Bombshell indictments could change how St. Louis handles incentives, land gross sales | Legislation and order

St.Louis City Hall

The view of the new exterior lighting at City Hall donated by the Gateway Foundation as photographed on Wednesday, March 24, 2021.  

ST. LOUIS — In January 2020, Alderman John Collins-Muhammad met with a local businessman who wanted a property tax break for a gas station he planned to build off an Interstate 70 ramp in north St. Louis.

The alderman told the businessman where to submit his application at the St. Louis Development Corp., the city’s economic development arm.

Even more crucial, Collins-Muhammad offered to provide an aldermanic letter of support for the tax abatement, required by SLDC.

“What I owe you for this?” the businessman was recorded asking Collins-Muhammad about his letter and support during a meeting later that month.

“Twenty-five,” the aldermen replied, returning later that afternoon to collect $2,500 in cash.

Reed Collins Muhammad Boyd

From left: Lewis Reed, former president of the St. Louis Board of Aldermen; former Alderman John Collins-Muhammad; and former Alderman Jeffrey Boyd. 

The transaction was one of many bribes that a federal indictment unsealed June 2 accuses three members of the Board of Aldermen of taking from the businessman, referred to in the indictment only as “John Doe.” Collins-Muhammad, who represented the 21st Ward, resigned from the board on May 12, apologizing for “mistakes” he’d made; Alderman Jeffrey Boyd, 22nd Ward, and Aldermanic President Lewis Reed quit after the indictments became public.

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The charges outlined in the 66-page indictment have shaken the city’s political order, forcing out two of the board’s longest-serving members. But they’ve also shined a light on a practice often referred to as “aldermanic courtesy” and the direct involvement of city alderman in many of the bureaucratic functions of city government.

Federal prosecutors zeroed in on lucrative tax abatements and the sale of property owned by the Land Reutilization Authority, the city’s land bank. But aldermanic influence can also affect which streets get repaired, where speed bumps are installed and whether the planning department even takes up a rezoning request.

And less than two weeks ago, the city launched a $37 million grant program for north St. Louis businesses and nonprofits using federal COVID-19 relief money. Many of the eligible areas are on commercial corridors in the wards Boyd and Collins-Muhammad used to represent. And required for grant applicants under a provision pushed by Reed: support from the ward’s aldermen, “via letter on the Alderman’s letterhead.”

“We know that aldermanic courtesy is something that’s been at the board for a long time,” Mayor Tishaura O. Jones said when asked Wednesday why she thought the problem ran deeper than just the aldermen indicted this month.

Mayor Jones addresses board of alderman indictments

St. Louis Mayor Tishaura O. Jones addresses the recent indictments during a press conference at City Hall on Wednesday, June 8, 2022.

Now, there are new calls to reexamine aldermanic involvement in city functions.

“For far too long, the political culture of city politics has concentrated power in the hands of the members of the Board of Aldermen — from approving the sale of city-owned LRA properties, controlling capital improvements through the disbursement of ward funding and issuing tax abatements all the way down to putting in stop signs and speed humps,” Alderman Cara Spencer, 20th Ward, wrote in a Monday letter calling for Reed’s resignation. “These ‘aldermanic courtesies’ must end.”

In an interview, Spencer said city functions “need to be professionalized in a way that doesn’t involve elected politicians.”

“The idea that we just kind of look the other way when aldermen want to shepherd these things through,” Spencer said, “it’s ripe for corruption.”

‘Outside of the norm’

Requests for tax abatements or other incentives aren’t unique to St. Louis. Locales throughout the country use them to encourage development by offsetting a portion of the tax increases new construction brings.

But the involvement of aldermen so early in the process via support letters is a quirk of St. Louis, a tradition developed over decades that has dispersed power to 28 aldermen who have immense — and often unseen — influence over the functions of city government in their ward. Though the Board of Aldermen must ultimately pass legislation authorizing incentives, the support of the alderman where a project is located is required even before the professional staff at SLDC will process the incentive application and make a recommendation.

Sometimes, SLDC staff would be reviewing an application and then have it shut down after aldermen intervened and withheld their support, said Jonathan Ferry, a former SLDC employee who analyzed incentive requests until his departure last year.

“I wouldn’t say it’s the norm, but it’s not uncommon,” Ferry said. “There were projects where personal differences were the reason they didn’t get done.”

Because tradition generally requires the bill sponsor to be from the ward where the project is located, a support letter to SLDC served as evidence a bill would be introduced, said Linda Martinez, who served as deputy mayor for development under former Mayor Lyda Krewson.

“The aldermen absolutely need to be involved in evaluating proposed projects in order to represent the interests of their constituents,” Martinez said. “But when should that occur and what analysis and input would assist the aldermen and the public to make their decisions? Should that be handled at a board of aldermen public hearing rather than a ‘go/no-go’ letter?”

Ferry said SLDC could look at other ways to introduce incentive legislation. Perhaps SLDC could submit its recommendations for introduction by members of the board’s Housing, Urban Development and Zoning Committee, which would both put the matters in the hands of aldermen more familiar with development and remove the stealthy veto power aldermen ultimately wield over projects in their ward.

Who knows how many applications never even make it to SLDC staff because of an applicant’s prior conversation with an alderman, Ferry said.

“It’s worth taking a step back and asking, is that even required at all?” Ferry said of aldermanic support letters. “Obviously someone still has to introduce a board bill, but are there other ways to do it?”

A 2016 report on the city’s use of incentives noted that “St. Louis’s significant reliance on Alderman involvement in the process is outside of the norm.”

“In many similar cities, tax abatement criteria for eligible projects are specifically defined, and City Council involvement is limited to end review and approval of projects,” the report commissioned by SLDC said.

Both Collins-Muhammad and Boyd were closely involved with SLDC’s review of tax abatements the businessman was seeking for properties he owned in north St. Louis. The indictment details numerous communications Collins-Muhammad and Boyd had with an SLDC incentives project manager, identified in the indictment only as “Z.W.” Zach Wilson, who handles tax abatement requests for SLDC, referred questions to SLDC’s public relations firm.

Working to move the abatement through SLDC for the proposed gas station, Collins-Muhammad in December sent Wilson an email: “Let’s do what we need to do to get this done.” Reed offered to call Wilson directly. Boyd actually filled out the tax abatement application before giving it to the businessman to send in to Wilson.

The indictment also details Boyd’s involvement in arranging a sale of LRA property for the businessman. The businessman at first offered $9,000 with Boyd’s support letter, but LRA staff countered with $33,500 in October 2020.

Boyd told the businessman to counter with $16,000. After one November 2020 conversation with former LRA Director Laura Costello, identified in the indictment only as “L.C.,” Boyd says “she’s gonna try to make the $16,000 work.”

The next month, he is recorded telling the businessman that he spoke with LRA officials and “convinced them that, um, I need them to support what you put down.”

Costello, who had led LRA since 2006, was fired in April. She declined to comment.

LRA property sales are supposed to be negotiated by its staff and approved by a three-member board. But in reality, aldermen are often involved in the process behind the scenes.

Cara Spencer mug

Alderman Cara Spencer, 20th Ward, on Tuesday, April 6, 2021.

Spencer said she was “shocked” to be asked whether she supported particular LRA property sales in her southside ward after she was elected in 2015. Half of the LRA properties in her ward have been sold since she took office, in part, she believes, because she removed herself from the process.

“Do I get involved on what the price is? Absolutely not, that’s not appropriate,” Spencer said. “Everybody in my view has a blanket support from me.”

Last week, SLDC announced they were suspending LRA sales from July through October, which Jones said Wednesday was part of its efforts to “assess and standardize its practices and processes.” The pause, though, had been in the works for months. Mark Stroker, director of real estate development at Rise Community Development, said SLDC staff told him back in the winter that it was planning to pause sales.

Regardless, a clearer process could prevent future abuses, said Alderman Annie Rice, 8th Ward.

Annie Rice

Alderman Annie Rice, 8th Ward, on Monday, Sept. 24, 2018.

“No one has ever been able to give me a straight answer on, this is how the process works, or what is the aldermanic involvement supposed to be,” Rice said. “It’s much more difficult to corrupt a process that is thorough and public than it is something ambiguous.”

‘Room for improvement’

There have been efforts in recent years to begin standardizing SLDC’s processes. Ferry helped develop an incentive evaluation scorecard when he was there, and the agency developed a map defining how much abatement rehabbers could expect on projects based on the neighborhood’s health.

That helped reduce some of the influence aldermen had, but applications for incentives still came in from aldermen sometimes, Ferry said. Using a public, online application portal to accept tax abatement requests could promote public engagement, he said. And even though aldermen might still refuse to introduce legislation, at least the public would know who applied.

“There’s definitely still room for improvement in the system, especially in the area of just transparency and making sure that projects come in through one set channel or one set pipeline, instead of them coming in a myriad of different ways,” Ferry said.

But Joe Roddy, who was the longest-tenured aldermen before opting not to run for reelection last year and often dealt with development and incentives in his Central West End ward, said aldermanic involvement can engage neighborhood leaders early in the process and “try and build consensus.” He admits he sometimes blocked incentive requests from developers he clashed with, and he predicted other aldermen would be hesitant to give up that influence.

“I don’t know how you’re going to turn that off,” Roddy said. “Are neighborhoods really gonna be happy with a situation where bureaucrats from SLDC or aldermen from other parts of town are going to decide what projects are appropriate for them? I think there’s going to be a lot of pushback for that.”

Tina Pihl, a progressive who succeeded Roddy as the 17th Ward representative, has also used aldermanic courtesy to secure developer contributions to one of her pet causes, affordable housing. Even a developer not seeking incentives still needed her support before it applied to the city’s planning department for a rezoning. It agreed to contribute $250,000 to affordable housing at her request.

Tina Pihl

Alderman Tina Pihl, 17th Ward, on Tuesday, April 20, 2021.

“I’d say it’s a good thing when we make the right decisions,” Pihl said, when asked about the use of aldermanic privilege to negotiate of a $1.8 million contribution from the developer of City Foundry in exchange for her introduction of incentives legislation.

Asked whether those kinds of deals should be left to professional planning and economic development staff, Pihl said she had unique experience because of her degree in in urban studies and planning from the Massachusetts Institute of Technology.

“I’m an alderperson, and I am professional staff,” Pihl said. “I’ve got 20 years of experience in this.”

Sarah Coffin, an associate professor of urban planning and development at St. Louis University, said such contributions might produce a public good, but they’re still reliant on the whims of aldermen rather than a comprehensive city plan.

“That’s the problem, it’s a one-off negotiation,” Coffin said. “There’s no standardization.”

Rice this month introduced legislation to form a city charter commission, and Spencer has said she will hold hearings on the bill. Rice, who said she planned the move even before the indictments, acknowledged that aldermanic courtesy is more of a tradition, not something enshrined in law. But she’s certain the discussion on the charter will be influenced by the indictments, and she said there should continue to be a role for aldermen in many local measures.

“We are close to our constituents, we are close to our neighborhoods,” Rice said. “There can be beneficial ways pressure can be put on people, but yes it can also be an opportunity for corruption if it’s done wrong.”

The charter commission would be an opportunity to take a comprehensive approach to reform of the city’s “archaic” governance structure, Spencer said.

“This could change the trajectory of our community if we seize this moment appropriately,” Spencer said.

But she also said SLDC could make some immediate administrative changes to limit aldermanic involvement.

For months now, SLDC has been working on a plan to standardize how it evaluates incentive requests, something the mayor noted Wednesday.

Neal Richardson, SLDC director, referred questions to his agency’s newly-hired PR firm, Kansas City-based Candid Marketing. Sara Freetly with Candid did not respond to specific questions about whether SLDC would continue to require aldermanic support letters. In a statement, she said that since Richardson took over “operational reform has been a priority.”

SLDC has hired consultants to review its incentive process, she noted, and would share information as “key milestones are met.”

“The public and media can stay informed of our progress,” Freetly wrote, “by following our board meetings.”

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