Luxury-Oriented Development in Clayton

Posted on by Joseph Miller

This week, Clayton proposed granting a 50 percent property tax abatement for 20 years to a $72 million luxury apartment development—The Crossing—in the heart of downtown Clayton, an area which the city council absurdly declared “blighted.” The city argues that the development will bring more economic activity and act as transit-oriented development.

We have written many times before that using tax incentives to lure development either generally diverts development from other areas or, worse, provides tax breaks to development that would have occurred anyway. These abatements put the pressure of funding local services on businesses or areas of the city that are not so favored by the city council. This type of central planning by tax policy creates an uneven playing field that is unfair and ultimately economically damaging. Allowing a luxury property developer and future residents to pay lower property tax rates, when rates were just increased for the rest of Clayton, is questionable policy.

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The Crossing

The argument that this development will boost transit ridership is also flawed. While changing zoning restrictions to allow less parking for a downtown building is not objectionable, using possible transit ridership to justify tax favoritism is bad policy. The relative affluence of Clayton has meant that local MetroLink ridership is far below what planners hoped for before the station opened in 2006. Original projections would have had the Clayton station serve 3,000 riders each weekday shortly after opening. Today, total ridership is 880 per weekday, and only 213 Clayton residents use the MetroLink to get to work. Four times that number walk.

The idea that luxury apartment dwellers will greatly boost this ridership is unlikely, because the affluent typically own vehicles and are much less likely to use transit than those with lower income. Even if all the residents of The Crossing did use public transportation, is it not enough that city, county, and federal government spent hundreds of millions building a light rail line to Clayton, and they continue to provide subsidized tickets that cover less than a third of that rail’s operating costs? Do we need to subsidize their luxury apartments next to the station as well?

Chances are some of the new residents will use transit, more will walk, and most will drive to their destinations. As for the local economy, the effects of diverting development and rearranging tax burdens will go unseen. But the good news is (for those with the means), new luxury apartments are coming on the market! And just wait until you see the location …

Streetcars Aren’t Good Economics or Transit

Posted on by Patrick Tuohey

Back in October 2013, Kansas City Councilman Russ Johnson said that the whole point of streetcars was to spur economic development, not transportation. He was quoted by the Kansas City Business Journal:

“The stated goal of this project is economic development. That’s the dominant goal,” [Russ] Johnson said. “The dominant goal is not to have a lot of people ride it. The dominant goal is to develop the city.”

The Show-Me Institute has argued repeatedly, and apparently successfully, that streetcars do not contribute to economic development or provide reliable transit. More people are waking up to this fact.

CityLab, formerly The Atlantic Cities, just published a column titled, “Overall, U.S. Streetcars Just Aren’t Meeting the Standards of Good Transit,” and it is worth the read. The author offers the following:

  • The most commonly cited problem with new streetcars—Matt Yglesias calls it the “original sin“—is that they tend to run in mixed traffic alongside cars. The resulting slow speeds, combined with the relatively short length of the lines (often just a mile or two), means many potential riders could sooner reach their destination by foot.

  • Very few next-generation streetcar lines run with the sort of frequency that might counterbalance slow speeds or short distances.

  • As streetcar skepticism grows louder, even among traditional transit advocates, there’s some confusion about its source. Some mistake it for an anti-rail sentiment (a misperception perpetuated when critical pieces quote actual rail opponents, as the Economist recently did). In fact, the true spirit of the concern is not anti-rail or anti-transit but anti-bad rail transit.

These three items appeared in the most recent campaigns for a streetcar: they ran along commercial thoroughfares; they were to run slowly and infrequently; and opponents were accused of just being anti-transit. The CityLab piece saves the best part for last. The author concludes that the reason streetcars fail to meet standards of good transit is because of boosters like Johnson:

“[The problem is] the way too many new streetcars are being deployed—as economic engines first and mobility tools second (if at all), even after being constructed with painfully limited transportation funding—that’s inspiring much of the criticism.”

Not only were Johnson and others who promoted economic development wrong on the facts, but transit supporters also are beginning to realize that streetcars don’t even provide worthwhile transportation.

Are Outdated Projections Driving I-70 Rebuild Plans?

Posted on by Joseph Miller

With the defeat of Amendment 7, the transportation sales tax, the issue of how to fund Missouri’s statewide road system remains up in the air. Part of the reason that the Missouri Department of Transportation (MoDOT) needs more money is to fund the rebuilding of I-70, a multibillion-dollar mega-project. However, it is possible that MoDOT’s plan to rebuild and expand I-70 is excessive and based upon erroneous projections of increasing traffic.

MoDOT has exposed the need to rebuild I-70 for years. Its oldest sections are more than 55 years old, and much of the highway requires rebuilding from the ground up. But MoDOT is not just looking to rebuild I-70, they are also planning to expand it. MoDOT’s preferred plan would replace the pavement, expand the highway to at least three lanes on each side, construct a wide median, and replace interchanges. The plan is estimated to cost $3 billion. If Amendment 7 had passed, more than $1 billion (a quarter of all sales tax dollars going to the state road system) would have gone to improve I-70. Of that, $500 million would have gone to expanding the highway to three lanes from Wentzville to Independence.

MoDOT is so concerned with expanding I-70 because they projected traffic would almost double from 2007 to 2030. If I-70 does not add lanes, it would mean stop-and-go traffic across the state. Here is a chart of MoDOT’s projections:

1

MoDOT expected average daily traffic to increase roughly 2.5 percent per year from 2007 to 2030. If the growth in I-70 traffic follows the trend above, MoDOT is more than justified in its drive for more lanes. However, these increases are failing to materialize. For instance, in 2013, traffic should have been around 16 percent higher than it was in 2007. However, at most points along I-70, traffic was down. And lest one think this is a trend of the recession, 2007 traffic was around the same as 2000 traffic.

2

The idea that people are driving less, or at least not driving much more, should not surprise MoDOT. After all, they repeatedly say just that when requesting more dollars to spend on expanding rail and transit projects. If traffic on I-70 is not growing much now, and MoDOT expects people to drive less in the future, why hasn’t MoDOT updated its projections and plans for I-70? Claiming to need more money because people are driving less, while simultaneously needing money to handle traffic growth, seems like trying to have it both ways.

A more economical solution to the I-70 problem may be to rebuild the two-lane structure while addressing bottlenecks around places like Columbia. That might fit the needs of Missourians, while lessening some of MoDOT’s financial strain.

Common Core Doesn’t Put the CCSS in Success

Posted on by Brittany Wagner

success

In previous posts on the Common Core State Standards (CCSS), I’ve written about the consequences of federal overreach, which, in itself, is a strong argument against the nationally imposed standards. Unfortunately, this argument is unconvincing for teachers, who have been led to believe these standards will give them more instructional flexibility and ultimately will help students make academic gains.

The following two quotes about CCSS reflect these widely held beliefs.

They are not a curriculum; it’s up to school districts to choose curricula that comply with the standards.
—Kathleen Porter-Magee and Sol Stern

Not exactly. Though it’s true that Common Core is just a set of standards, curriculum is informed by assessment. If the assessment is Common Core, the curriculum is Common Core. School districts buy curriculum sets (textbooks, workbooks, reading materials, etc.) that reflect the standards and prepare students for assessments. This ultimately gives teachers less instructional flexibility.

The promise of these high standards for all students is extraordinary.
—Former NEA President Dennis Van Roekel

If only. As a teacher, I would have loved to set the same high bar for ALL of my students. But the truth is, not every student has the same readiness for learning. Last year, one of my 13-year-old students scored a 30 on the ACT. Would I set the same high bar for this student and a student who had just tested at a fourth-grade reading level? No, I would differentiate instruction, meaning I would assign a project with varying degrees of difficulty and interest-based learning.

The problem is not “setting the bar high enough,” it’s the challenge of scaffolding instruction to fill in the gaps where there is missed learning. Sure, setting a high bar for every child sounds great, but without instructional flexibility, how will teachers make decisions that best suit the needs of their students?

They won’t. Even if setting a high bar for all students did increase academic achievement, there is still some debate about whether the Common Core even does that. If Missouri really wants to see students make academic gains, we should trust teachers to do their job well, and reward the ones that do.

 

Ditch the Tax Incentives and Pursue General Tax Cuts Next Year

Posted on by Patrick Ishmael

The Missouri Legislature’s 2014 veto session begins this week, and the chambers are set to reconsider dozens of bills rejected by the governor earlier this summer. While a handful appear to have enough support for an override, most sit in legislative limbo, fates to be determined. Among those bills hanging in the balance are a package of tax incentives I’ve talked about many times before.

These incentives are bad policy in general, but to create these handouts well outside of the legislature’s normal budgeting protocol is inexcusable. The budget must balance, and this late-breaking special interest goody bag throws the state’s budget out the window. Missourians deserve better than to be treated like a cash spigot for the well-connected.

There’s also a larger picture that needs to be understood here. Some of the most vocal tax cutters are also big boosters of tax incentives, but by creating, expanding, and sustaining tax handouts like these, our state is making the enactment of future tax cuts much more difficult. We should all be paying for the cost of our government, but increasingly, well-connected special interests are being exempted from that burden. That’s wrongheaded policy. As a general rule, if taxes are going to fall for anyone, they should fall for everyone. It’s time to kick the tax incentive circus out of Jefferson City.

The legislature should come back next year and pass broad and responsible tax cuts for Missourians. The first step is rejecting this year’s incentives.

Saint Louis Needs Better Bus Rapid Transit Plans

Posted on by Joseph Miller

In a previous post, we outlined how Metro is planning to introduce Bus Rapid Transit (BRT) in the Saint Louis region, and how they may waste millions on a low-ridership route that follows I-64 between downtown and Chesterfield. In this post, we turn our attention to Metro’s ridership estimates for these BRT plans.

Metro expects the I-64 BRT to have 5,100 weekday riders to start, 2,100 of which will be new “choice riders.” Another possible BRT route, one that follows Natural Bridge and Florissant, could carry 3,200 riders. Metro used a regional travel demand model to come up with these estimates. And while models can be very useful, the real-world performances of Metro’s Express Buses show no such underlying demand, especially in West Saint Louis County.

Metro operates six Express Bus lines in Missouri, which are designed to handle weekday rush hour traffic to and from downtown. They have routes that follow the region’s major highways between downtown and the county, with fewer stops than normal buses.

brtx

As the map above demonstrates, only the proposed Page Avenue BRT does not have an Express Bus currently running a very similar route.

Unfortunately, these express routes are not popular. In fact, they are a regular who’s who list of the emptiest, worst financially performing bus routes that Metro has to offer. The best performing Express Bus by far is the 36X, which carries a mere 563 passengers per day and loses more than two dollars per passenger. Anyone who has read our previous posts on the MetroBus system will not be surprised to hear that the highest ridership is on a route that serves North Saint Louis City and County. The 57X, which runs along most of the proposed I-64 BRT route, has 257 passengers per day and loses more than nine dollars per passenger. By way of comparison, the average MetroBus route carries 897 passengers per day and loses $3.22 per passenger. A full table on Express Bus performance is below:

Line Average Passenger Boarding Count Per Day Farebox Recovery Ratio Loss Per Passenger
36X Bissell Hills Express 563 32% ($2.31)
174X Halls Ferry Express 255 16% ($5.56)
40X I-55 Express 178 11% ($8.68)
57X Clayton Rd 257 10% ($9.45)
410X Eureka Express 187 8% ($11.89)
58X Twin Oaks Express 155 8% ($12.91)
MetroBus Average 897 25% ($3.22)

Express Buses are not BRT. They do not have the higher level of comfort, signal priority systems, dedicated lanes, or sheltered stops that BRT provides. However, they do provide reasonably fast service along major highway corridors between downtown and the county. In that way they likely portend future demand for BRT routes running very similar routes. And the prediction for an I-64 BRT route is not good.

Saint Louis County: Does It Have Too Many Municipalities

Posted on by Joseph Miller

Many municipalities in Saint Louis County, large and small, rely on fines that harm their populations to fund local government. This week, the Washington Post published a story illuminating how clusters of small municipalities, each attempting to fund their governments through citations, turn parts of the county into a minefield for cash-strapped residents.

Saint Louis County contains 90 municipalities, some with less than 1,000 residents. Many of the smaller municipalities are in North Saint Louis County and rely heavily on traffic tickets and court fees. For example, Beverly Hills (population of 571) issued more than 3,000 tickets and collect more than $200,000 in court fees last year. Charlack, a small city in North Saint Louis County (population 1,362), derives 29 percent of its revenue through traffic fines alone. By contrast, most cities in Missouri receive less than 5 percent of their revenue from fines and fees.

speedtrap

But size is not everything. As the Post article points out, even the larger municipalities in North Saint Louis County are guilty of issuing numerous citations. Florissant (population 52,000) issued almost 30,000 traffic tickets for more than $3 million in fines last year, accounting for 13 percent of its revenue. Saint Ann, notorious for its I-70 speed trap, expects that 36 percent of its revenue ($3.3 million) will come from fines and court fees in 2014.

Furthermore, small Saint Louis County municipalities do not all rely so heavily on fines. For instance, Grantwood Village (population 863) only issues around 120 traffic tickets a year. In 2012, it collected only $34,000 in fines and fees. Black Jack, a small municipality in North Saint Louis County (population 6,920), receives less than 5 percent of its revenue from fines. What do Grantwood Village and Black Jack have in common? They both contract out police from Saint Louis County and do not operate their own police departments.

A combination of necessity and opportunity likely drives cities, large and small, to pursue aggressive citation policies: the necessity arising from a dearth of other funding sources, the opportunity from having a piece of Missouri’s highway system.

Fining residents to generate revenue, instead of promoting public order, is not the way to achieve good governance in Saint Louis County. In future blog posts, we will discuss these problems further and explore ways residents and policymakers can reform local governments.

Taxing a Population: Saint Louis and Kansas City’s Earnings Tax Draw People Away

Posted on by Rik W. Hafer

The city of Kansas City grew in population by 4 percent between 2000 and 2010, but the population of its surrounding metropolitan area grew at a much faster 13 percent rate during the same period. Meanwhile, the city of Saint Louis saw its population shrink by 8 percent during the first decade of the century while the population in its metro area expanded by 6 percent.

Why the marked differences in population growth between Missouri’s two major cities and their surrounding areas? Undoubtedly, there are a number of factors involved, like housing prices, amenities, and school quality. But what about taxes? Specifically, what about the 1 percent earnings tax that both cities impose on everyone who works there and on everyone who lives there even if they work someplace else? A new study by Howard Wall, commissioned by the Show-Me Institute, suggests that the earnings tax could be impeding the population growth of both cities.

In 1947 the Missouri Legislature authorized cities with populations of 70,000 or more to levy an earnings tax, capped at 1 percent. Only Saint Louis and Kansas City chose to impose this tax. But earnings taxes are known to have bad economic side effects. A study by Dr. Joseph Haslag of the University of Missouri–Columbia found that Saint Louis and Kansas City’s earnings taxes help explain the decline in personal income in those cities relative to the surrounding non-taxed metro areas during the first part of the 2000s. Wall, the director of the Hammond Institute for Free Enterprise and the Center for Economics and the Environment at Lindenwood University, tackles a different question: Does the imposition of earnings taxes help explain differences in population growth across cities?

Wall conducted his investigation using population growth rates for 185 cities (population 25,000 or more) over the period 2000 through 2010. Seventy-nine of the cities included in his study levy an earnings tax. Nineteen Missouri cities are included, of which only Saint Louis and Kansas City have an earnings tax.

After controlling for other factors that might explain differences in population growth, Wall finds that having an earnings tax has a statistically significant, negative effect on population growth. And the impact is not small: A 1 percentage-point increase in the earnings tax is associated with about a 4 percentage-point reduction in population growth over a decade.

What does that mean for Saint Louis and Kansas City? Based on his results, Wall suggests that the earnings tax in Saint Louis accounts for about half of the population decline experienced over the decade. For Kansas City, the earnings tax may have cut its population growth in half.

The effects of the earnings tax apparently do not stop at city borders. Wall finds that there are negative metro-wide effects emanating from the central city’s earnings tax. The population loss of Saint Louis City dwarfs the population increase in its ring cities, yielding a net reduction in the metropolitan population. The effect is similar for Kansas City. There are substantially fewer residents living in the metro area than there would have been were it not for Kansas City’s earnings tax. Employing an earnings tax has adverse effects on population growth for the taxing city that spill over into surrounding communities.

Even though the earnings tax produces such negative effects, how would cities replace the lost revenue if they were removed? One option is to reorder tax priorities. Wall notes that, on average, property taxes account for about 17 times as much in revenue as income taxes in cities across the country. In sharp contrast, Saint Louis and Kansas City rely more heavily on taxing income. In Saint Louis, the earnings tax revenue is more than twice that from property taxes; in Kansas City it is a little over 1.5 times as big.

The evidence in Wall’s study and in previous research lends credence to the view that shifting priorities from taxing income to taxing property may be the answer to reversing the negative economic effects of the earnings tax on Missouri’s major cities.

R. W. Hafer is the distinguished research professor of economics and finance at Southern Illinois University Edwardsville and a research fellow at the Show-Me Institute.

 

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