The MSD Bond Issue: Vote Yes Or No, But Blame The EPA

Posted on by David Stokes

The Metropolitan St. Louis Sewer District (MSD) has an enormous bond issue on the ballot next week, for $945 million! Even in a post-bailout America, that is a lot of money.

I do not know how I am going to vote on this issue. The project is going to be done and rates are going to increase either way. If the bond issue passes, rates will increase slowly, but bond financing will have to be added to the total costs. If the bond issue fails, rates will increase more substantially right away, but we would not have to pay an estimated $200 million in bond financing costs. (My $200 million estimate comes from the bottom of page 7 here.) Pay more now or pay more later. I am probably leaning toward paying more now, but each voter is going to have to make that choice for himself or herself and their families, and I certainly understand those wanting to take a more long-term view.

I do not blame MSD for this. Kansas City is going through a very similar process, as are cities around the country. I blame unnecessarily strict EPA rules designed to prevent occasional releases of sewage during extremely heavy storms and to eliminate the use of combined sewers. I also blame time and the aging process.

Nobody wants sewage releases, and everyone wants safe water. The issue arises when federal regulators require local sewer authorities to spend billions of dollars for comparatively small increases in water quality. Perhaps cost should not matter because it is for the kids. But we do not live in fairyland, we do not spread magic dust, and costs do matter; as does regulatory overreach.

Could MSD have done a better job in recent decades updating the system to prepare for this? Almost certainly, but at some point it was going to be necessary to do a massive upgrade of an old sewer system; EPA regulations or not. The EPA regulations will do what the federal government usually does: take an issue and make it larger, more expensive, more litigious, and more intrusive. But that is our fault for allowing the federal government to grow to a size where it gets to dictate so much of our lives; it is not MSD’s fault.

People who are better able to comment on the technical, engineering aspect of the issue should feel free to chime in via the comments.

Too Little, Too Late?

Posted on by Audrey Spalding

The St. Louis Post-Dispatch reports that regulators have granted banks increased flexibility to rent foreclosed homes that they cannot sell. This is great news. Private banks now have more options that can help put vacant homes to productive use, and people still (understandably) wary of purchasing a home can choose to rent one instead. Hopefully this will result in fewer vacant properties and more people in homes.

However, this ease of regulation comes just a little late. The housing market crisis began years ago. Part of the federal government’s response was to throw hundreds of millions of dollars in taxpayer money at the problem. In February 2010, the U.S. Department of Housing and Urban Development (HUD) awarded more than $223 million to help establish land banks in Michigan. More than $40 million went to a land bank in Ohio. The Saint Louis land bank, the Land Reutilization Authority (LRA), has used federal money to acquire property.

It would have been nice if the federal government had eased this regulation earlier, and before so much money was dumped into a program that has not been proven successful. After all, the Saint Louis land bank, which is the oldest standing land bank in the U.S., has not succeeded in getting vacant property back into private, productive use. Since its creation, the land bank’s holdings have quintupled, and Show-Me Institute research found that the land bank had a habit of rejecting nearly half of all formal offers to purchase its property.

There is a real risk that land banks set up in Michigan, Ohio, Indiana, New York, and other states will end up where the Saint Louis land bank has: Holding many properties indefinitely, and plagued by processes that favor political insiders. Much of the blame for this expensive and unproven expansion of land banking rests squarely with the federal programs and funding that encouraged it.

Reducing regulations associated with renting vacant, foreclosed homes is a good first step to dealing with the glut of foreclosed property. A next good step would be for the federal government to cease funding land banks.

Another Judge Rules Saint Louis’ Red Light Camera System Unconstitutional

Posted on by Audrey Spalding

Once again, a Saint Louis City judge has found that the city’s red light cameras are unconstitutional. Yesterday, Judge Theresa Counts Burke sided with a ruling in February that found that the City of Saint Louis’ red light camera system violates due process. Missouri Sen. Jim Lembke (R-Dist. 1), a long-time critic of red light cameras, brought forth the case.

Saint Louis City’s system violates due process because  tickets sent to alleged violators do not contain information about a court hearing date or the right to contest. That means, attorney Bevis Schock (a Show-Me Institute board member) told KMOX, that “. . . there’s no way the defendant, the person receiving the notice, understands that there’s a right to a hearing.”

Hopefully this ruling will help bring about the elimination of red light cameras in Missouri. In our state, red light cameras have not been shown to increase safety. But they are popular, perhaps because they can help a city raise a great deal of revenue from traffic tickets.

This latest ruling throws the continued operation of red light cameras in Saint Louis City into question. One Saint Louis attorney has said that he would advise family members to not pay red light camera tickets because the penalty for the ticket appears to be just threatening letters from a company in Texas.

In related news, at the most recent Columbia City Council meeting, city officials reported that the installation of red light cameras had resulted in more than a four-fold increase in tickets. The city has issued more than 3,500 tickets since the cameras were installed in September 2009, compared to an average of about 330 tickets before the cameras were installed.

And earlier this year, Kansas City found that red light cameras in its city had not increased safety, as promised. In fact, the study found that both accidents and fatal accidents had increased at a majority of intersections where red light cameras are installed.

For more information about the policy questions regarding red light cameras, watch Show-Me Institute Policy Analyst David Stokes’ recent vlog on the Saint Louis red light camera issue, or check out our “Policing By Camera” panel discussion with Lembke, Saint Louis Alderman Antonio French, and Redditt Hudson of the American Civil Liberties Union (ACLU).

Building A Better Streetcar Proposal

Posted on by Patrick Ishmael

I have lodged my complaints for a long time regarding Kansas City’s $100 million trolley proposal. In short, it is yet another unnecessary government-centric development proposal that would raise taxes on residents and business owners already enduring some of the highest tax rates in the Midwest.

There is, of course, another (and better) way to fund this trolley, and the Kansas City Star’s Lewis Diuguid articulates it quite clearly: private funding.

So instead of heaping more taxes on those folks, Mayor Sly James and the City Council should begin an all-out, metrowide streetcar fundraising drive. Fundraisers helped build other great bricks-and-mortar things for the city.

The Central Library downtown is a wonderful example. So is the addition to the Nelson-Atkins Museum of Art.

People contributed to the construction of the Kauffman Center and the World War I Museum. Corporations metrowide, foundations and individuals could do the same for streetcars.

Private fundraising for ostensibly public projects is not a new idea, and as Diuguid highlights, that is especially true for Kansas City.

The city’s proposal already contemplates user fees and advertising to supplement the public financing component. Shouldn’t the Kansas City Council take the next step and explore the possibility of philanthropy and private investment, and work to remove the public component? And if there is neither a private nor philanthropic interest in building the streetcar, doesn’t that say something about the merits of the project?

What Is The Matter With Columbia?

Posted on by Audrey Spalding

The demolition of the Regency Hotel site. Photo by Timmy Huynh of the Columbia Missourian

The demolition of the Regency Hotel site. Photo by Timmy Huynh of the Columbia Missourian.

Since 2005, the City of Columbia has entered into the business of subsidizing development in a big way. The Columbia City Council approved its first Tax Increment Financing (TIF) project in 2009 and is considering another one.

In 2010, the city actually bought property for $3 million in order to lease it to IBM for $1 (yes, just a dollar) for at least 10 years. In fall 2011, the Columbia Missourian reported that IBM had hired just 101 full-time employees, far short of the 800 jobs promised.

It may not be a tax subsidy, but it is certainly a failed bet: The city has also built a very expensive parking garage that garishly lights up downtown Columbia in the evenings. The Missourian has reported that it costs more than $3,000 each month to keep the lights on in that garage. Of course, the cost of the parking lot is $21 million, and its parking revenue appears to have been paltry.

To this former Columbia resident, the city’s development bets seem contrived. The City Council, hoping for a better hotel, approved a large TIF for the Regency Hotel site on Broadway (demolition site pictured above). In my humble opinion, if the replacement of any hotel in Columbia could merit subsidy, I would nominate the Arrow Head Motel, which looks a little worse for the wear.

Now, the Columbia City Council is moving aggressively forward to allow for the awarding of Enhanced Enterprise Zone (EEZ) subsidies. The City Council voted 7-0 on Monday to set up an EEZ board, the first step needed to hand out EEZ development subsidies, despite the fact that many people showed up to protest that move.

What, exactly, is wrong with Columbia? The unemployment rate in the Columbia metropolitan statistical area is lower than the rest of Missouri. Columbia has a large college campus that guarantees a certain level of sales tax revenue and occupied apartments. It hosts football games that draw even more commercial activity to the city.

And yet, Columbia officials argue that a large swath of their downtown should be considered “blighted” and that the city needs development subsidies.

I wonder, to what success are those officials looking? I have pointed out before (in a Columbia newspaper) that TIF has a very poor track record on both sides of the state when it comes to creating long-term growth.

The Wall Street Journal just highlighted Kansas City’s bad development bets. The Saint Louis area’s use of development incentives has been so inefficient that we have spent more than $370,000 per job created. And the Associated Press just reported that the Kansas City development incentive border war has resulted in $750 million in incentives spent to move jobs across state lines.

Development subsidies that taxpayers fund are no way to provide long-term economic growth. But if Columbia’s city officials are itching to get into the development game, they should do so with their own money, and on their own time.

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