DECEMBER 2006 :: ECONOMICS

Toxic Tour Stop
Illinois Town Attracts Businesses That No One Wants

By William Spain
Staff Reporter of The Wall Street Journal

When construction and waste-management firm Fred Weber sought to build a trash-transfer station in the St. Louis area, it was shooed away by activists and residents opposed to having thousands of tons of other people's garbage being trucked through their communities.

But across the border in Illinois, the village of Sauget (pronounced so-ZHAY) rolled out the welcome mat. "This kind of industry has to go someplace," says the village's president, Richard A. Sauget Jr. "We are very comfortable with it here."

That "Yes, in my backyard" ethic has made Sauget, population 250, an island of prosperity in the sea of economic blight across the Mississippi River from St. Louis. While the little towns around it are marked by crime, shuttered factories, burned-out buildings and trash-strewn streets, Sauget boasts clean parks, neat homes and beautifully maintained roads.

No Moral Judgments

S auget might offer some lessons for other Midwestern towns desperately seeking economic revival. Sauget has no downtown to dress up, no chamber of commerce. It has done nothing to try to attract new housing or a Wal-Mart.

Instead, Sauget has embraced some of the less-popular remnants of the industrial Midwest as well as the seamier side of the U.S. service economy. Along with companies that smelt zinc, treat sewage and incinerate toxic waste are a brace of strip clubs, two nightclubs and a 24-hour liquor store that doubles as a betting parlor.

"The town allows us to operate as a business, not making moral judgments, but expecting us to obey the law," says Michael Ocello, president of VCG Holdings of Denver, owner of the strip clubs.

What the village lacks are schools, churches and supermarkets. There is now a village maintenance shed where a school once stood. While Mr. Sauget's three children attend Catholic school, the village pays into a neighboring district for kids who go to public schools.

Many of the residents are police officers, firefighters and other village employees. Given the population's relatively static nature, housing turnover is rare. "I have never sold a house in Sauget," says Linda Frierdich, owner of Advantage Real Estate in nearby Columbia, Ill. "I don't think anyone has. Nobody wants to move there."

Yvonne McDaniel, 58, has lived in Sauget for 55 years and raised four children here with her husband, a retired Sauget police officer. "It might not be the most beautiful place in the world, but there are more important things than beauty," she says.

Sauget's per capita income of about $19,000 is just $1,000 less than Chicago's. And with annual property and other tax revenues of $7 million-which works out to a remarkable $28,000 per person-Sauget residents enjoy free sewer service and trash pickup, and a force of 16 police officers and 16 firefighters-one of each for every 15 locals.

Sauget's location-just a five-minute drive from downtown St. Louis-makes it easy for weekend visitors to sample its nightlife.

But perhaps nothing is more vital to Sauget's success than the unabashedly pro-business leanings of its leading family, the Saugets.

Mr. Sauget, 33 years old, is a former minor-league ballplayer who has been attending village meetings since he was 13 and is known around town as "mayor." He is the third Sauget to be elected village president since the town's founding in 1926. Members of his family control the Gateway Grizzlies, a local minor-league baseball team, several nightclubs, and a portion of its four square miles, including about 20 of its roughly 100 homes. His father, Richard Sauget Sr., lives in a mansion in Sauget complete with a tennis court and meticulously trimmed lawn and hedges.

Driving around town in his SUV, the younger Mr. Sauget proudly points out the many industrial landmarks. "There's Stellar Manufacturing," he says, adding, "They make the 'hockey pucks,'" the deodorizing cakes used in many public toilets.

Kathy Andria, president of a local environmental group, occasionally gives "toxic tours" of East St. Louis and other poor industrial towns just east of St. Louis. She says Sauget is a must-see because it's a "magnet" for industries that deal with pollutants. "They think of the companies as their constituents."

The village, originally named "Monsanto" after the chemical company, was created specifically to offer the company a tax- and regulation-free dumping location at a time when environmental rules existed mainly at the local level. "We were basically incorporated to be a sewer," Mr. Sauget says.

The town thrived under the oversight of its first president, Leo Sauget, Richard's great-grandfather. The town also got a reputation for its smell, memorialized in the 1992 song "Sauget Wind" by rock band Uncle Tupelo.

Chemical Stew

I n the late 1960s, polychlorinated biphenyl (PCB) contamination of land, ground water, rivers and the food chain began to cause concern-and the Monsanto plant in Sauget was the nation's largest producer of PCBs. Production of PCBs was banned in 1977, but they remain part of a noxious chemical stew at an Environmental Protection Agency Superfund site along Dead Creek in Sauget.

"Sauget is one of the most polluted communities in the region," says Richard Karl, director of the EPA's Superfund Division, Region 5. "It's basically a soup of different chemicals," including PCBs, benzene, toluene, and dioxin and organic solvents. Heavy-metal pollutants include cadmium, silver, selenium and zinc. So far, the agency has spent tens of millions of dollars to clean up the area. "We have eliminated a lot of the direct contact threats, but we won't be leaving anytime soon," says Mr. Karl.

Around the time of the PCB imbroglio, the town changed its name from Monsanto to Sauget, after Leo Sauget, who had just stepped down as village president. Today, the plant is owned by Solutia, which was spun off from Monsanto in 1997, and makes products including oil additives and agricultural chemicals.

Over the years, the town has occasionally sided with local companies in court against regulators and groups worried about pollution. Paul Sauget, Leo's son and successor as village president, once handed a complaining EPA official a gas mask at a public meeting.

A trucking company recently built a terminal and a new dialysis clinic opened next to the ballpark. In August, a new $100 million ethanol plant broke ground. "The heavy industry is not as strong as it used to be, but all the infrastructure is still [here]," Mr. Sauget says. "We have the access, we have the roads. And we will talk to anybody."