Abatement Advisory Board Declines to Catch a Falling Star

Posted on by Patrick Ishmael

It’s been a bad few days for the Kansas City Star. Last week, the Kansas City Business Journal reported that the Star was seeking a 15-year extension to the abatement it has on its downtown production facility, which ended last year. If approved, the extension would be worth millions of dollars for the newspaper.

But prospects for the Star’s extension dimmed a bit on Wednesday when the city’s Chapter 353 Advisory Board, in unexpectedly harsh terms, recommended the city deny the newspaper’s request.

Advisory Board Chairman Michael Duffy made the motion to recommend denial, giving two primary reasons. For one, Duffy said, Chapter 353 abatements were intended to be used as redevelopment incentives, “not as a bailout provision for a troubled business.” In addition, Duffy said, the Star’s request appears to be “an end run around an adverse county determination of fair market valuation.”

According to the Business Journal, without the abatement the Star’s property taxes could accelerate from less than $100,000 each year to around $1.3 million annually. That’s a hefty chunk of change to be sure, but remember: It’s a chunk of change that the newspaper hasn’t had to pay for the last decade. Put another way, the Star’s present abatement meant millions of dollars did not go to public services in Kansas City; denial of this extension would allow the newspaper to fully fund its obligations to the city’s schools going forward.

Chairman Duffy’s suggestion that an abatement shouldn’t be a “bailout provision for a troubled business” is exactly right. If an enterprise cannot make it on the strength of the value it brings to the market, it is not the obligation of taxpayers to make it profitable. If the government is the only thing that can make a business work, then the business isn’t working (*cough cough* convention hotels *cough*).

But this week’s news is unlikely to be the end of the Star’s abatement story. We’ll keep you posted.

Kauffman Foundation Releases New Education Data Tool

Posted on by Brittany Wagner

Are you looking for a new school for your child? Are you curious to know how your child’s school stacks up to others across the state? Do you want to know if your hard-earned property tax dollars are being put to good use? You’re in luck!

This week the Kauffman Foundation released Edwise, an “online tool to help parents, educators, school districts, policymakers, and the public make informed education decisions.” It has comparable data for every school and district in Missouri (and some in Kansas) on everything from ACT scores to enrollment to student-teacher ratios.

As school choice expands in the Show-Me State, access to information regarding schools must as well. While the Department of Elementary and Secondary Education (DESE) already provides data for every school district and charter school, their website is notoriously hard to navigate.

Increasingly, websites such as stlschools.org and greatschools.org are helping parents find a school that fits their child’s unique needs.

Edwise makes a great contribution with its easy-to-navigate map tool that makes data that could be daunting to comb through incredibly user-friendly.

I encourage you to check it out!

Minimum Wage Hike on Ice?

Posted on by Michael Rathbone

To say the proposed minimum wage hike in the city of Saint Louis has been controversial is an understatement. We’ve been on top of the issue since it was first proposed. I even got a chance to testify on the bill before the Ways & Means Committee. Needless to say, I was not the most popular guy in that room.

Still, Alderman Joe Vaccaro, the acting Ways & Means chairman, has announced he is cancelling all future meetings on the minimum wage, potentially killing the proposal. A recently passed bill from the Missouri Legislature, if signed by the governor, would prevent any local minimum wage increases from going into effect after August 28. Given that the Board of Aldermen go on summer break starting July 10, this puts the minimum wage bill in a precarious position and will make it difficult for any minimum wage increase to be enacted.

I applaud this decision, and I hope no increase is enacted. Increasing the minimum wage will destroy jobs and do little to help those in poverty. I want people across the city and state to earn more in wages. However, increasing the minimum wage is not the way to achieve such a goal. Thankfully, some in the Board of Aldermen feel similarly.

Nixon Vetoes Transfer Bill . . . Again

Posted on by Brittany Wagner

Today, Gov. Jay Nixon vetoed a bill to amend the transfer program for students in unaccredited school districts for the second time in two years. HB 42, this session’s version, would have expanded virtual and charter school options for students in failing schools in Jackson and Saint Louis counties, created a new accreditation process evaluating individual schools rather than districts, required students to transfer to an accredited school within an unaccredited district first, and restricted transfers to those students who have lived in a failing district for one semester.

The governor foreshadowed this move on Tuesday when he announced a new plan for the state’s two unaccredited districts. Twenty-two higher-performing districts will commit to offering a lower tuition rate for students transferring from Riverview Gardens and Normandy and will provide instructional support for the unaccredited districts. Apparently for him, that is enough for the students in Riverview Gardens and Normandy for at least another year.

But it is not enough for them. Students in these districts should be able to attend the school that best fits their needs, be that a charter school, a virtual school, or a private school. Even one year within a failing school can cause irreparable damage in the life of a student. Students shouldn’t have to wait for support from other districts or their own district to get its act together.

Last year, the governor vetoed the transfer bill because it allowed for the creation of a tiny school voucher program. Legislators cut that provision this year, and still the bill was vetoed.

Supreme Court Rules Against King v. Burwell Plaintiffs

Posted on by Patrick Ishmael

Today, the U.S. Supreme Court ruled that federal subsidies may continue to flow to insurance plans sold in federal insurance exchanges, despite what the text of the Affordable Care Act might suggest. Readers can find the Court's ruling here and further background on the case here. The Court's decision is a disappointment not only to supporters of genuine reform to America's health care system, but also to the millions of Americans who will now be fully exposed to Obamacare's mandate and penalty provisions—including hundreds of thousands of Missourians. More to come; stay tuned.

The Risks of the New Convention Hotel

Posted on by Patrick Tuohey

Despite being midsized in both population and convention business, Kansas City was rated among the top five cities in high travel taxes. That rating didn't include the new 1 percent downtown streetcar Transportation Development District (TDD) tax or the proposed 1 percent Community Improvement District (CID) for the proposed new 800-room convention hotel. These additional taxes will make Kansas City less attractive to conventions.

The proposed hotel deal not only will make conventions here more expensive, but it also will remove one of the few remaining charges conventions can keep down: open-bid catering.

Patric Mills works with Educational Testing Service (ETS), which brings over 5,000 people to Kansas City every year for between eight and 23 days—accounting for 26,000 room nights and 173,000 meals. She says that Kansas City is already more expensive than our peer cities. In a phone interview, she told me,

Kansas City is more expensive in general than some of our other site cities, such as Louisville and Cincinnati. Everything—travel, lodging, local transportation, IT support, decorators, security services, etc.—is less expensive in other cities. Being able to save on catering dollars makes Kansas City more attractive than it would otherwise be. 

The deal Kansas City is considering would give up the only cost advantage it has—catering—by giving Hyatt exclusive rights to it. As a result, convention planners like Mills will lose an opportunity to control costs. Mills said,

In most cities, the convention center has exclusive catering. Kansas City has open catering, and that is one of the biggest attractions, because it saves us money. . . . Exclusive caterers will have to bill for overtime and, with no competition, would have no incentive to offer low prices.

This will make Kansas City less attractive to ETS and probably many other conventions. Increasing costs and decreasing choice won't bring Kansas City new convention business. Mills concluded,

The College Board has a budget, and ETS, in managing their programs and events, has an incentive to keep costs low. If Kansas City moved to an exclusive caterer and prices rose as high as I am afraid they might, College Board could ask us to move the Kansas City AP Reading to a less expensive site.

The benefits of a new convention hotel are iffy, but the costs and the risks are real. Kansas City is already an expensive place for conventions—this effort to build a new hotel will make us more expensive and cost us an important competitive advantage: open-bid catering.

Taxpayers and the City Council need to understand these risks. If we're not careful, we may end up pricing ourselves out of contention.

Modernize Saint Louis’ Outdated Business Code

Posted on by Joseph Miller

Miniature pony tracks.

Bathhouses, detective agencies, and pool rooms.

Horse-drawn vehicles, junk dealers, cattle dealers, and street railways.

Vault cleaners.

Sound like the backdrop of a novel set at the turn of the century, or maybe the establishing shots of the newest period drama on HBO? How about Saint Louis City’s business regulations? All of those business models of yesteryear, along with many others, are part of the city’s antiquated regulatory code.

Unfortunately for Saint Louis, the city’s ordinances are almost comically outdated, concerned with protecting the public from businesses that no longer exist or are no longer considered dangerous to the public peace. Does anyone think that we should still require public petitions to set up a pool hall or open a tattoo shop? Should a transient photographer still have to apply for a specific license? Is it necessary that city officials should have, from the front door, an unobstructed view of the back wall of an arcade? Most residents would laugh at these laws, but they are laws. And the fun and games end when real people are prevented from starting businesses because the city has not reformed its licensing rules for decades.

The good news is that a much-needed overhaul of the business code may finally happen. A bill before the Board of Aldermen, BB 110, would eliminate or significantly alter specific license and operating requirements for more than 40 types of businesses, reportedly reducing the total length of the city’s business code by 75 percent. Much of the streamlining comes from eliminating regulations on business models that barely exist in the city anymore, like bathhouses, street railways, and motor carrier transportation brokers. However, some of the changes would eliminate outdated and ill-conceived regulations on a variety of businesses that still exist, including photographers, real estate agents, and massage therapists. For example, barbers would be able to stay open past 6:30 p.m. and work on Thanksgiving, if they so wished. Bed and breakfasts, pool halls, and tattoo parlors would no longer need neighborhood consent to open up shop.

Two related bills before the Board of Aldermen, BB 108 and 109, would supplement the reforms in BB 110 by making it easier to open a small business. Currently, registering a business with two or fewer employees costs $200 annually. Under BB 108 and 109, micro-businesses or home occupation operators would only have to pay a $25 fee. That could make Saint Louis a more attractive place for start-ups with shallow pockets.

While the proposed reforms to the city’s code represent progress, policymakers could go further. For example, the bills would not eliminate dated regulations that govern alarm businesses, brick dealers, laundry/dry cleaning, and pawn shops, among others. The city could also benefit if the business code were reworked to have a permissive attitude toward licensing—an attitude where, instead of a new company having to jump through hoops to start up, officials would have to jump through hoops to shut it down.

Saint Louis City’s greatest concern should not be how new business activity is controlled, but rather that there is too little activity to start with. While the proposed reforms go a long way toward updating the city’s regulations, there’s more that can be done to make it easier to invest in the city, whether that investment is a restaurant or a bed and breakfast or a private bus route. Or even a miniature pony track.

Taxicab Commission: Ridesharing a Want, Not a Need in Saint Louis

Posted on by Joseph Miller

The status of ridesharing companies, like Uber and Lyft, dominated the agenda at this month’s meeting of the Metropolitan Taxicab Commission (MTC). When the commission opened the floor to public commenters, most were supportive of reforms necessary to get ridesharing companies up and running in Saint Louis.

However, despite the public enthusiasm, the commissioners themselves were more critical and directed their criticism mainly at Uber’s business model. They doubted whether Uber’s background checks were up to their standards, they discussed at length the need for initial drug testing, and they questioned Uber’s insurance requirements. As is usual, they claimed that their concerns were only about customer safety.

In their nitpicking about which background check was most thorough, the MTC continued to ignore the fact that most of its for-hire vehicle regulations have nothing to do with safety. How does limiting the number of licensed cabs protect safety? How do pricing regulations determine whether a cab is road worthy? What consumer breathes a sigh of relief knowing that the MTC controls what drivers may wear?

Unfortunately, rather than take an open attitude toward innovation, a regulatory reflex reigns at the MTC. When the commission was asked to reconsider the necessity of its regulations, one commissioner asked, and I’m paraphrasing, “Would you get your hair cut at an unlicensed barber?” (Barbers require licenses in Saint Louis.) He was incredulous to the idea that, yes, many residents would feel perfectly comfortable choosing a barber that did not have the city’s seal of approval, if that barber did a good job. That same commissioner ended the meeting by saying that ridesharing companies were a want, but customer safety was a need. Customer safety as defined by the MTC, not customers themselves.

The MTC would best serve Saint Louis if it takes the demands of its residents seriously and gives up on its instinct to delay and control ridesharing companies. More than anything, Saint Louis needs a welcoming business environment; no one wants the MTC to hold the region back.

Maintaining the Education Status Quo

Posted on by James V. Shuls

Today it was announced that many St. Louis area school districts have agreed to accept a lower tuition rate for students transferring from the Normandy and Riverview Gardens school districts. Jessica Boch of the St. Louis Post-Dispatch writes:

 A significant number” of districts have agreed to reduce the tuition costs for transfer students to about $7,250, said Don Senti, executive director of EducationPlus, an organization of area school districts that has coordinated the transfer process for the past two years. That is the same amount most districts charge St. Louis Public Schools for transfer students under the voluntary desegregation program. In the past, tuition rates have ranged from $20,768 in Clayton to a low of $7,927 in Mehlville.

I am very pleased that the school districts have decided to take this step. Actually, I’ve been saying this action was possible all along. Back in January 2014 I wrote:

 Many have lamented that the inter-district transfer law, which allows students to transfer from unaccredited public school districts to nearby accredited districts, may bankrupt failing districts. Normandy and Riverview Gardens, the two unaccredited districts currently allowing students to transfer, are already seeing financial hardship, and reports indicate that Normandy could be bankrupt by the end of the school year. This has occurred because the districts are paying tuition rates that are often in excess of what the districts spend on their own students. This has led some to clamor for a set tuition rate. In a recent position paper by the Cooperating School Districts of Greater St. Louis, area school superintendents stated, “If transfers are made between school districts then a regional tuition rate should be determined.” The interesting thing is that nothing is stopping area school districts from charging a lower tuition rate now. Each district, with a vote of its school board, could decide to set a lower, consistent tuition rate. To date, none of them have. Instead, school leaders are asking for more state government action. This is the very problem that plagues our society in so many regards; instead of taking initiative and fixing a problem ourselves, we allow or we seek greater government involvement. The next time you hear a school leader complain about the transfer situation and how it may bankrupt unaccredited schools, ask him or her what his or her district is doing to help. Are these leaders taking action locally, or are they requesting a solution from Jefferson City?

Eighteen months ago school leaders scoffed at my idea. They wanted a legislative fix. They wanted to stop the transfer program. What changed? Now, area school leaders are acting to stop a legislative fix. The current bill sitting before the governor would improve Missouri’s charter public school law and allow for broader establishment of virtual schools. Eighteen months ago, the education establishment rejected the idea of lowering tuition because they wanted the legislature to maintain the status quo. Today, the education establishment welcomes the idea of lowering the tuition because they want to avoid the legislative fix and maintain the status quo.

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