Has MetroLink Spurred Development?

Metro, St. Louis’s transit agency, claims (p. i) MetroLink has helped spur $2.2 billion in development. However, Citizens for Modern Transit (CMT)—the region’s major transit advocacy group—thinks Metro is being far too modest. According to CMT, “transit generates growth. To date, more than $16 billion in new development has occurred within a ten minute walk of MetroLink.” Hopefully, CMT isn’t trying to imply that MetroLink is responsible for all, or even most of that development. A quick look at some of these projects will show how tenuous the connection is between MetroLink and the development that CMT cites. For example:

  • Over $440 million in road, bridge, and parking garage investments. That’s right, asphalt to drive and park your car on. (Most curious are improvements to Interstates 64 and 70.)
  • $3.4 billion in renovations and expansions of established institutions like Barnes Jewish Hospital, Washington University, Saint Louis University, and the University of Missouri–St. Louis—investments that likely would have occurred with MetroLink or without.
  • Another $785 million from government agencies and publicly funded sources—not the privately funded, mixed-use development rail advocates promise.
  • CMT even associates another transit project—the $51 million Loop Trolley—with MetroLink.

Who, besides those ideologically wedded to rail, would think MetroLink is primarily responsible for these projects?

The chart below shows other developments that CMT associates with MetroLink. Even charitably assuming a causal link between rail investments and development, much of the economic activity CMT cites is tangentially related—at best—to MetroLink. So, be wary of claims about the economic payoff from rail investments. If MetroLink was so good at driving development, its advocates wouldn’t have to cast such a wide net for evidence of its success.

Legislature Should Be Recording All of Its Public Meetings

On Tuesday the Missouri Western District Court of Appeals affirmed a lower court ruling that Progress Missouri, a liberal activist group, did not have a right to record Senate committee hearings under Missouri's Sunshine Law. That's a problem; if our elected officials are going to have blanket discretion to put the kibosh on recordings intended to keep them honest and the public informed, that luxury will come at the cost of the public interest and the public trust.

The Kansas City Star reports: 

Missouri law says a public governmental body “shall allow for the recording by audiotape, videotape, or other electronic means of any open meeting” and “may establish guidelines regarding the manner in which such recording is conducted so as to minimize disruption to the meeting.”

Senate rules give committee chairmen the discretion to allow cameras so long as they don’t disrupt the decorum of committee meetings. And the Missouri Constitution says each legislative chamber “may determine the rules of its own proceedings.”

The lawsuit by Progress Missouri says it was denied permission to record four Senate committee hearings last February and March, and on several occasions the Senate did not record the meetings either. [Emphasis mine]

As we noted two years ago, one of the key elements to ensuring good government is transparency, and while we do not agree with Progress Missouri about much, the documentation of public meetings is one issue where our positions align. Missouri law is very clear that recordings shall be allowed at public hearings, and that their regulation should ensure only that such recordings are not overly obtrusive.

The public should be able to record these hearings as they choose, but if they do not, then the Senate should be recording every public hearing they have. That the Senate is not already recording each hearing covered by the Sunshine Law itself is cause for concern, but that our elected representatives would go on to dispute the rights of private individuals to do so in their place is even more alarming. The Senate should change its recording policies to carry out the intent of the Sunshine Law: to ensure the public can see and hear what its government is doing, and why.

They Fought the Feds, and the Feds Lost!

Pop quiz time: Who said the following in response to the Obama Administration’s 2009 Race to the Top Program?

“The basic assumption of your draft regulations appears to be that top down, Washington driven standardization is best…. You are funding teaching interventions or changes to the learning environment that promise to make public education better, i.e. greater mastery of what it takes to become an effective citizen and a productive member of society. In the draft you have circulated, I sense a pervasive technocratic bias and an uncritical faith in the power of social science.”

Was it:

(A)   Then Kansas Senator (now Governor) Sam Brownback

(B)   Then Texas Governor Rick Perry

(C)   Then California Attorney General  (now Governor ) Jerry Brown

(D)   Missouri Governor Jay Nixon

If you guessed Sam Brownback, you would be wrong. It was actually Democrat Jerry Brown.  Yes, that Jerry Brown.

This quote resurfaced in an interesting piece by Matt Barnum of education website The 74 about California’s long-running opposition to federal education policy. Brown’s riposte was a harbinger of the showdown that California ultimately had with the Department of Education in 2013, when California suspended its standardized testing and school rating system. The feds said they couldn’t do it and threatened to withhold funding. Brown responded more like a Texan than a Californian and dared them to come and take it.  The feds backed down.

I think there are two interesting lessons to take away from this story (which is worth reading in full).

First, states can stand up to the federal government. It obviously helped California that it is the most populous state in the union and is one that will reliably deliver Democratic votes, but even with that said, it is clear that the federal government is loathe to pull funding that overwhelmingly benefits poor students and students with special needs. That is not to say that they wouldn’t, but states are probably in a stronger bargaining position than they realize.

Second, the issue itself matters. California picked a smart issue on which to go toe to toe with the Department of Education. Had the feds been opposing standardized tests and the states supporting them, the calculus would probably be much different. A hardline stance might not work with an issue with more divided opinion or one where the federal government has the majority opinion on its side.

I don’t know if what California is doing is right or wrong. I’m by no means a technocrat, but I think they probably swung too far in the opposite direction on testing and school accountability. That said, part of respecting local control of education is realizing that not everyone is going to make the decisions that you would have made had you been part of the process. Agree or not, we can learn from California about what states can do when they feel they have been pushed too far, and we can recognize the need for states to have a game plan in place in case they are asked (or ordered) to do things expressly against the will of their citizens.

Regarding Centene’s Outrageous Corporate Welfare Demands

For those unfamiliar with the company, St. Louis-based Centene Corporation is a managed care organization with a specialization in Medicaid. As you might suspect, providing government services can be big business, and that's helped make Centene a profitable enterprise and the largest Medicaid Managed Care Organization in the country. Centene loves Obamacare; Obamacare loves it right back.

But as it turns out, the company may be looking to get even more money from the big spenders in government—this time, from state and local officials.

Centene Corp. is seeking $147 million in taxpayer help for its proposed $771.8 million, multibuilding expansion project in downtown Clayton.

Under the company’s plan, described in a document submitted to the Missouri Development Finance Board, much of the taxpayer help would come from the city of Clayton, which over a period of years would provide nearly $95.6 million in property tax abatement on Centene’s huge downtown investment.

Centene also wants from Clayton nearly $3.2 million in personal property tax abatement and a $2.5 million commitment from a transportation development district.

The full proposal can be found here at the St. Louis Business Journal. In addition to the individual incentives described above, Centene is seeking an additional $35.7 million in state "Mega Works" tax credits, which lawmakers created three years ago by consolidating several existing (and failed) tax credit programs. At least $10 million in BUILD bonds have already been approved for the project, and if the region's track record of incentive profligacy is any indicator, the remaining tax incentives will probably to be approved without much delay.

Centene's subsidy demands may be "business as usual" in Missouri's broken tax-incentive universe. Yet, that Centene's business model is already highly reliant on extravagant public spending puts the company's latest tax incentive plan into a whole new class of corporate welfare and cronyism.

University of Missouri System Reformed Pensions in 2012. Other Plans Should Follow Suit

In 2010, a group of University of Missouri faculty and staff members from the four campuses were given a task: examine the University of Missouri’s retirement system and offer suggestions for improvement.  Though it wasn’t unanimous, the committee ultimately proposed a shift from a defined-benefit (DB) pension plan to a hybrid system which used both DB and defined-contribution (DC) components. The system followed through on the proposal and launched a new hybrid plan in 2012.

Often, people who propose reforming public employee pension systems—people like me and the scholars at the Show-Me Institute—get painted with a very negative brush. In 2013, the American Federation of Teachers listed the Show-Me Institute and two other organizations as personae non gratae for pension fund managers, suggesting that plans should disinvest from funds affiliated with the Institute. In 2015 (and at various other times), Steve Yoakum, executive director of the Public School Retirement System of Missouri, attacked SMI in a letter to retirees. He wrote, “As has become a pattern, ‘studies’ done by the Show-Me Institute and their attendant comments tend to mislead both participants and Missouri citizens and this was no exception.”

What’s interesting is that the report from the University of Missouri faculty makes many of the exact same arguments that we have made at the Show-Me Institute for years. For example, the committee noted that DB plans can provide excellent retirement security for individuals who work a full career at the university. However, few actually do this . Indeed, the report noted “that only 16% [of employees] reach 20 or more years of service.”

What the majority of the members of the committee came to realize was that the standard DB pension plan was simply too risky. The system was shouldering a burden that it could ill afford to carry. So, they suggested a change.

Pension reform is not a crazy conspiracy to rob retirees, as some might have you believe. It is simply common sense planning. It is time for other DB pension systems in Missouri to follow the University of Missouri system’s lead. 

TIF in a Flood Plain–A Recipe for Trouble

High noon approaches as the Saint Louis region awaits Stan Kroenke’s development proposal for Maryland Heights.  For those unfamiliar with the situation, Kroenke and a business partner want to transform 1,800 acres of flood plain into a new mixed-use district and will most likely seek public dollars to do so.   While Kroenke's name alone evokes strong emotions in Saint Louis, there is much more than civic pride involved when we say this development would be both fiscally and environmentally irresponsible.

The partners have expressed interest in developing a vast retail, commercial, and residential district that, if subsidized, could cost taxpayers millions. Unfortunately, history in the Saint Louis region shows that if you ask you shall likely receive, even if the project is of questionable merit. A prime example of this occurred in 2010 when a Walmart located in both Saint Ann and Bridgeton (two adjoining suburbs of Saint Louis) relocated a spot in Bridgeton 2 miles down the road in order to capture $7 million in public subsidies. Kroenke's plan would not only be costly for Maryland Heights residents; it would also likely move economic activity from other areas in the region, rather than creating new activity.

Periodically reshuffling existing businesses across the metro area was not the original purpose of tax increment financing (TIF). TIF was intended to encourage the development of blighted areas in need of economic growth. Instead, it is often used as a subsidy to attract businesses to areas that are already economically healthy, forcing other government entities like school districts to shoulder the costs of those decisions.

Then there is the separate question of whether it's wise to subsidize construction in a flood plain.  Flooding is still a threat in the areas where the Kroenke development would be built. In fact, as recently as last year hundreds of families were forced to evacuate their homes as a result of flooding. Saint Charles County and the Great Rivers Habitat Alliance (GRHA) have sued Saint Peters over flood plain developments in the past for environmental endangerment, and David Stokes, executive director of the GRHA and a former Show-Me staff member, contends that further development on the flood plain “will just make the [environmental] problems we’ve experienced in the past even worse.” 

Fortunately, Saint Louis is beginning to acknowledge the TIF problems we’ve been discussing for years at the Show-Me Institute.  In the past, municipalities could simply override a county veto with a two-thirds vote and proceed with the projects of their choice, but this year legislation passed both the House and Senate that would limit municipality overrides to financing costs of demolition and clearing land. If this law goes into effect on August 28 as expected—the governor has not technically signed off on it yet—then the seemingly limitless public financing of projects like Kroenke's might be scaled back considerably. 

If subsidizing construction on the flood plain is economically questionable, would hurt local school funds, and could actually threaten the safety of nearby residents, shouldn’t the flood plains be left alone?  

To Pay for North-South MetroLink, the City Will Need the County

Recently, regional leaders in Saint Louis have gotten into a spat over plans to expand the MetroLink. Saint Louis County has been independently exploring (and spending money exploring) various MetroLink expansion options. However, County Executive Steve Stenger feels this process has been short-circuited, “surreptitiously,” as the city and transit authorities have already applied for federal aid for their preferred “North–South” expansion without getting buy-in from the county. In protest, Stenger issued a harshly worded letter to the FTA and has publicly denounced the project. The Mayor’s office has tried to diffuse Stenger’s criticisms, with one official calling the County Executive’s actions “embarrassing.” However, given Stenger’s opposition, the city needs to confront the fact that funding a MetroLink expansion without the county’s participation is a nonstarter.

To see why this is the case, remember first that building the proposed North–South MetroLink expansion may cost upwards of $2 billion, not including the increased costs of operating the system. That’s a huge price tag, one that the region would likely not consider if not for the possibility of getting federal grants, which can cover as much as 50% of transit infrastructure costs. However, getting these grants is a competitive process, and the County’s vocal opposition could harm (if not destroy) Saint Louis’s chances. No federal dollars would all but guarantee no new MetroLink.

However, let us imagine that the city moves forward over the county’s objections and, despite the disharmony, the federal government agrees to cover half the costs of MetroLink’s expansion. Even then, the city’s ability to go it alone is questionable. The city would still need to cover a billion dollars in capital costs and increased MetroLink operating expenses, requiring a new city-wide sales tax of more than 2 percent. Such an increase would put the city’s total average sales tax above 10 percent, with many areas in the city charging a tax of more than 12 percent on all goods and services. Even if the state legislature would allow a vote on it, Saint Louis’s residents and businesses would likely reject a tax hike of that size.

The other prime option for circumventing County opposition, the use of a transportation development district (TDD), is also unlikely to succeed. Creating a new taxing district near the proposed route could help fund the expansion, but creating a district large enough to raise a billion dollars would be difficult. TDDs, by state law, can charge a maximum of a 1% sales tax and a property tax of 10 cents on each $100 of assessed valuation (imposing the property tax would require a supermajority approval) in the district’s boundaries.  To fund a MetroLink expansion, the TDD would have to extend well beyond the city and reach economically productive areas in Saint Louis County, all of which would be far away from the North–South expansion’s route. These areas would be less likely to vote in favor of a high-tax TDD.

Unfortunately for the city, the only logical way to fund a multibillion-dollar MetroLink expansion is the same method used to fund past expansions: sales tax increases in both the city and the entire county, to tune of 0.5%. The city might find Stenger’s opposition embarrassing, but what’s more embarrassing here is that the MetroLink, with its massive expense and low ridership, requires financial support from those who will rarely, if ever, ride. In the end, if the city and transit activists want more rail, they are going to have to start begging the county, as they are now begging the federal government, to get on board. 

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