St. Joseph’s Development “Plan” Not Exactly Focused On Actual Development

Posted on by Patrick Ishmael

Let me pose a hypothetical to you. Let’s say you were in charge of revitalizing a languishing downtown area but you didn’t have the money to develop the properties yourself. Would you let property owners renovate their properties so that they could attract new tenants? Or would you block their renovations because you didn’t think the renovations were consistent with your “vision” of the new downtown?

Enter St. Joseph, Missouri.

Geneo DeSpain, owner of 616-620 Felix St., said he was denied an approval to modify and update his buildings’ existing facades so he could accommodate businesses that have expressed interest in the property. It’s the “red tape” and multitude of guidelines that makes it difficult for small businesses to grow Downtown, he said.

The St. Joseph Downtown Partnership, however, says while it encourages business development, those guidelines are put in place to keep businesses in line with the city’s vision of Downtown.

Like most acts of civic development these days, St. Joseph has a “plan.” In late 2001 the city instituted the “Downtown Precise Plan,” a document which is chock-full of contemporary urban development conventional wisdom — including the notion that the city should be in the business of trying to “guide future private sector actions.”

“It used to be that anything goes Downtown. Then we got to the point that we realized in order to make positive changes Downtown and to bring back these historic buildings, there needed to be these regulations in place,” [Rhabecca Boerkircher, executive director of the St. Joseph Downtown Partnership,] said.

Well, it looks like St. Joseph might just “guide” one of its current property owners right out of town. Says DeSpain, “My fight is done. I’m not going to get any more white hair trying to get these people to understand why I want to be Downtown… It’s not like there’s people in line waiting to get their buildings done Downtown.”

“Development.” Cities keep using that word, but I don’t think it means what they think it means.

A New Homegrown Option Downtown

Posted on by James V. Shuls

Soon, more than just homegrown produce will be available in the Soulard area. Next year, a homegrown charter school is slated to open downtown: Lafayette Preparatory Academy.

The school received final approval at the October Missouri Board of Education Meeting and school leaders are planning for the opening. The head of the school, Susan Marino, stopped by the Show-Me Institute to tell me a bit about this new school.

Marino has worked in the education field for many years and lives in downtown Saint Louis. She came into contact with a group of parents in her neighborhood who were concerned about the availability of quality educational options in their area. So they banded together, drafted Marino to lead the efforts, and started sowing the seeds for a new charter school.

The school will focus on the core academic areas and will have a lengthened school day. Marino notes that the school will “have at least 2 ½ hours dedicated to literacy . . . [and] an hour every day for science and an hour for math.”

Marino hesitates to define the school; rather, she wants the students’ needs to shape how the school operates.

“We are committed to being responsive to our students and allowing our teachers to really build around the needs of the students,” Marino said.

Read more about Lafayette Preparatory Academy on the Show-Me Institute’s website.

They Stole My Idea!

Posted on by James V. Shuls

Have you ever had a really great idea, then found out later that someone else is already doing what you thought of doing? I recently experienced that, but my response to seeing others stealing my idea was not displeasure, it was joy.

So what was my brilliant idea? To find out, check out one of the charter schools slated to open next year, Eagle College Prep.

I recently sat down with two of the school’s leaders and talked with them at length about the new school, which will be opening in the South Tower Grove neighborhood. You can read the full interview on the Show-Me Institute website.

Below are just a few of the highlights.

Teachers at the Eagle College Prep will utilize research-based instructional practices in the classroom and will “differentiate [instruction] using a blended learning model.” The Show-Me Institute has been a big proponent of harnessing the power of technology to improve instruction.

The school also will have an affordable (maybe free) after-school program, which the school’s management company, Educational Enterprises, will run. Matt Hoehner, Saint Louis regional executive director of Educational Enterprises, noted the after-school program will be faith-based: “We . . . recognize that many families want a faith-based option. Through our free public charter school and a separate, optional faith-based after-school program, we believe we can meet the need for a high-quality school and faith-based instruction.”

A school that utilizes technology to meet the unique needs of each child and partners with the faith-based community to offer optional after-school care . . . what a marvelous idea.

(Now, if I could just get someone to follow through with some of my other great ideas.)

Nixon: Missouri Will Not Implement Health Insurance Exchange By Federal Deadline

Posted on by Patrick Ishmael

In a victory of sorts, Missouri Gov. Jay Nixon said on Thursday that the state will not be able to implement an Affordable Care Act health insurance exchange this year. It is not that Nixon does not want the state making an exchange — just that it has run out of time.

Under the federal health care law, states face a Nov. 16 deadline to submit blueprints to the federal government if they want to run their own health insurance exchanges when the online shopping sites are due to open in 2014. If states don’t set up their own sites, the federal government will run one for them.

Nixon said he would prefer Missouri run its own insurance exchange. But that’s not possible, at least not at this point. Voters on Tuesday passed a ballot measure barring the governor from taking steps to establish a state-run insurance exchange without legislative approval. The Legislature has not granted its approval. And it’s not scheduled to be in session until January, meaning lawmakers could not meet the Nov. 16 deadline even if they wanted to do so.

It is a good thing voters explicitly blocked the governor from instituting the exchange, given the governor’s statements. As the news report notes, just days ago Missourians resoundingly passed Proposition E, which prohibited the creation of a health insurance exchange without voter or legislative approval. Given the governor’s position in favor of the state exchange and the timing of his announcement, it appears he may have considered acting unilaterally to implement the exchange if the avenue was still available.

Why is the state-run vs. federally-run exchange issue important? As I said when I wrote about Oklahoma’s challenge to the ACA:

Many employers under the ACA can be fined/taxed if they do not provide health insurance to individuals who qualify for the federal government’s subsidies. However, if a state does not build its own exchange, then no employee would qualify for the subsidy, and therefore employers in the state would not be subject to the tax because none of their employees would meet the criteria set out in the law.

No state exchange? Then the law’s text suggests that there would be no employer penalty.

More to the point, a state-created exchange does not mean an exchange effectively run by the state; such exchanges will still have to comply with the rules the federal government imposes, as Christine Herrera and I explained earlier this year in an editorial in the Southeast Missourian.

The theory of a state-run exchange, designed to navigate and subsidize the purchase of health insurance, is simply that — a theory. Rules that officials in Washington issued to implement the law say that every detail of Missouri’s exchange must have the approval of federal bureaucrats.

And because federal grants and subsidies will flow through state-based exchanges, Washington will always be able to control Missouri’s exchange through ongoing regulation. This “my house, my rules” scenario underscores the new parent-child dynamic occurring between Washington, D.C., and the states, and the Missouri Senate was right to reject the governor’s ability to implement an exchange.

I support returning greater power to the states, which are often closer to the governed and better engaged with their problems. Put simply, a state-based exchange under the ACA is, for all intents and purposes, a federal exchange, effectively controlled by the federal government and designed to implement federal policy. The governor is right to prefer more localized solutions to big federal government solutions. Unfortunately, a state-based exchange does not further that objective.

A Golden Opportunity

Posted on by Michael Rathbone

Now that there are veto-proof Republican majorities in the state legislature, lawmakers have the opportunity to enact real, substantive changes to Missouri public policy. Show-Me Institute Policy Analyst Patrick Ishmael commented on some things that he would like to see and I want to comment further on items that the legislature should consider.

Missouri is lagging behind economically compared to other states. The state should avoid development schemes such as Aerotropolis and instead focus on other means of boosting the state’s economic competitiveness, such as tax reform.

Oklahoma is looking to enact major tax reform with an eye toward eliminating the state’s income tax. That is a worthy long-term goal and it is an issue that the Show-Me Institute has studied in the past. In the nearer term, the state should focus on eliminating the income tax on c-corps and pass-through entities. Pass-through entities are businesses whose income is taxed at the individual level instead of the company level. Many small businesses and professional corporations, such as a dental practice, are pass-through entities. Kansas got the drop on us when it eliminated its tax on pass-through entities. Missouri can do one better if both the corporate income tax and the tax on pass-through entities are eliminated.

There have been a couple of attempts to reform the corporate income tax. Missouri Sen. Will Kraus (R-Dist. 8) proposed a bill that would have modified certain tax credits and used the increased revenue to offset the corporate income tax. The Missouri House passed a corporate tax cut in 2011. Unfortunately, these attempts did not go any further. However, the legislature can still move forward, especially now that there is a veto-proof majority. Policy changes that Missouri’s neighbors have enacted have made change more necessary.

No Free Rides for Delta

Posted on by Kacie Barnes (Galbraith)

If you regularly follow the blog, you know that officials in Columbia, Mo., offered a revenue guarantee to American Airlines to entice the company to start flying into mid-Missouri. Delta, which has serviced the Columbia market for four years, was offered no such deal during that time. Columbia Mayor Bob McDavid announced on Tuesday that the city offered Delta a $3 million deal. This was an attempt to quell Delta’s negative response to American’s financial aid from the city.

Well guess what happened. Delta declined the offer, and announced it will exit the Columbia market in February 2013.

I said it before and I will say it again: what were Columbia decision-makers thinking?

They interfered with the market by offering American a revenue guarantee, which is essentially a subsidy. Delta officials had to step up and say “hey wait a minute — this isn’t fair if we are competing with an airline whose flights are subsidized by the government. We cannot compete with that.”

Columbia then found itself in a lose-lose situation. The city would have been out another couple million dollars if Delta accepted a deal that matched American’s, forcing taxpayers to spend even more. Or, Delta would decide to leave an unfair market and the city would lose the options they worked hard to grow at the airport, which is what happened.

What happens in two years, when the revenue guarantee for American ends? Will the city extend the deal, or just hope that the market suddenly becomes profitable? It is not prudent to subsidize a market that would not survive on its own just because someone likes the idea of it. I hope this will serve as a memorable example of the damaging consequences of government intervention in the free market.

The Most Dangerous Place To Be Right Now: The Sidelines

Posted on by Patrick Ishmael

The election season has — finally — ended, and soon the governing season will begin again in earnest. Although public policy will unfortunately continue to drift leftward at the national level, Missouri freedom lovers do not have the luxury of wallowing in their disappointment.

Starting next year, the Missouri Republican Party will have veto-proof majorities in both the state House and Senate. The re-elected Democrat governor had been able to stifle legislation from the legislative majority with vetoes and veto threats during his first term — a united Republican caucus would make that impossible in his second.

Indeed, the state legislature will have more power next year to exert its will in state governance. What will it do with that responsibility? What will it fight for?

I know what I will fight for.

I will fight to put an end to a decade’s worth of tax credit shenanigans that produce proposals such as 2011’s Aerotropolis and instead re-focus the state on enacting tax reforms that benefit all companies rather than the favored few. I will fight to have the corporate income tax eliminated and to have Missouri credibly respond to Kansas’ massive tax reforms of 2012.

I will fight for a health care policy that focuses on empowering the patient and the doctor, not the government. I will fight to have burdensome licensing laws reformed, particularly laws preventing some health care professionals from providing free care to Missouri’s neediest.

Especially today, supporters of liberty must ask themselves: “What will I fight for?” The state will be moving next year. The question is, in what direction?

The worst place you can be in the next few years is on the sidelines. Fight on.

The State Needs To Stop Acting Like A Bank

Posted on by Michael Rathbone

During this time of year, no one wants to say, “Bah, Humbug!” However, I would be remiss if I did not mention that the state might run into a revenue shortfall (between $400 million and $600 million) next year.

That can be troublesome, but it also presents an opportunity for the state to re-examine some of its questionable spending decisions. In earlier commentary, I have listed some areas where the state should reconsider spending money.

However, for now, I will focus on the state’s support of the Missouri Agricultural and Small Business Development Authority.

The mission of the authority is to make “capital available to Missouri farmers, particularly independent producers; agribusiness; and small business at competitive interest rates on a scale to make a major impact.”

This raises a red flag for me. An entity that makes capital available to businesses at a “competitive” interest rate sounds an awful lot like a bank to me. In fact, a couple of the programs that the authority administers include: Missouri Agribusiness Revolving Loan Fund, Alternative Loan Program and Animal Waste Treatment Loan Program.

The total state funds loaned to the Animal Waste Treatment Loan Program alone is close to $500,000 ($485,333.56 for fiscal year 2011, specifically).

Is anybody uncomfortable that a part of state government is acting like a bank? Why can’t the recipients of these loans get private financing? If they are great deals, why are private banks and/or financial institutions not jumping at the chance to invest in these projects?

Farms already face lower property tax burdens compared to commercial businesses (farm property has an assessment ratio of 12 percent compared to commercial at 32 percent and residential at 19 percent, and the soil quality grading system sets a very low appraised value already) so why do they need additional help with subsidized loans?

Also, how can a government and a private enterprise compete when it comes to financing? By issuing below market interest rates to different businesses, isn’t the state undercutting private financial institutions?

Even if a state department/agency/program loses money, it can acquire new financing by compulsion with increased taxes. A private organization does not have that same power to tax (although with TDDs and CIDs, we are getting there).

Thus, with the ability to achieve easier financing, what real incentive is there for the state to make wise spending decisions when it comes to these loans besides avoiding grief from dedicated bloggers such as me? Isn’t it time for the state to get out of the business of lending with your money and return to the basics?

Just some food for thought.

Michael Rathbone is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Through the TIF Looking Glass, In High Style

Posted on by David Stokes

The Saint Louis city Tax Increment Financing (TIF) Commission recently approved $2.3 million in tax subsidies for a new Mercedes-Benz dealership in the city. The city board of alderman will take up the proposal for consideration soon, and judging by history over the past 20 years, they will almost certainly pass it. Think about this for a moment. That is $2.3 million of other people’s money going to a Mercedes dealership. In a very nice part of the city, no less.

I presume they declared the area “blighted.” Because the city does not post the TIF documents online, I am not certain of that (but it is highly likely). So, a piece of land just across the highway from the city’s crown jewel (Forest Park) is blighted. And because this not-really-blighted land is being called “blighted,” taxpayers get to subsidize it for more than $2 million. This is abject insanity. Talk about tax breaks for the rich . . .

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