Boeing's $1.8 billion St. Louis-area project faces questions on tax breaks worth millions
BERKELEY — If you spend any time traveling the roads north of Lambert International Airport, you know the landscape doesn’t vary much.
Enormous warehouses and manufacturing facilities are the norm except for about 110 acres nestled between Interstate 170 and the northeastern part of the airport’s property.
This site feels forgotten.
Thick vegetation lines the uneven gravel roads, and trees erupt through leftover concrete and asphalt pads, some rising at least 30 feet high.
In the summer, the insects around generate such a cacophony you could mistake this for the Missouri wilderness until a plane passes overhead.
But this place may soon become more like the rest of the area around Lambert. Boeing Co. has plans to transform it and a nearly 50-acre site to the west into multiple buildings totaling 1 million square feet of new advanced manufacturing space.
The project comes with a $1.8 billion price tag and would add to Boeing’s already sprawling campus nearby.
“This is key to significantly growing our advanced manufacturing capabilities,” Randell Gelzer, Boeing's senior director of state and local government operations, said during a meeting with the Airport Commission last month. “This will allow us to compete for those next franchise programs in St. Louis.”
Details on exactly what Boeing wants to make with the new manufacturing space are sparse. The proposal does come a few months after the Air Force formally started its search for a contractor to engineer and supply its next-generation fighter jets, but details are highly classified, and the contract won’t be awarded until next year.
Still, the development would be significant for the region, said Jason Hall, CEO of Greater St. Louis Inc., which promotes economic growth in the region.
“This is St. Louis on the rise,” he said. “These are the kinds of deals I feel like we’ve missed in the past.”
It’s the largest investment in the region in recent memory, Hall said, even eclipsing the National Geospatial Agency’s new $1.7 billion headquarters north of downtown St. Louis.
“Just the construction phase alone of a $1.8 billion spend — I mean you get a feel for that at the NGA,” he said.
And after construction, Boeing promises the project will create 500 jobs centered in north St. Louis County.
That prospect has St. Louis County Councilwoman Rita Heard Days enthused. The Democrat’s district includes a portion of the proposed development.
“It bodes well for the entire north county community, which has kind of like a black eye at this particular point,” she said. “I think this will be an economic boon.”
Fellow Democrat Kelli Dunaway recalls when the abatement first appeared on the council’s agenda.
“Wow, that’s some really tone-deaf timing — that honestly was my first reaction,” she said.
“It feels like it’s contributing to the idea that the system is rigged and that the people that deserve tax breaks are the ones that need them least,” Dunaway said.
Dennis Ganahl, managing director of MO Tax Relief Now, said his email blew up when Boeing’s request for an abatement became widely known. His group had lobbied the council to pass the freeze on taxes for seniors.
“People were so angry,” he said. “A lot of the conversation was about: ‘We’re not even surprised this was the kind of thing that St. Louis County would do to seniors.’”
To Ganahl, it’s a crystalized example of a local government choosing who or what it values more.
“This is a real conundrum for them,” he said. “Do we take care of the big (multibillion-) dollar corporation? Or do we take care of our seniors who are fighting to stay in their homes?”
The political optics of this moment aren’t great, and the members of the county council who voted against the senior property tax freeze, including Days and Dunaway, said it would set a bad precedent.
“Who will be next? Will we do folks with disabilities? Single parents?” Days said. “It’s a lot of folks that could say, ‘I’m overburdened with taxes.’ We all are overburdened with taxes quite frankly, because folks don’t like taxes, they don’t want to pay them.”
Dunaway said it’s unfair for the county council to pick one group or organization to benefit more than another.
“It feels like everyone wants something for nothing and then will expect the same service from St. Louis County without contributing to what it would take to deliver services,” she said.
Are big tax breaks effective?
The proposal also comes after St. Louis County had to cover a $40 million budget deficit late last year.
A freeze on seniors’ property taxes would mean the county government loses revenue over time, while Boeing’s request for a 50% abatement on real and personal property taxes only applies to new investment and not to any existing taxes the company pays. St. Louis County would effectively bring in $155 million over 10 years in revenue if the council approves Boeing’s proposal.
“We’re not getting this revenue if we don’t build there,” Dunaway said. “It would be flat for us.”
Boeing said in a statement that it welcomes scrutiny from different public bodies on this proposal and the tax breaks around it.
“The fact that everybody knows for St. Louis that it’s Boeing surprises me,” said Bruce McDonald, a professor of public budgeting and finance at North Carolina State University.
Companies seeking these kinds of incentives from state or local governments usually try to stay anonymous for as long as they can, he said.
McDonald has studied how effective tax incentives are at attracting and retaining businesses. They’re a mixed bag when it comes to driving long-term economic growth, he said.
They’re not particularly great at keeping a business in a community when that company has indicated it wants out, McDonald said. Those businesses were going to leave anyway, he added.
“(But) coming in and redeveloping an area that hasn’t really had a lot of economic development tends to actually be fairly successful,” McDonald said. “Because you’re taking land and making it more useful.”
Incentives geared toward labor activities, like training people to work or increasing a company’s size, can also produce returns as people in the community begin to make more and contribute more in taxes, he added.
“It might be slow to grow over time, but long term you’re likely to come out at least in a fairly good position,” he said.
And there are ways local or state governments can ensure incentives are more effective for their communities, McDonald added. Clawback requirements are one, and another can be a requirement that the company in question specifically reinvest into the local community, he said.
There are clawbacks in the Boeing proposal: The company has to create 500 new jobs and not allow its St. Louis workforce to drop below 12,100 people during the plan’s 10-year lifespan. Boeing is one of the region’s largest employers, with 16,000 workers in the region, leaving room to cut close to 4,000 jobs.
“I found it incredibly insulting,” Dunaway said. “I just feel like if I could see more broader investment and a commitment to St. Louis and to this region, it would be easier to swallow that pill.”
She said she would like to see Boeing also invest in something that can contribute to all St. Louis County residents, like a community center.
Boeing touts its commitment to Missouri, pointing out the $13 million it made in charitable gifts in the state in 2022. Last year, the company also pushed $5 million into the Advanced Manufacturing Innovation Center coming to north St Louis, and in 2021 it committed to building a drone production facility at MidAmerica St. Louis Airport in the Metro East.
Boeing's next phase
Business leaders across the area argue this new development from Boeing builds on the legacy of the aerospace industry in the area and will boost the region’s profile in the sector moving forward.
This level of investment in a likely new product line also telegraphs where Boeing intends to be in the future, Hall of Greater St. Louis said.
“That’s when you’re most vulnerable,” he said. “You want to make sure and not take for granted that just because somebody is here now, that they will always be here in the future.”
Plus, this investment would ripple across Missouri to the hundreds of suppliers Boeing has in the state, Hall added.
“It’s like an auto plant,” he said. “Everybody wants these because it’s like the golden goose that keeps on feeding other companies and jobs that aren’t even their direct employees.”
But to secure the commitment, St. Louis County needs to play ball with the incentives it provides, Days said.
“St. Louis needs to be in a position where it can compete. Period,” she said.
Legislation for the tax breaks was introduced at the county council this week. A final vote on the matter could come as soon as Sept. 19.
Jason Rosenbaum and Rachel Lippmann contributed to this article.