Generous incentive package draws logistics, industrial facilities to Hazelwood

HAZELWOOD • When this city faced the loss of 1,400 good-paying manufacturing jobs from a closing Ford assembly plant, the suburb just north of St. Louis Lambert International Airport wasted little time laying the groundwork to attract new employers.

It sought state tax credits to help pay for the site’s cleanup, lobbied lawmakers for the ability to pass an economic development sales tax and put together a generous package of property tax abatement and forgivable loans.

It took almost a decade after the last Explorer rolled off the assembly line in 2006, but in the last couple of years, the effort has started to show results. In a changing economy increasingly focused on quick delivery for e-commerce orders, logistics and distribution companies have filled new warehouses built at a rapid clip in Hazelwood business parks.

The most recent announcement came from the world’s largest e-commerce company,, which confirmed it had signed leases for two facilities that would be the company’s first in Missouri. Hazelwood officials anticipate will add about 350 part-time jobs and 35 full-time jobs to the Hazelwood Logistics Park, bringing employment in the park to about 1,200 by year end.

Just northeast of that park, a 548,000-square-foot warehouse is under construction in Aviator Business Park, the former site of Ford’s plant. The park being developed by Panattoni Development Company of California already has buildings with tenants such as Weekends Only, Silgan Plastics and Trans-Lux Corp. The city estimates there are a few hundred workers on the old Ford site now.

“We like our logistics companies,” said David Cox, Hazelwood’s economic development director. “But we’ve also seen some light manufacturers move in. With that mix, we’ve got some pretty good jobs numbers.”

‘The hot spot’

Hazelwood’s logistics parks aren’t the only growing ones in the region. Two business parks in Edwardsville are also filling up with companies and count Hershey and Procter & Gamble among big tenants. Last year, those parks each lured an fulfillment center — much larger facilities than the last-mile sorting centers planned in Hazelwood — that together employ about 1,000 full-time workers.

Still, Hazelwood has seen a flurry of activity since 2015, with four speculative warehouses built in the Hazelwood Logistics Park and a fifth under construction since Kansas City-based NorthPoint Development took control of the park from developer Paul McKee.

“Hazelwood is the hot spot right now, and it’s all driven by public incentives,” Joseph Hill, a senior vice president at commercial real estate firm Colliers International, said in a May interview.

Those incentives include 25 years of property tax abatement at the Aviator Business Park (10 years of full abatement and 15 years at 50 percent) and 17 years of abatement in Hazelwood Logistics Park (10 years of full abatement and seven years at 50 percent).

“I think that really helps us with keeping the lease rates low and makes us attractive,” Cox said.

In addition, Hazelwood routinely uses funds from a half-percent sales tax to offer forgivable loans to companies that move there. It also uses that money to pay for roads and other infrastructure projects when companies need it.

When Ford was closing, city officials made a conscious decision to offer more generous incentive packages to try and win back some jobs to what historically has been one of the larger employment hubs in the region, said T.R. Carr, the mayor of Hazelwood from 2000 to 2009.

“We did not enter into this without a lot of thought and without a lot of advice,” said Carr, who is also a retired professor of public administration and policy analysis at Southern Illinois University Edwardsville. “We realized if we did nothing, we probably would have had an empty rusted hulk of a building, and people would have said, ‘Oh, remember what used to be’ .... Now we have jobs coming in, we have investment coming in. Sure, we gave away tax revenue, but zero dollars versus some dollars, I would go with taking some revenue.”

Some of the companies lured to Hazelwood have been from outside the region, such as Massachusetts-based Quiet Logistics, which said in April it planned to open a distribution center in the Hazelwood Logistics Center and hire about 250 full-time employees.

Others, though, have moved from existing facilities in the region, such as Bunzl Distribution USA. The food packaging distributor said it would move about 70 employees from its distribution center in Maryland Heights to one of the warehouses also being leased by The company, with corporate offices in Creve Coeur, said it had been looking for new warehouse space, and Cox said Hazelwood provided it with a $750,000 forgivable loan.

Cox, Hazelwood’s economic development director, said he believes the city of Hazelwood has had a payoff, even though there’s no way to know how many of the new employees live there and pay other taxes.

Most of the property taxes would be paid to the Hazelwood and Ferguson-Florissant school districts. And during the years the city isn’t collecting its share of property taxes, Hazelwood does collect a 6 percent utility tax and business license fees that generate a fair amount of revenue from manufacturing companies.

“We’re still getting revenue,” Cox said.

‘Regional approach’ needed

At least the incentives aren’t being offered to retailers, said Les Sterman, who was chief of regional planning agency East-West Gateway Council of Governments back when Ford closed. But, he said, “warehouses don’t generate a lot of jobs or tax revenue.”

“Hazelwood has always been a pretty heavy user of tax incentives,” Sterman said. “We need a regional approach to these things, and we’ve been kind of inching towards it, but we’re still pretty far from that right now.”

There’s still room for more warehouses in Hazelwood Logistics, where NorthPoint plans to start a sixth speculative warehouse later this year. In Aviator, Panattoni should finish a half-million-square-foot warehouse next month, though no tenants have been announced yet.

Those investments wouldn’t be happening without the aggressive incentive packages, Carr argued. Not only Hazelwood, but the region would have suffered for the lack of jobs in a place where many St. Louisans go to earn a paycheck.

“I know there’s some rhetoric out there that, ‘Oh, you’re just trying to give everything away,’ but in our case, we really took a long, hard view,” Carr said. “We had to take steps, and we took the right steps.”

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