Saint Louis City’s Growth: Trickle-Down Urbanism?

Posted on by Joseph Miller

A look at the latest American Community Survey data confirms that income growth in Saint Louis City has been lackluster for the past decade. Since 2005, median income growth has lagged inflation by 6 percent, indicating falling real wages. But at the same time, some are proclaiming the return of the city, with new developments on Washington Avenue, Ballpark Village, and the Central West End pointing to a bright future.

These contradictory accounts of the city’s performance point to a more complex reality, a tale of different populations and neighborhoods. The bad news is that wages are stagnant and the poor and middle class continue to leave the city. From 2005 to 2013, Saint Louis City households whose income was less than $75,000 per year (more than twice the city’s median income) fell by 7.8 percent. But the good news is that wealthy households (earning more than $100,000 per year) increased by 78 percent. Households earning $200,000-plus per year more than doubled over the same period.

But as the map below demonstrates, lower income residents are most predominant in North and South Saint Louis City, while the very wealthy are most populous in the central corridor. That means increasing growth where growth is most visible, and stagnation and decline where it is out of sight, out of mind.

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Saint Louis City’s planning strategies may have contributed to this bifurcated outcome. We have written before about the city’s attempt to generate density, walkable neighborhoods, and a vital downtown through lopsided investments to the central corridor. The city also uses tax incentives to subsidize high-end living and entertainment districts. Instead of fostering economic opportunity, which draws residents who will generate local culture from the bottom up, the city instead will become an entertainment machine, which will draw the creative class, who in turn will create jobs.

Even where this upended model succeeds (and there is no guarantee of that), there are questions as to whether this actually helps middle-class or poor residents, or simply makes them former middle-class or poor residents. Urban “renewal” in boutique cities like New York City and San Francisco has resulted in a displacement of the poor and middle class and rapidly rising income inequality. Although Saint Louis City is not NYC, income inequality is rising quickly. From 2005 to 2013, the city’s median income fell from 75.3 percent to 69.6 percent of the city’s mean income, indicating an increasingly top-heavy income distribution. This trend, compared to that of Saint Louis County, is shown below:

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If leaders focus on making the city a safe, affordable, and easy place to live and do business, it is possible Saint Louis City could enjoy an expansive resurgence. But as things stand, the city is pushing more publicly supported bar districts, luxury apartments, and expensive amenities to draw the rich into the city center and hope the wealth trickles down to the rest. For areas like North Saint Louis, that could be a long wait.

Ridesharing an Option Regulators Want to Keep from Residents

Posted on by Joseph Miller

Recently, Ray Mundy, a professor at UMSL (also the head of a consultant group that works for the nation’s top taxi companies and part of the staff of Airport Ground Transportation Association, an airport taxi lobbyist group), was interviewed on a local radio station. While Mundy failed to state his conflict of interest, he lost no time accusing ridesharing companies like Lyft and Uber of having improper background checks, using inadequate insurance, price gouging, and destroying the cab industry that the needy rely on. But in reality, his statements are misleading, and his recommendation to ban these services will only serve to hurt Missouri residents. I will take his issues point by point:

  1. Lyft and Uber have insurance gaps.

This statement may have had validity a few months ago, but this is no longer the case. In July, both Uber and Lyft changed their insurance policies so that cars operate under liability insurance whenever the ridesharing apps are activated. Commercial insurance becomes primary (not secondary as Mundy stated in the interview) when a passenger has been accepted. Both Lyft and Uber detail their policies, and no driver or customer needs to use these systems if they find them inadequate. But regulators and those of Mundy’s persuasion would rather legislate additional insurance (shown not to improve safety) or ban ridesharing.

  1. Every time the taxi industry has been deregulated, it’s been reregulated.

This statement is empirically false, as a Reason study demonstrates.

  1. Ridesharing companies do not perform adequate background checks.

Mundy claims Uber and Lyft drivers might be dangerous because they do not use the same type of background check as most cab companies. Peruse Uber’s qualifications for yourself:

UBER BACKGROUND CHECKS Uber Blog

According the Mundy, these tests do not go back as far as taxi checks and do not include arrests where there are no convictions. That seems like a contrived standard, and once again, customers can decide whether they feel Uber or Lyft drivers are safe. But Mundy and other regulators would rather residents did not have such options.

  1. Uber and Lyft use price gouging.

Mundy, and other defenders of taxi regulations, do not like Uber and Lyft using variable pricing, such as charging more money at different times of night or when demand is higher. In reality, allowing for higher fares means drivers have a larger incentive to take fares at 2 a.m. or on New Year’s Eve. It allows the price mechanism to match supply with demand. But Mundy and other regulators would rather Saint Louisans wait hours for cabs that don’t come rather than have the choice to pay a higher fare.

  1. Uber hurts the poor, because cab companies cannot cross-subsidize service.

It is well known that, despite stringent regulations, taxis around the country refuse fares and avoid depressed neighborhoods. The best protection against fare refusal and more service is a large, diverse supply of for-hire vehicles, which ridesharing can help provide. And what’s more, cities like Saint Louis spend hundreds of millions of dollars a year on extensive public transit and para-transit services to serve the poor and the disabled. The for-hire vehicle market should not be regulated in order to duplicate those efforts.

If there is a common theme to Mundy’s and regulators’ arguments, it is that city officials, and not city residents, should decide whether ridesharing companies are safe enough, charge the right amount, and provide the right kind of service. But in reality, the corrective action of riders and drivers making their own decisions regarding Uber and Lyft are a far better test of all those criteria, and even Mundy admits the popularity of ridesharing where it has not been quashed by city government. The reality is that most Saint Louisans don’t see cabs as an option, because the service does not meet their needs. That’s a shame, because that hurts residents and hurts the city. But Mundy and the taxicab commission would rather keep it the way it is than let residents make their own choices.

Our Take on Amendment 3

Posted on by Brittany Wagner

There’s been a lot of talk about Amendment 3, which limits teacher contracts to three years and ties evaluations to personnel decisions. Some arguments against Amendment 3 are rational, evidence-based, and well thought out; others are not. In this post, we present our analysis of several arguments that have been made regarding Amendment 3. We conclude with some final thoughts on the matter.

(1) Amendment 3 will mandate more standardized tests.

Analysis: False.

Here’s what the ballot language says:

The majority of such evaluation system shall be based upon quantifiable student performance data as measured by objective criteria.

The St. Louis Post-Dispatch claims:

. . . the worst thing about Amendment 3 is that it imposes an untested experiment on all local school districts in the state, requiring them to devise a new standardized test for students that becomes the primary evaluation tool for teachers. Don’t our children take enough standardized tests these days?

This is a tremendous overstatement. With the state tests that students already take and the multitude of internal assessments that districts already administer, there is no need for additional tests under this amendment. Moreover, there are other types of performance data, such as districtwide common assessments, which could fit within the Amendment 3 language.

(2) Amendment 3 takes away local control.

Analysis: Both true and false.

If we were moving from a neutral system to an Amendment 3 system, it would be a loss of local control. Of course, we are not moving from a neutral system. Current Missouri tenure laws grant teachers a permanent contract after five years within the same school district and prescribe the exact steps that districts must undertake to remove a tenured teacher. This is a clear loss of local control. Amendment 3 would remove these centrally imposed mandates and would also remove the disastrous “Last in, first out” provision.

Under an Amendment 3 system, contracts would be capped at three years. Amendment 3 would also mandate that districts make staffing decisions based on teacher evaluations. A majority of such evaluations must be based on student performance data. Aside from this provision, districts would largely get to shape their evaluations.

(3) If there is a problem with the new system, Amendment 3 would make it difficult to change policies in the future.

Analysis: True.

How much of a teacher’s evaluation is tied to quantitative data should not be in the state constitution. Ideally, policies such as this would be determined as close to home as possible. That is, authority to determine contract length and evaluation practices should be devolved to the local school district or set in state regulations that could be changed when necessary. Even statutory changes would be preferable to a constitutional change.

Final thoughts:

Proponents argue that Amendment 3 will lead to better teacher evaluations and more recognition for great teachers. Ultimately, they hope this will create an improved teacher workforce. There is just one fundamental problem with that argument—when it comes to teacher quality, we have what is known as a principal-agent problem. That is, we as citizens (the principal) want great teachers in our schools and we hire school administrators (the agent) to make sure this happens. If the agent does not do his or her job, there is little we can do about it. Ultimately, we are dependent upon the school administrator for hiring the right people, evaluating them effectively, and retaining the most effective teachers. If a school administrator lacks the will to remove low-performing teachers, there is little that parents can do about it. Amendment 3 does not change our fundamental principal-agent problem. It may remove tenure restrictions, but if school administrators lack the will, then nothing will change.

The only way to change this dynamic is through greater school choice. With school choice, a parent does not have to depend on an administrator to remove an ineffective teacher. The parent can simply choose to go somewhere else. This places pressure on school administrators to take a more active role in managing the teacher workforce. School choice is the answer to our principal-agent problem. School choice is the answer for improving the overall quality of the teacher workforce.

James Shuls contributed to this post.

Indebting Missouri’s Children and Expanding Government? That’s Just Wimpy

Posted on by Patrick Ishmael

Although the Popeye the Sailor cartoons were made long before I was born, I was a connoisseur of the VHS copies I had as a kid. Along with Popeye, the shows typically featured his nemesis, Bluto, and his love interest, Olive Oyl, but perhaps the most memorable character from the series outside of Popeye himself was his companion J. Wellington Wimpy. Unfortunately, he’s memorable for all the wrong reasons.

Wimpy is soft-spoken, very intelligent, and well educated, but also cowardly, very lazy, overly parsimonious and utterly gluttonous. He is also something of a scam artist and, especially in the newspaper strip, can be notoriously underhanded at times.

In the animated cartoons, Wimpy comes off as someone who not only is unreliable in his words but, ultimately, self-aggrandizing in his behavior. His signature phrase, “I’ll gladly pay you Tuesday for a hamburger today,” hints that Wimpy will never pay you at all.

Even as a kid, Wimpy’s character was troubling because, like most children, I was well-acquainted with the idea of “fairness.” Wimpy was always willing to make others worse off for his own immediate benefit, and because of Wimpy’s generalized character issues, it was just hard to like him.

Wimpy would make you worse off . . . and he’d do it with a smile. When I think about how government and its politicians operate, that is, unfortunately, one of the images that comes to mind.

Perhaps this Wimpy image is most appropriate when it comes to the Obamacare debate in Missouri. On the one hand are the true believers who, despite evidence to the contrary, believe that government health care is the best health care. On the other hand are the Wimpys of the debate, whose support of Obamacare’s Medicaid expansion has more to do with their near-term interests than the long-term consequences of their actions. Those consequences include billions of dollars in new spending and debt saddled on future generations to fund a failing and flailing health care program, meant to explicitly benefit the well-connected and highly profitable hospital industry. So before we pick up the Obamacare expansion fight in 2015, let’s be clear: that’s just wrong.

I have no problem disagreeing with and debating folks who have a worldview that expanded government is better policy than small government. We can win that debate on the facts. But I have a serious problem with those out there who have concluded that expanded government is better politics—the contingent that’s calculated that they won’t be paying for their hamburger when the bill comes due.

That’s just Wimpy. Missouri needs genuine Medicaid reform. Fix Medicaid. Don’t expand it.

Some Thoughts on the Proposed Olivette Charter Amendment

Posted on by Michael Rathbone

Next Tuesday, voters in Olivette will decide on whether to approve Proposition 1, which states (in part):

Any real estate, now or hereafter owned by the City of Olivette or any agency or instrumentality of the City, which is principally used or held out for use as a public park, shall not be sold, leased, given away or otherwise disposed of, and shall be used only as a public park, nor shall any structure be built in any such park to accommodate activities not customarily associated with park use or outdoor recreation, unless such sale, lease, disposal, gift or structure is approved by a majority of the qualified electors voting thereon.

To say this language is broad is like saying the Great Wall of China is long. True, but it is also kind of an understatement.

I get why people would be in favor of this measure. They want to have a say in case the city wants to do something drastic, like sell a public park. However, the problem with this amendment covers more than just selling a park. If passed it would require the city to seek voter approval if the city wanted to lease park management to private operators for a whole assortment of activities.

For example, if Olivette wanted to let a private operator open a restaurant on park grounds, like Saint Louis does for the Boathouse in Forest Park, then it would have to be approved by the voters. If Olivette wanted to let a private company open an ice rink in one of their parks, like Saint Louis does with Steinberg Skating Rink, then it would have to go to the voters. There are other successful examples of  private groups operating recreational services,  like Saint Louis does with the golf courses in Forest Park. Olivette residents won’t have to worry about golf courses, but they just go to show that if Proposition 1 is passed then any lease or contract will have to go to the voters.

The ultimate decision on whether to adopt the charter amendment is up to the residents of Olivette. I believe that voters should have a direct say if, for instance, a city decides to sell their municipal parks. However, I also think that city officials should have more leeway when it comes to leasing the park or contracting for services.

Cost of Compliance to Rise for Missouri Wastewater Treatment

Posted on by Joseph Miller

Recently, the EPA released a decision letter approving most of the changes to the Missouri Department of Natural Resources’ (MDNR) water quality standards. While this will bring the state in closer compliance with the federal Clean Water Act, the new rules mean pollution limitations will be extended to thousands of lakes and tens of thousands of miles of rivers not previously under strict regulation. That will mean higher costs for Missouri’s water treatment utilities.

According to a report issued by MDNR, upgrading the state’s wastewater treatment plants to meet strict federal standards will cost between $430 million on the low end and $1.2 billion on the high end. However, most municipalities did not set high enough utility fees to cover the cost of regular improvement projects when regulation was more lenient. With the cost of needed upgrades now looming, localities will be forced to find more funds, which means wastewater utility rates, or other forms of local taxation, are likely to increase statewide in the near future.

Conforming to higher water quality standards in the most economical manner possible has pushed many municipalities across the nation and in Missouri to privatize their water utilities. Cities usually receive an upfront payment for leasing these systems, and while the private owners often raise rates, the increase is usually less than what the public utilities planned to do absent of privatization.

The city of Arnold in Jefferson County is considering just such a privatization plan partially in response to these types of costs. We have written before how this deal can benefit Arnold financially, and should it succeed, the privatization plan could become a model for other municipalities as they decide how to deal with increasing regulatory burdens for water treatment.

What Uber and School Choice Have in Common: In Missouri

Posted on by Brittany Wagner

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Late last month, founding president and chief operating officer of the Children’s Scholarship Fund James Courtovich wrote an op-ed in the Wall-Street Journal titled “What Uber and School Choice Have in Common.” He said:

When we began the project [Children’s Scholarship Fund] in 1998, teachers, union leaders and their political benefactors said choice was a threat, much as cabdrivers say now. But as [Ted] Forstmann used to say, “Monopolies invariably produce bad products at high prices.” The 1.3 million parents who applied for the scholarships illustrated the tremendous demand for alternatives.

I reread this article after my trip to Washington, D.C., where I took my first Uber and Lyft rides. Reflecting on my positive experience with the taxicab alternatives, i.e., five-dollar fare, I realized—I’m not used to having choice.

In the Show-Me State, it is the status quo to be educated within your zip code. It is also the status quo to pay $40 for a 10-mile cab ride. Saint Louis and Kansas City are two of the largest metropolitan areas to prevent Uber and Lyft from operating their ridesharing services; and there are no private school choice programs in the state. Is Missouri choice-resistant?

As Courtovich suggested, there’s a parallel between the St. Louis Metropolitan Taxicab Commission (MTC) and Missouri’s school choice critics. The MTC claims to protect rider safety, maintaining the balance between cab supply and demand. School choice opponents claim voucher programs will “destabilize” public education, that choice and competition have no place in education.

The MTC and school choice critics are utterly afraid of change, but keeping the status quo has consequences. Children are trapped in low-performing schools, and cab fare is high. Missouri should follow the lead of states that have embraced choice in any context, because as Uber’s tagline suggests, “Choice is a beautiful thing.”

 

 

Saint Louis Municipalities: Who Is in Trouble With Macks Creek Law?

Posted on by Joseph Miller

In previous posts, we have discussed the problem of small Saint Louis County cities supporting themselves through fines and fees, essentially using the police and courts as revenue generators. A report released by Better Together shows the scale of the problem. Twenty municipalities, mostly in North Saint Louis County, generate more than 20 percent of their total revenue from fines and fees.

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The largest portion of these fines usually comes from traffic violations and related penalties. But a state law, known as the Macks Creek law, is supposed to cap traffic fines to 30 percent of a municipality’s operating revenue. Fines in excess of 30 percent are to be redirected to schools, and failure to comply can result in suspension of local traffic jurisdiction. While this cap should arguably be lower, the state should first enforce the cap that already exists. But proper enforcement within Saint Louis County may be lacking.

chart22

 

As the chart above demonstrates, eight municipalities within Saint Louis County collect more than 30 percent of their revenue from fines, and in some cases much more. These cities may not be in violation of the Macks Creek law if much of their fine revenue is from non-traffic-related citations. However, all eight cities are home to notorious speed traps and have small populations from which to generate non-traffic citations. For instance, Calverton Park, Bella Villa, and Pine Lawn would need to issue more than $200 of non-traffic-related fines per resident in order to comply with the Macks Creek law. That seems unlikely.

That is perhaps why Bella Villa, Pine Lawn, and Saint Ann (along with Ferguson and six municipalities outside of Saint Louis County) are having their municipal courts audited by the state to ensure that they are “about justice and not revenue.” That may be a hard case for those cities to make.

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