Does Kansas City Really Have Too Many Hotel Rooms?

Posted on by Patrick Tuohey

The other day we highlighted a letter from a developer who claimed that his client, a hotel company, should receive higher-than-offered taxpayer subsidies because of a saturated hotel market. The hotel won’t make as much money, he argued, so the city should be more generous in its offering. That taxpayers should continue subsidizing hotels when there are already plenty seemed an odd position to take. But are there really too many hotels in downtown Kansas City?

Yes, according to the Hotel Muehlebach, a Kansas City landmark first opened in 1915. A developer is asking the City Council to execute “a Tax Contribution Agreement with Platform Ventures LLC for the purpose of incentivizing the redevelopment of the historic Hotel Muehlebach” (Ordinance No. 180842.)

The developers want tax money to help them redevelop the hotel into offices, residential apartments, and a 144-room hotel. This is a dramatic reduction from the Muehlebach’s current 420 hotel rooms. This is not the first time the Muehlebach has sought taxpayer subsidies. As we pointed out a few years ago in a post about Kansas City’s long history with hotel subsidies, a previous subsidy for the Muehlebach in 1992 was a disaster for taxpayers because there wasn’t enough demand for the hotel rooms to make the venture profitable.

Too Many Hotels in KC, According to Hotel Developer Seeking Subsidies

Posted on by Patrick Tuohey

In a blog post earlier this year I wondered about Kansas City, “If previous subsidies successfully created a vibrant economic center, then why are they still needed?” The recent news that Drury Hotels is withdrawing its application for tax-increment financing (TIF) makes this question relevant again.

The reason for the withdrawal is that Drury’s original request for TIF was only partially approved by the Economic Development Corporation (EDC). Drury would have received some taxpayer support if the development had gone forward—but not as much as requested.

Consider the letter from a development attorney working for Drury announcing the withdrawal. According to the letter, the subsidy is needed not because downtown is an economically challenged market, but because there is too much hotel development.

From the letter (which is available in its entirety via the link at the bottom of this post):

Additionally, Drury believes that the Project is financially risky, particularly given the projected doubling of downtown hotel room inventory over the next twenty-four months. Drury anticipates that a substantial decline in revenue per available room will take place over the next several years while the market absorbs this unprecedented growth in available rooms.

Let that sink in. Developers think that the area is overdeveloped, so taxpayers need to protect them from the risk of low revenue due to market saturation.

We only know this because a representative of this developer stated its position bluntly in writing. How many other developers—hotel or otherwise—are using economic development subsidies not to address a public need, but to protect themselves from offering too much of a private product?

Reading the letter, it’s difficult to understand why the EDC would have recommended any subsidy at all for hotel development. Downtown clearly has enough hotel rooms; taxpayers don’t need to fund any more. Unfortunately, the EDC is funded with fees paid by TIF recipients, so they have every incentive to say yes. Maybe Kansas City leaders need to follow Nashville’s lead and put a halt to TIF until the process can be improved.

No Longer Forgotten

Posted on by Susan Pendergrass

Far too often, our policy conversations focus heavily on urban locations. This is especially true in education. Yet there are over 9 million children in America’s rural schools who deserve our careful and thoughtful attention as well. That was what prompted Show-Me Institute Senior Education Policy Fellow Mike McShane and Andy Smarick, director of the Civil Society, Education and Work program at the R Street Institute to assemble an edited volume on rural education titled No Longer Forgotten: The Triumphs and Struggles of Rural Education in America.

Show-Me Institute Distinguished Fellow of Education Policy James Shuls contributed a chapter on rural school finance. Although the chapter is not about any specific state, James drew on several examples from Missouri. For instance, he explained how Missouri’s property tax assessment practices place rural schools at a disadvantage when raising local funds for schools and how many rural communities tax themselves at lower rates. When you combine these two facts, it’s easy to see why rural schools receive much less money than their suburban and urban counterparts.

There are a myriad of issues affecting rural schools, and the book is a good reminder that education reform shouldn’t stop at city limits.

 

How Can Missouri Support Students with Special Needs? Find Out.

Posted on by James V. Shuls

In November, the Show-Me Institute will host two events on Bryce’s Law.

Haven’t heard of it? Don’t worry, few have—and even fewer have benefitted from it.

Bryce’s Law was passed in 2013. It was intended to provide scholarships to students with special needs so they could get the educational services they need from specialized private institutions such as the Judevine Center for Autism. As Mike McShane, Susan Pendergrass, and I point out in our recent essay, “Bryce’s Law Revisited: Serving Missouri’s Neediest Students through Targeted Scholarships,” not a single student has benefited from Bryce’s Law.

Join Mike on November 13 in Kansas City or Susan in St. Louis on November 15 as they share how Bryce’s Law could be revised to do what it was meant to do—serve students with special needs.

If you have a child with special needs or know someone who does, or even if you just want to find out more, I highly recommend you attend one of these events. Unlike some political issues that generate millions of dollars in backing from organized interest groups, scholarships for students with special needs are not likely to receive that kind of substantial support. You won’t see any television adds. You won’t see yard signs. And if people are not educated on this issue, we won’t see any special needs students benefitting from Bryce’s Law.

The Tax Burden in Kansas City Is High

Posted on by Patrick Tuohey

On Ruckus the other day, panelist Woody Cozad mentioned that taxes in Kansas City are high. He’s right. My colleague Patrick Ishmael has made the point repeatedly. But a study of taxation out of Washington, D.C., underscores just how bad things have gotten here relative to other U.S. cities.

The study, issued by the government of the District of Columbia in December 2017, “aims to calculate the combined state and local tax burdens that would apply to a hypothetical family at five different income levels living in D.C. as well as the largest city in each state.” Kansas City is included and St. Louis is not, and neither are some cities that we’ve identified as peers. But the data are valuable nonetheless.

The estimated tax burden for a family earning $50,000 in Kansas City—the median income is $47,000—is $5,444. That’s 10.9 percent of income and includes income, property, sales, and auto taxes. This places us 8th in the country, ahead of places well-known as expensive such as Boston, New York, Portland, Seattle, Denver, and Los Angeles.

Dave Helling of The Kansas City Star has pointed out that taxes in Kansas City are also regressive. This report supports that conclusion regarding auto sales taxes, stating that “Providence, Rhode Island; Bridgeport, Connecticut; and Kansas City, Missouri are the cities with the highest automobile tax burdens across all income levels.” Combined with all other taxes, a Kansas City family earning $25,000 pays a combined tax burden of 12.6 percent; 8th highest of the cities measured. For a family earning $100,000, the burden is lower at 11.2 percent, placing us 12th.

What’s worse, the sales tax estimates are low for Kansas City. On page 39, the study lists Kansas City’s sales tax rate to be 8.475 percent, but anyone living here knows it goes much higher due to the proliferation of special taxing districts across the city.

Individuals can determine for themselves if City Hall is providing a return worthy of the investment, but the debate over whether taxes are high is settled. Kansas City is a high-tax city. Our taxes are regressive, too, but they are certainly high.

Food Deserts and Demand

Posted on by Patrick Tuohey

The Kansas City Star published a 2,500 word front page story on Sunday that asked, “Why do so many stores east of Troost lack healthy food?” It wasn’t until the 11th paragraph that we got the answer: demand. This answer shouldn’t surprise anyone—we’ve known it for years.

The story also makes clear that it’s not that stores east of Troost Avenue “lack healthy food,” as the headline suggests. It’s that nutritious food isn’t presented immediately as one enters the store. We’re told, “Customers must walk back 100 feet before they encounter the produce section.” 100 feet.

There’s no bad guy in the story, either. Grocers admit to stocking what people want.

“You can pick apart any store that you want to on what they have or don’t have, but it’s about if people request these things or not,” [Sun Fresh store director Kim] Nagel says. “We’re going to give our customers what they want. Not just what looks good.”

Grocers aren’t fools. They’ll quickly learn what the community wants and work hard to provide it. All the fresh and brightly colored produce goes to waste if no one buys it, which is exactly the problem. Kansas City seems to think that building a new supermarket will address the problem. It won’t, as was addressed directly in recent USDA research. In fact, the Star’s own reporting echoes the research findings on food deserts: People do not necessarily drive to their closest grocery store. If they want something that isn’t available, they travel to where it is available.

I can’t get ground veal at the two grocery stores nearest me. I must travel to a third, more distant store. Am I the victim of a veal desert? Of course not.

The challenge of poor nutrition is very real, and addressing it will require a lot of work. That work should be focused on increasing demand rather than on counting kale and measuring miles. As the Star editorialized a few years ago about the announcement of the taxpayer subsidized Sun Fresh on Prospect:

[Kansas City Mayor Sly] James said building the Sun Fresh Market would be the “beginning of the revitalization of this entire corridor.” In truth, that’s been said before. For example, the current forlorn Linwood Shopping Center opened to rave reviews almost 30 years ago on the site of the demolished St. Joseph Hospital.

Yet the old grocery store there closed almost a decade ago. The center today is a reminder that investing in the East Side must overcome hurdles that don’t exist in other parts of the area. History shows that a lone project can’t really lift up an entire community. It takes a much bigger effort to do that.

The current “rave reviews” over some offerings at the new location will likely end if the demand does not keep up. And there are hurdles specific to the East Side when it comes to nutrition. Pretending otherwise is not just bad public policy; it is a disservice to residents.

Kansas City’s Unrelenting and Unaddressed Homicide Problem

Posted on by Patrick Tuohey

Four years ago, when Kansas City’s homicide rate was down, City leaders were eager to let people know.

“There is still work to do because even one homicide is too many,” [Mayor] James said. “But I have faith in the collaborative and strategic approach of KC NoVa. This year’s data tells us that so far we are making great strides in the right direction.”

Fast forward to today—after years of a nation-leading spike in homicides (currently #5 in the nation with 108 in 2018 as of this writing)—and those same people seem to want to deny any affiliation with policing. The mayor, whose role as a member of the police board was highlighted in 2014, seems to shrug off any role in policing today. In a KCPT panel discussion about the 50th anniversary of the Kansas City Race Riots, moderator Nick Haines raises a question about minority hiring in the police department, “Mayor, you’re on the police commission.” James responds, “Yes . . . and…?” to laughs from the audience. (Starts at 35:32.)

In a more recent press conference, Mayor James complained bitterly about lack of gun control legislation and political ideology in the state legislature. But as a recent KSHB report on homicides made clear, there is no evidence that Jackson County, Missouri, has significantly more gun ownership than, say, Johnson County, Kansas, or that gun ownership in Kansas City has increased over the same time frame that homicides have spiked. It’s not the guns.

There is research, however, that indicates that increasing the number of police officers does reduce crime. KSHB’s Andy Alcock makes that point in his report, too. In fact, according to FBI statistics, Kansas City has fewer police officers per capita than all other cities with high homicide rates. What’s worse, since 2011, the number of uniformed police officers in Kansas City has declined.

As I laid out in a Kansas City Star guest column, no one in Missouri has more power over policing in Kansas City than the mayor’s office. What is lacking is not power, but will. And until Kansas City leaders get serious about adopting policies and policing methods that actually contribute to reductions in violent crime, we are figuratively whistling past an ever-growing graveyard.

How Do Rental Scooters Fit into the Transit Paradigm?

Posted on by Patrick Ishmael

Late last month I made the fateful choice to join the gig economy (after hours, naturally) by collecting and charging some of those rideshare electric scooters “all the kids are talking about.” I put the “kids” bit in quotes because I have been surprised at how wide the age and demographic spread has been among the riders I’ve seen, from businesswomen to construction workers to kids to just about everyone in between.

It’s gotten me thinking: Could this “Uber, but for scooters” thing catch on? And if it does, how would it fit into our short-term, or even long-term, public transit future?

For Kansas Citians and St. Louisans, whether scooters catch on is an important question in light of the rail plans that both cities have pursued in recent years and may yet continue to pursue. As we know, streetcar lines are fixed, stop often, and can be dramatically impacted by traffic. Scooters are much more tailored to the user’s needs, though heaven help you if it rains.

But that said, during my Nightcrawler-esque scooter-gathering pursuits it has been fascinating to see so many people using rental scooters zip past Kansas City’s streetcar as the publicly financed, free-to-ride trains trundle on their tracks, from stop to stop, at roughly the same speed. And, according to the Dallas News, it seems the scooters are catching on just about everywhere they’ve been introduced:

Only last week The Atlantic ran a piece about [micro-scooter inventor Wim] Ouboter that said scooters aren’t the future, but only because they were the present long ago. They might have been sold and marketed as kids’ toys—even winning, in 2001, the award for “best toy designed for outdoor play.” But as The Atlantic’s Sarah Holder just wrote, the scooters were always intended “to fundamentally change urban transportation.”

Until now Razor has ceded that transformative micromobile marketplace to Bird, which has 3,000 scooters in Dallas, and Lime, which replaced most of its green-and-yellow rental bikes with around 2,000 rental scooters, according to docs prepared for the briefing. Clearly [scooter manufacturer] Razor grew tired of missing out on the business it essentially created—especially now that Bird is up to $1 billion in funding, making it what CNBC recently called “the burgeoning industry’s first unicorn.”

Lime and Bird have already shown these things work. The companies gave the city stats that show rides span just more than a mile and take, on average, about 13 minutes. The companies say people are riding twice as far on the scooters as they did on the rental bikes—yet their rides are six minutes shorter. Nothing in those docs indicates that scooter riders are less sweaty. But I can attest, yes, you do tend to smell better after 13 minutes on a scooter than 19 minutes on a bike.

What the scooter companies will tell you is that they’re in the business of solving the “last mile” problem in urban areas—that is, replacing the walk from public transit to your home, with a scooter ride instead.

But I also wonder to what extent, at least in Kansas City, the scooter is not just replacing the last-mile walk, but also the first mile of public transit. Granted, the scooters aren’t free to use like the streetcar, but they meet a need that the streetcar doesn’t—transit flexibility over short distances. Keep in mind that in Dallas the average trip is about a mile, which makes the two-mile length (north to south) of the streetcar line in Kansas City particularly notable. And that’s to say nothing of the east-to-west flexibility that scooters provide that Kansas City’s streetcar would seem unlikely to ever satisfy.

Will private rental scooters, or something similar, end up replacing the publicly-financed streetcar? It’s a possibility that I think city leaders here in Missouri and elsewhere need to consider before starting or expanding their urban streetcar systems.

Struggling High Schools Are Just the Tip of the Iceberg

Posted on by Abigail Burrola

If Missouri has a workforce development problem—that is, if students are leaving high school without the skills they need to enter the workforce, a knee-jerk reaction might be to blame the high schools. But there is reason to believe that the problem starts much earlier.

The Missouri Department of Education and Secondary Education (DESE) publishes district-level data on standardized test results that we can use to track whether students are gaining or losing ground as they progress through the primary school grades. Student scores are tiered in four categories: below basic proficiency, basic proficiency, proficiency, and advanced proficiency.

Let’s look at math scores as an example. In 2017, 61 percent of Missouri districts had at least half of their third-graders achieving proficiency or above. (These districts show up as blue in the maps below.) There is plenty of room for improvement in these scores, but also plenty of time—third-graders have nine years of K-12 schooling ahead of them.

Unfortunately, the eighth-grade scores show that many students have fallen even further behind. Only 12 percent of districts had at least half of their eighth-grade students achieving proficiency in 2017. The eighth-grade map shows far fewer blue (above 50 percent proficiency) districts and many more orange and red (below 50 percent proficiency) districts than the third-grade map. It should hardly surprise us when these students struggle in high school—by the time they get there, they have been on a downward trajectory for several years. (Note: White areas on the map encompass districts that had so few students that they could not provide data due to concerns about student privacy.)

Show-Me Institute writers will be diving deeper in future blogs and publications to better understand how our state can get high-schoolers ready for the workforce (and for college) by the time they graduate. Workforce development depends on effective preparation of our students, which in turn (certainly in Missouri’s case) depends on a detailed and accurate view of school performance.

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(Data for maps from Missouri Department of Elementary and Secondary Education 2017 Content Area Assessment Data)

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