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St. Louis Mills Auctioned Off for 6 Percent of Its Original Cost
The St. Louis Outlet Mall, formerly St. Louis Mills Mall, sold on November 18 on Auction.com for $9 million. The mall’s value—$40 million—has depreciated considerably since 2008 when it was appraised at $117 million.
I remember my first visit to “the Mills” shortly after it opened in 2003. The 1.2 million square foot building was bustling with people. The line for Panda Express was more like that of an amusement park ride than a mall food counter.
Today, only 77 percent of the mall is occupied (the average occupancy rate for malls is 92%). “Ghost town” is the best way to describe what I saw during my visit last November. The stores I once frequented as a teen were gone—replaced by metal bars and “for rent” signs.
You could look at the decline of the Mills Mall as a sign of the times—malls are out, online shopping is in. In fact, survey data supports this conclusion. In 2014, 34% of Americans said they did more than half of their shopping online—a 99% increase from the 2006 shopping season.
It’s certainly true that digital retailers like Amazon have disrupted the shopping industry, but the decline of the Mills Mall signals more than just the need for mall rats to find a new place to hang out. The failure of the Mills exemplifies why governments shouldn’t use tax increment financing (TIF) as a mechanism for economic development.
TIF is a method of attracting businesses to blighted communities through government subsidies. In 2003, an $18.5 million TIF in conjunction with a $34 million transportation district helped fund the mall’s development. In a 2006 Primer on TIF, UMSL professor Kenneth Thomas pointed out a few problems with this instance of TIF use.
- The building of the Mills Mall displaced sales tax revenue from Northwest Plaza in St. Ann, a shopping complex nearby.
- The project was environmentally harmful—the mall and surrounding road system was constructed on top of a wetland.
- The median income in the community was $52,656—hardly blighted.
Hazelwood’s Economic Developer David Cox told the St. Louis Business Journal, “If the developers could have looked into a crystal ball, they probably would have built it smaller.”
But that underscores another problem with funding large development projects like the Mills—crystal balls don’t exist.
The construction of the Mills Mall had promised 3,000 new jobs. Only half that number was realized.
The Mills Mall points to a serious need for TIF reform in Missouri. Malls may, indeed, be on their way out. Inappropriate uses of TIF should follow suit.
Show-Me Now! Bold is Better for KC Schools
The KC Public Schools Master Plan is disappointing. The district needs to do much more to bring real reform to public education in Kansas City.
All Too Many Missouri Students Are College Bound, but Primed for Failure
Numbers are beginning to roll in on the performance of Missouri’s students on several major national assessments administered last year. Brace yourself for the findings—they are deeply troubling.
More than three-quarters of Missouri’s class of 2015 took the ACT, an admissions test that is also designed to tell whether students have a strong likelihood (a 75 percent chance) of earning a “C” or higher in introductory college courses in four subject areas. For English, the minimum required score to be deemed “college-ready” is 18, for math it is 22, for reading 22, and for science 23 (all out of 36).
Only 30 percent of students scored college-ready in all four tests. In other words, seven out of ten were judged to be unprepared for college in one or more of the four areas. While a high of 71 percent of students scored college-ready in English, the scores dropped sharply in the other subjects: 51 percent in reading, 44 percent in math, and 42 percent in science.
Even more troubling is the performance of African-American students. Only 6 percent of African-American students scored college-ready in all four tests. On the individual tests, 37 percent of African-American students scored college-ready in English, 19 percent in reading, 13 percent in math, and 12 percent in science.
On advanced placement (AP) exams—which indicate how many students are likely not only to pass, but to excel in different subject areas—the state did even worse. Here the gold standard is a score of 3 or better on a 1-to-5 scale, enabling high-scoring students to obtain advance credit for courses such as calculus and physics prior to their arrival at college.
Though class-wide numbers are still emerging, it is already clear that Missouri, once again, has under-performed all but a handful of other states in AP tests. This is the same story as last year, when only 9.5 percent of Missouri graduates passed at least one AP exam. In Massachusetts—the highest performing state—28 percent of graduating students, or three times as many as in Missouri, passed one or more of the tests of college-level proficiency in challenging subjects.
Out of approximately 20,000 African-American high school juniors and seniors in public schools in Missouri last year, only 55 black students met the standard in AP English literature, 44 did so in U.S. history, 24 in calculus, 8 in chemistry, 7 in physics, and 6 in computer science. In total, that is just seven of every thousand students who are already working at a college level in one or more of these subjects while still in high school.
The numbers tell an alarming story. First, our schools are underperforming across the state. Preparing only 30% of students for college-level work isn’t going to work. Second, our schools’ poor performance is particularly egregious for black students.
We need to upgrade our education system almost everywhere, but a good start would be providing choice for African-American students trapped in the worst public schools. A school system that empowered parents rather than bureaucrats to make the most important decisions in children’s lives would maximize the likelihood of reversing these troubling statistics.
Study: Direct Primary Care and Concierge Care Different in More Ways Than One
Last month the Show-Me Institute released our paper on direct primary care, a patient-centric physician practice model that generally cuts out insurance middlemen. I say "generally" because colloquially, both patients and doctors sometimes use the words "direct primary care" and "concierge care" interchangeably, even though there are important differences between the practice models. To clarify: concierge care doctors typically bill insurance for their services, whereas "pure" direct primary care providers typically do not.
But the difference between concierge and direct primary care isn't just academic; the terms also appear to be related to the price of the services rendered by these nontraditional physician practices. According to a study by Phillip Eskew and Kathleen Klink published this month in the Journal of the American Board of Family Medicine, practices that simply self-describe as a concierge service are more than twice as expensive as direct primary care on a monthly basis.
We found the public perception of the term concierge as having higher prices holds true. Self-described DPC practices charged a lower average monthly fee ($77.38) than DPC practices that self-described as concierge ($182.76). Concierge practices such as MDVIP and MD2 have listed average periodic (monthly) fees of $137.50 and $2083.33, respectively; these periodic fees are billed in addition to standard fee-for-service office visit and procedural charges that would be encountered in any traditional medical practice.
In other words, while they sometimes use these terms interchangeably (and for understandable reasons given their similarities), both doctors and patients should be mindful that these models differ in very important ways, and that pricing is perhaps the most important difference. Making that fact clear is especially important for patients seeking cost-effective treatment plans with direct primary care physicians—because in the process of trying to find one, they could balk at the price tag they might find if they're only looking at "concierge" practices.
Missouri Paycheck Protection Is Back for 2016
It appears that the sponsor of last year’s paycheck protection bill will reintroduce the bill in 2016. Paycheck protection safeguards government employees’ right to choose whether their money goes to union political activity. The freedom to support only the political speech you agree with is a fundamental right protected by the first amendment. For Missouri’s government workers, this right is sometimes ignored.
Last year’s paycheck protection bill would have required government unions (such as teachers unions and unions representing state employees) to obtain permission from employees before using dues or fees for political activity. The bill would have required unions to seek permission from employees only once each year; however, for that school teacher or social worker who opposes the politics of union bosses as a matter of conscience, such protection can make a big difference.
Consider the story of Terry Bowman, who started an organization dedicated to providing a voice to union members who feel silenced and marginalized by the union political establishment. Or Andrew Palmer, a public school teacher who started Conservative Teachers of America to provide an alternative perspective on public education. Both of these men bucked the mainstream opinion of their workplaces in order to make sure their voices were heard. This can be hard to do, but it’s a lot easier when the law protects people who swim against the current.
Driving Still Dominant in Saint Louis, Kansas City
When considering investment in transportation infrastructure, be it road, rail, or river, it is important to think about what type of infrastructure people will actually use. In Missouri and around the country, many planners have a “build it and they will come” mentality, essentially hoping that increased spending on planners’ preferred options (read: public transportation) will result in a transformation of habits. There already is a narrative that people are abandoning their cars for public transit, if we will let them. Saint Louis is spending money like that is the case, as public transit will receive around half of total federally aided transportation investment in the near future. However, the latest Census Bureau data provide little evidence that heavy investment in public transportation is having any effect at all on Missouri’s commuting habits.
That data indicate that driving is still king, and unlikely to be dethroned any time soon. In 2014, 79% of commuters in Saint Louis City either drove alone or carpooled to get to work. In Saint Louis County, that number was more than 90%. In the Kansas City area, almost 90% of commuters drove alone or carpooled. As for public transportation use, the numbers remain quite modest. Saint Louis City had 10% of its commuters use transit, but in Saint Louis County and Jackson County that number was less than 3%.
If we consider what the numbers in terms of long-term trends, our writing from last year on this subject remain relevant:
Transit’s share of commutes in Missouri and its major cities has slowly decreased over the last few decades; a lower percentage use transit now than in 1990. Taking 2000 as our baseline year, the nadir of public transportation use in the United States as a whole, 1.49 percent of Missourians used transit for their commutes. After 13 years and well over a billion dollars of investments, transit’s share of commuters has remained essentially flat.
Nothing has happened to refute those observations. In fact, from 2013 to 2014 transit commuters as a percentage of all commuters decreased in Saint Louis City, Saint Louis County, Jackson County, and Clay County, as the chart below demonstrates:
All of the recent changes have been small and may be within the margin of error. This means we cannot say that transit is definitely drawing a lower percentage of riders than they did last year. But we can say that the Census Bureau’s 2014 data, much like data from previous years, show no evidence of either a rapid rise in the preference for transit or a rapid decrease in preference for driving in Missouri’s largest cities.
Obamacare Cronyism: Where Does the Bureaucracy End and the Insurance Industry Begin?
When the Affordable Care Act, or Obamacare, was written in 2010, much of it was negotiated behind closed doors with lobbyists from across the health care industry. It's unsurprising, then, that many of those major players—especially in the insurance industry—got sweetheart deals. Requiring Americans to buy health insurance gave insurers instant access to millions of new customers. Assuming that their customer pools had enough healthy people to subsidize beneficiaries who were sicker, insurance companies could expect to make a lot of money—not only through payments from consumers, but also in direct subsidies from the federal government itself.
Well, things are not working exactly has insurers had planned. Just ask United Healthcare.
United Healthcare is the largest U.S. insurer by enrollment, and the company is warning that it may withdraw from Obamacare in 2017. The insurer has already suspended advertising for its Obamacare coverage and stopped paying commissions to insurance brokers for signing people up. It literally doesn’t want consumers to buy its products.
On a United Healthcare call Thursday with Wall Street analysts, Josh Raskin of Barclays asked, “Simply, how long are you willing to lose money in exchanges?” and then followed up, “Are you willing to lose money again in 2017, Steve?” United Healthcare CEO Stephen Hemsley replied: “No, we cannot sustain these losses. We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself,” adding that “we saw no indication of anything actually improving.”
Not only are enrollees in the insurance market sicker than expected, but thanks to budgetary language passed last year, the insurance companies' shortfalls are no longer the taxpayers' problem. Obamacare's "risk corridors" were designed to transfer some money from profitable insurers to less profitable insurers as a way to shield less successful insurers from the deep losses that could force them to leave the marketplace. Under the original plan, taxpayers would pick up the remainder of the shortfall—a bailout for insurers, negotiated by insurers, and financed by taxpayers. Today, the insurers will bear that risk alone, and appropriately so.
Of course, whether these taxpayer protections will endure in the years to come may depend on the pull of insurance industry cronies— not only in the private sector, but also those cronies who are currently part of the adminstration. The Washington Examiner's Timothy Carney vividly captures the current, and appalling, health care scene:
This is where the intimate network of the Obamacare insiders comes in. The Centers for Medicare and Medicaid Services (CMS) — which issued the pledge to fully bail out United Healthcare and its cohorts — is run by acting administrator Andy Slavitt. Slavitt is the former CEO of United Healthcare (while he held that position he contributed to Obama's 2008 election)….
Meanwhile, the insurance lobbyist leading the industry's push for more Obamacare bailout money is Marilyn Tavenner, Obama's previous chief of CMS, now head of America's Health Insurance Plans (AHIP). AHIP says risk corridors aren't the group's top focus, but Tavenner is speaking out on it.
In summary: Tavenner helped build the risk corridor program, and then went to the industry that would get the money. Slavitt left the insurer with the biggest losses, and now is the government official promising to bail out his former employer.
You can call it regulatory capture or you can call it a revolving door, but it is cronyism all the same. And it's of a kind that is especially troubling: the kind where cronies don't just try to regulate their own industry, but also try to loot the Treasury while they're in power. The question now is whether Congress will accommodate these cronies by explicitly removing last year's taxpayer protections or will stand by if Obamacare's bureaucracy tries to sidestep the law and hand out money to insurers anyway. We should find out one way or another in the next month or so; stay tuned.
University of Chicago: An Example for Mizzou on Free Speech
Over the past few weeks, the University of Missouri has been turned upside down by protests that, so far, have cost the jobs of the university system President and the school's Chancellor. The protests have also brought to light a lot of troubling behavior by university employees against university students. Between Mizzou staff assaulting students' First Amendment rights and a Mizzou professor literally calling in "muscle" to physically remove a student reporter from a public space, something is rotten in Columbia. It's one thing to have a liberal campus culture, which has long been the case in Columbia. It's another thing entirely to have a culture so liberal that it becomes illiberal.
The thin silver lining here is that Mizzou's broken campus culture—not only among students, but among faculty as well—has finally been laid bare, providing the opportunity for policymakers and administrators to fix it.
So, where does Mizzou go from here? One important step would be to reestablish the University's bona fides as an institution that believes in free speech for everyone, not just those who support the politics of the university faculty. On point, L. Gordon Crovitz wrote in the Wall Street Journal yesterday about a strong, student-supporting free speech policy that the University of Chicago adopted earlier this year. The policy has already been adopted at Purdue and Princeton, and which is now being pushed nationwide by FIRE, a student advocacy group.
You can find the University of Chicago's full report here, but I'd like to pull out two important paragraphs that could have written about Mizzou and its handling of free speech issues. (Emphases mine)
As a corollary to the University’s commitment to protect and promote free expression, members of the University community must also act in conformity with the principle of free expression. Although members of the University community are free to criticize and contest the views expressed on campus, and to criticize and contest speakers who are invited to express their views on campus, they may not obstruct or otherwise interfere with the freedom of others to express views they reject or even loathe. To this end, the University has a solemn responsibility not only to promote a lively and fearless freedom of debate and deliberation, but also to protect that freedom when others attempt to restrict it.
As Robert M. Hutchins observed, without a vibrant commitment to free and open inquiry, a university ceases to be a university. The University of Chicago’s longstanding commitment to this principle lies at the very core of our University’s greatness. That is our inheritance, and it is our promise to the future.
A lot needs to change at Mizzou in the coming months. Administrators should start by unequivocally rejecting the university’s recent Orwellian nonsense on speech matters and commit to the free speech principles on which this country was founded, and possibly by adopting the University of Chicago policy construction. As the University of Chicago statement suggests, open inquiry and speech are the inheritance of all universities. It is up to policymakers and administrators to ensure that this inheritance is not wasted at Mizzou.
