Aerotropolis: Boon or boondoggle?
Debate on issue unusually nonpartisan
Sunday, September 4, 2011
ST. LOUIS (AP) — China’s growing presence in the marketplace may be cause for concern in some corners of America, but business and civic leaders in St. Louis see an opportunity with a Goliath of a trade partner.
The centerpiece of next week’s special legislative session in Missouri is the so-called “Aerotropolis” project that would develop Lambert Airport into a hub for trade, predominantly with China. Proponents say the hub could create tens of thousands of jobs and provide an economic boost that will last for decades.
Opponents see a potential boondoggle and scoff at the proposal to provide $360 million in tax credits — one of the largest incentive proposals ever in the state. The project would offer assistance to companies developing warehouse space and other cargo facilities.
The debate is unusually nonpartisan — Democrats and Republicans fall on both sides of the issue.
“The second largest economy in the world is at the other end of the table,” said state Sen. Eric Schmidt, a Republican from the St. Louis suburb of Glendale and sponsor of the tax incentive legislation. “It’s an opportunity, quite honestly, that comes along once in a generation.”
But Republican state Sen. Jason Crowell of Cape Girardeau said it makes no sense to have taxpayers foot the bill to become partners with a nation increasingly competing with American companies.
“I hope that the window of ignorance on what this plan really is closes, and closes quickly,” Crowell said.
In a sense, the project seeks to return St. Louis to its roots.
The Mississippi River city was a hub for trade, particularly fur traders, in the early 19th century. By the mid-1800s, spurred by its prominence as a trade outpost, St. Louis was the nation’s fourth-largest city.
Then the railroads came. Schmidt noted that Chicago, at the time smaller than St. Louis, seized the opportunity and became a leading rail hub, “and the rest is history.”
St. Louis’ decreasing presence in air travel is more recent. In 2000, Lambert was among the nation’s 10 busiest airports — 30,558,991 passengers flew into or out of Lambert, according to the airport’s statistics.
But Trans World Airlines, which used Lambert as a hub, went out of business. Then the Sept. 11, 2001, terrorist attacks changed the dynamics of air travel. By 2010, Lambert’s passenger traffic was down by nearly two-thirds, to 12,331,426.
As the decline was happening, the airport moved ahead with a long-planned expansion and runway addition. The project completed in 2006 cost $1.1 billion. Crowell said the only development spurred by the expansion “is we got the movie ‘Up In The Air,”’ which filmed many scenes at Lambert, “and the only reason was because it was empty and George Clooney could use the empty terminal whenever he wanted.”
Aerotropolis proponents see the underused airport as an opportunity. They say airports in larger Midwestern markets like Chicago and Dallas are busy and congested, making Lambert an attractive alternative for the Chinese.
Discussions between the Chinese and St. Louis-area civic leaders and politicians began about three years ago. An organization called the Midwest China Hub Commission was formed in January 2009.
Chinese leaders have expressed a desire to increase trade. During a trip to the U.S. in January, Chinese President Hu Jintao signed several export deals with American companies, including two in St. Louis — the coal firm Peabody Energy Corp. and the ag company Bunge North America.
During that same visit, Chinese Commerce Minister Chang Deming said he hopes China more than doubles its purchases of U.S.-made goods by 2016. And Chang said China is looking to the Heartland.
“These states are traditionally the agricultural and manufacturing centers of the U.S., and there’s a strong economic complement with China,” he said at the time.
St. Louis Regional Chamber and Growth Association president Richard C.D. Fleming said the city is perfectly situated as a trade hub, citing its central location and easy access by rail, river, highway and air.
But developing the hub — and particularly luring American businesses to participate — isn’t a given. That’s why the plan seeks to offer $360 million in tax breaks for companies involved in international shipments. Schmidt said those companies would need to meet rigorous requirements before getting the incentives. “The credit is performance-based,” he said.
Crowell disagreed. He said the bill is written in a way that makes it easy for companies to get the tax breaks without providing much benefit to taxpayers or the region.
Crowell and Audrey Spalding, a policy analyst for the St. Louis-based think tank the Show-Me Institute, questioned claims that the project could create up to 20,000 construction jobs and 10,000 to 12,000 permanent jobs. Though the hub commission funded a study showing the benefits, opponents say there has been no independent cost-benefit analysis of the project.
Advocates say the hub could spur trade with other regions of the world, too. Democratic Gov. Jay Nixon sees strong potential with South America, Schmidt with South Africa.
Missouri Chamber of Commerce President Daniel Mehan believes the incentive legislation could have an immediate impact, but acknowledges it will be years before the value of the hub could be judged.
“We should be getting flights in this fall from China,” Mehan said. “The sustainability is the question. Can we keep it up?”