Cargo hub backers hope to launch freight incentive program at Lambert-St. Louis Int'l Airport

March 30--After last year's bruising legislative failure to create subsidies for Chinese cargo flights, the project's supporters are trying again, this time side-stepping skeptical state lawmakers.

St. Louis County plans to create a $3 million fund designed to lure freight flights to Lambert-St. Louis International Airport -- thanks to an unusual series of transactions between the state and the county. The county will pay for the freight incentives by diverting casino tax revenue previously designated for street improvements in Lemay. The state, in turn, will finance the Lemay project with federal flood relief money.

The move is part of a broader effort to revive four-year-old aspirations to make Lambert and international cargo hub. Despite high hopes, the effort fizzled soon after that September day when water cannons christened the first -- of only two -- China Cargo flights to land here from Shanghai.

The fund is a drastically scaled back version of a provision in last year's proposed Aerotropolis tax credit, which would have set aside $60 million over eight years to reduce the cost of flying goods overseas. The credit was designed to make shipping from Lambert cheaper than from Chicago O'Hare, where most Midwestern air freight takes off. Such a discount would attract freight forwarders -- who route most air cargo -- to St. Louis in hopes of building an industry here.

The bill died in last fall's failed special session, and shortly thereafter China Cargo began canceling its weekly flights. Hub supporters went back to the drawing board.

They found $3 million in an unlikely source: a federal grant the state received to redevelop areas hit by the 2008 Mississippi River floods.

St. Louis County was already planning to spend $3 million -- drawn from taxes paid by the new River City Casino -- on streetscape improvements in the south county neighborhood of Lemay.

But because Lemay qualified for the state flood assistance, the county's Port Authority applied for a grant from the state Department of Economic Development -- thus freeing up the county to spend the casino money on freight incentives.

Casino tax revenues "don't have the same regulatory issues associated with them" as flood-relief grants, said Denny Coleman, president of the St. Louis County Economic Council.

The one-time cash will pay for a pilot project that supporters estimate would support three flights a week for a year. They hope to build a case for St. Louis freight routes -- to the cargo industry and to state lawmakers.

"A lot of us believe it'll work," said Emerson president Ed Monser, who is working on the project. "But in order to go back and talk about a potentially bigger program in the future, we believe the right thing to do is run a pilot and prove it."

But first, the plan's various moving parts need to clear Clayton, where the County Council this week delayed a measure to accept the state grant.

Steve Stenger, an Affton Democrat whose district includes Lemay, said he was worried, at least in part, because of recent statements that the hub project was dead by Mike Jones, a senior adviser to County Executive Charlie Dooley.

"I'm 100 percent in favor of developing a hub for international cargo here in St. Louis, but this plan has boondoggle written all over it," Stenger said Thursday. "(The hub) is dead one minute, and then the next we see these back-channel maneuvers involving Lemay streetscaping money to fund these unsustainable flights?"

The short-term nature of the project worried Greg Quinn, too. The Republican from Ballwin recalled last year's arguments that the hub needed $360 million in state tax credits to succeed.

"It doesn't make a lot of sense to me to use $3 million to pay freight forwarders when you don't have a plan in place to back it up," he said.

Hub supporters say they do have a plan, it's just a smaller one.

Gone, at least for now, is talk of 10 flights a week or tens of millions of dollars in new warehouses around Lambert. Gone, too, are the six-figure consulting contracts paid out by the Midwest China Hub Commission over the past few years. Even "China" will be removed from the commission's name.

Staff from Lambert and the Regional Chamber and Growth Association will work to drum up interest in St. Louis among exporters and the cargo industry. The World Trade Center St. Louis will handle day-to-day operations of the Hub Commission, which will have a far-more-modest annual budget of $120,000. For partners, they will look beyond just China.

"We'll still go after China, but we export all over the world," said Lambert director Rhonda Hamm-Niebruegge. "This has to include the U.K. South America. India. It's a broad look at trying to bring cargo activity here."

It's an appropriate use of state money, said Jason Hall, deputy director of the Missouri Department of Economic Development.

"They're using the (grant) money exactly for what it's intended to do," said Hall, referring to spending the flood money on Lemay street work.

But boosting exports is one of Gov. Jay Nixon's top priorities, he said. So if the flood grant frees up $3 million to kick-start air cargo exports, all the better.

Some of Aerotropolis' fiercest critics don't have a problem with the new plan.

State Sen. Jason Crowell, R-Cape Girardeau, helped stymie the Aerotropolis bill last year, calling it "a cancer" that would siphon state tax dollars to special interests. But when told of this plan, which doesn't need the General Assembly's OK, he said he was fine as long as no state money went directly to the fund.

"I wouldn't do it, but I'm not on the council there," Crowell said. "It's a local decision."

That means its up to the seven-member County Council to decide whether to sign off on the maneuvering of money. They meet again Tuesday.

Paul Hampel of the Post-Dispatch contributed to this report.

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