Argentina? Why hasn't there been a commission down there the past 4 years? This whole Nixon and $450M scenario makes me nervous, but I'm hopeful with it passing 9-0 out of the Senate's ED Committee. 4 years of sitting on pins and needles...

sirshankalot wrote:Bonwich,

I think if they came forward and said that Brazil and Argentina want in also, then go ahead with the subsidies. But we need more than just pinning our hopes on China...my opinion.

Yes and No, Yes you can't pin your hopes on one thing and the states economic development team has been missing on a lot of opportuniteis. However, the legislation is multi-year and the year to year numbers are still significantly less then what it took to keep Ford in the state and also less then what was being offered to when the Canadian plane maker played us off to get what they wanted in Montreal.

In other words, No becuase I think Pat has a better take on it in my opinion. It amounts to incentives for new business to come to the state because of cargo and it goes a long ways in providing Chinese with backhaul. Second, Chinese are looking hard at STL because it is a central location in the Amreican breadbasket. China is huge agriculture market that is only getting bigger not only for low end grains/soy but also for both the high end products (Beef) that could move via air freight.

Finally, we need to look at this in Chinese perspective. A big volume of freight is coming and going from the likes of FEDEX, UPS, Delta, multiple third party forwarders, etc. In other words, they want a piece of the pie and need a place to make it happen. This is probably one of the few hub opportunities in commercial aviation that will exist in the foreseeable future.

Its bottom of the ninth, swing big by offerring the incentives is my thought, you either clear the fences or whiff. It couldn't be any worse then waiting in the bullpen the last four years.

I will continue to say that this could really be "the" game-changer for the entire region. The amount of investment and jobs needed to support all this will be huge. Another benefit is many of these jobs will be manufacturing based, something a large portion of the current population is well trained in.

I would be surprised if we could pull much of the current cargo out of Chicago because that would likely be cost-prohibitive. Rather I can see St. Louis becoming the destination for different goods to China (agriculture of course being one), and opening up the midwest to new global markets in South America and Asia.

Another plus of this is that it might greatly increase STL's position as a city to immigrate to from outside the U.S. Many of these jobs will need people that can speak other languages and understand the business climates in working with countries such as China.

It's also encouraging to see that this bill is getting Democratic, Republican, rural and urban support.

I don't see how you can read that article and not think it's worth it.

Yet another write-up offering, perhaps, better clarity:

http://www.stltoday.com/news/opinion/co ... f6878.html

^I thought the article was very well conceived and written. I agree, pleasantly surprised by the PD as well.

I'm not an expert on business, but it sounds like this deal will bring a lot to the area. Will it cost a ridiculous amount of money? Yes. However, if it is all it's cracked up to be then it may eventually pay for itself.

I would like to rehab every historic building in St. Louis. I'm not sure the area itself can support that. You need the population. In order to get the population you need schools and and more jobs.

True, if you reformed schools then you may have more families moving into the city and that will bring in a lot of revenue to the city. That said, from the little I know of big school systems, throwing money at it does not always work. You have to have the right people running the system. At the same time, it may take decades for St. Louis to completely shake off its "bad schools, high crime" imagine, as unfair as the image is. I'm not convinced that pouring money into the schools will help more than the China Hub.

Is it possible that we spend a half billion dollars on the China Hub and it does not pay for itself? It's possible. However, people who know a lot about business have been working on it for two years. If it works, it should generate income for years to come. At the same time, you could pump a half billion into schools. It could change things dramatically or it might not. That is a gamble as well.

Fact is, in order to make money you have to spend money. Any investment is a risk, but this one seems like a pretty good risk.

In a perfect world, at least from America's perspective, we would still be a manufacturing giant and wouldn't have to import so much. Unfortunately, the manufacturing is in China now. We can't really change that. We just have to find ways to profit off of it. I think we can, if it's done correctly. We have to work with China. If we can sell them products and they can sell us products and there is mutual benefit then I don't see any problem with it. The world is the way it is and you have to work with it.

It seems to me that you almost have to take this risk. Everything else the area has tried has not worked. Could the money be spent else where? Sure. No matter where you spend the money, there's no guarantee of better days. But St. Louis cannot sit on its hands.

I don't always trust politicians or businessmen, but, after three years, I trust that they know what they are doing. They have done their homework. This doesn't seem like some half-baked reckless scheme.

doug wrote:I simply find it interesting that we are going to spend 500 million to get better access to Chinese goods and -- apparently -- sell them our stuff which we really don't manufacture to the degree we did in the past.

You just need some perspective, Doug: That's only ½ a runway.

-RBB

rbb wrote:

doug wrote:I simply find it interesting that we are going to spend 500 million to get better access to Chinese goods and -- apparently -- sell them our stuff which we really don't manufacture to the degree we did in the past.

You just need some perspective, Doug: That's only ½ a runway.

-RBB

To add some more perspective, its over a 15 year period.

Another thought, how much has been provided for the historical tax credit and over what timeline? and yes, I think adding manufacturing and distribution jobs to the region is just as important and vital to the region as rehabbing a structure.

Add these perspectives, the fact that the state has made very little capital/direct investment into Lambert and you got reasonable proposal for the states biggest GDP generator.

I don't really think the Aerotropolis Credit and Historic Tax Credit compare. The historic tax credit goes towards rehabbing a building which can in bring in some type of commercial residential business. It makes the city look prettier. The Aerotroplis credit goes towards building a warehouse or doing business with China (A billion person country). There's quite a difference. The potential with the Aerotropolis credit vastly outweighs that of the Historic Tax credit. I'd much rather see new industry and new businesses than a rehabbed building.