The City of Ellisville Versus the Saint Louis County TIF Commission

Posted on by Ben Barnes

Last night, Show-Me Institute Policy Analyst David Stokes testified against the use of tax increment financing (TIF) before the Saint Louis County Tax Increment Financing Commission. Ellisville officials are seeking TIF to finance a $49 million redevelopment of 16 acres on the southwest corner of Manchester and Kiefer Creek Roads. Sansone Group, the proposed developer, plans to build a Walmart.

The Commission voted 7-4 against using tax incentives to finance the development, but despite the commission’s opposition, we may very well see a Walmart Superstore in Ellisville. That is because, in this case, the Commission’s recommendation has little practical effect. The Ellisville City Council still has final say and the negative recommendation’s only effect is to require a supermajority vote of the City Council (five of seven members), whereas a positive recommendation would have required just a simple majority (four of seven).

The Ellisville situation exemplifies just how broken the TIF system is in Saint Louis County. Despite overwhelming opposition from the County (all seven negative votes came from County representatives), Ellisville could still easily get its TIF. This approval process favors point-of-sale cities and plays down the importance of the County TIF Commission’s decision.

The Missouri Legislature needs to revisit the TIF approval process in Saint Louis County. In order for a TIF to pass, the local city government and the county commission should each have to approve the project, independent of one another. Independent approval requirements would encourage collaboration between cities and the county, in contrast to the current adversarial process that threatens the sales tax pool and encourages point-of-sale cities to abuse eminent domain.

Charles Pavlack, the Commission chairman and a former Ellisville City Council member, told the St. Louis Post Dispatch: “For us to say we’ll take the moral high ground and make a brave stand to turn down TIF, when others have used the same method to take our business, doesn’t make sense.” But this should not be about Ellisville versus Saint Louis County. After all, there is overwhelming evidence that an Ellisville TIF is bad for everyone, including Ellisville. According to the East-West Gateway Council of Governments, TIF creates one retail job for every $370,000 in taxpayer subsidies. As David Stokes testified last night: “That is not a road to growth — it is a road to poverty.”

TIF Is A Bad Idea That Refuses To Die

Posted on by David Stokes

Tax increment financing (TIF) is the Rasputin of Saint Louis County – the bad idea that keeps coming back and refuses to die. Despite TIF’s documented failures, Ellisville and interested developers are considering the establishment of a new TIF district in the southwest quadrant of Clarkson and Manchester Roads. The TIF district would take the tax dollars generated by the development and divert them back to the developer. County leaders from both parties, including Steve Ehlmann in Saint Charles and Charlie Dooley in Saint Louis, have seen the harm that TIF is causing our region. The TIF commission and the city council should reject this proposal.

TIF has had numerous negative economic effects in Saint Louis County. TIF has increased government involvement in the economy, sparked abuse of eminent domain, and made subsidies a permanent fixture of development. Furthermore, TIF has failed at its main purpose: economic growth. The East-West Gateway Council of Governments concluded that TIFs and other incentives have created jobs at the rate of one retail job for every $370,000 in taxpayer subsidies. That is not a road to growth – it is a road to ruin.

An Iowa study of TIF usage concluded that, “On net (…) there is no evidence of economy-wide benefits, fiscal benefits, or population gains.” Another study from Illinois found that economic growth in cities that did not use TIF was stronger than in cities that did, because TIF subsidies caused an inefficient allocation of resources.

Consistent with those findings, cities’ heavy use of TIF has distorted economic growth and subsidized less efficient, politically-favored developments in Saint Louis County. Citizens are free to choose between shopping at Walmart or mom-and-pop stores, but cities should not give Walmart an advantage over their competition through subsidies.

Everyone wants a “do-something” leader. So, even though the evidence says TIF is bad for the region’s economy, municipal leaders support TIFs within their city. They can claim political credit for the “new” businesses, while playing kick-the-can with the adverse consequences for the other taxing districts, like the schools. Most residents of the Rockwood School District do not live in Ellisville; they have no way of voicing their opposition.

I urge this TIF commission and Ellisville to recognize that the constant quest for retail tax incentives is harming the region’s economic base. By passing this TIF, Ellisville might gain in the short term, but at the expense of other taxing districts that also serve its citizens. More importantly, it will continue the downward spiral of incentive-based retail developments that shrinks our region’s tax base to benefit private developers.

Ellisville can address long-term revenue issues by switching to pool sales tax status. The city, its residents, and its taxpayers would then benefit from development throughout the county. I hope the TIF commission and Ellisville can lead the way to a new realization for our region, where economic development works for everyone when governments do not play favorites and businesses succeed or fail on their own merits.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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Episode II: Attack Of The Dome

Posted on by Michael Rathbone

The Edward Jones Dome saga continues. I previously blogged about this topic and there is a new development. It seems the St. Louis Rams have rejected the St. Louis Convention and Visitors Commission (CVC) plan (price tag: $124 million, of which the Rams will pay $64 million) to renovate the Edward Jones Dome. The Rams have until May 1 to offer a counter-proposal on what they would like in regards to renovations to the Dome.

Does it strike anyone as worrisome that in economic times such as these, public officials are scrambling to work out a way to funnel public money into a sports stadium housing a team that a billionaire owns and is in the process of trying to acquire another sports team? When the Dallas Cowboys built their $1.15 billion stadium, the Jones family (the owner of the Cowboys) contributed $261 million to building the stadium. In fact, less than 30 percent of the new stadium was financed with public money. The CVC’s first proposal did not indicate how the non-Rams portion (close to $60 million) of the plan would be financed, but it seems that the CVC will turn to the state of Missouri, Saint Louis County, and Saint Louis City, who put forth the original financing for the Dome’s construction. The Rams rejected this proposal. It seems disquieting to think about how much the Rams will ask from the public for the upgrades they want.

What justification do the state, Saint Louis County, and Saint Louis City have for spending public money to help a private sports franchise, beyond civic pride? I previously cited a study that the St. Louis Federal Reserve conducted showing that in most cases, building or refurbishing a sports stadium has NO impact on that city’s real per-capita personal income growth and in the case of Saint Louis, the impact was a NEGATIVE one.  Here is the exact quote:

Moreover, Baade found that of the 30 metro areas where the stadium or arena was built or refurbished in the previous 10 years, only three areas showed a significant relationship between the presence of a stadium and real per-capita personal income growth. And in all three cases — St. Louis, San Francisco/Oakland and Washington, D.C. — the relationship was negative.

Given this finding, it is hard to find a compelling reason as to why the state, Saint Louis County, and/or Saint Louis City should provide ANY public funding to the Edward Jones Dome and so far, it seems that public officials have yet to provide one.

100 Days Of Bad Teaching (Or More)

Posted on by Audrey Spalding

At a Show-Me Institute policy breakfast, Saint Louis Public Schools Superintendent Kelvin Adams noted that it is very difficult to fire bad teachers. In fact, it is even more difficult to fire bad teachers in Saint Louis than it is in the rest of the state.

Adams said:

It takes 100 days to remove a teacher after you give a teacher a plan. In every other city or county in the state of Missouri, it takes 30 days. So if there’s a bad teacher in the classroom, I have to work with that teacher for 100 days with a detailed plan, called a PIP, a professional improvement plan, to remove that teacher . . . I’m not talking about the hearing process, I’m just talking about getting them out of the classroom. No other place has that in the state of Missouri but Saint Louis.

You might find Adam’s statement difficult to believe. But he is correct. According to state law, if a teacher is doing a poor job, that teacher cannot be dismissed quickly. Instead, in Saint Louis City, the teacher needs to be notified in writing at least one semester before the superintendent can even present the charges against the teacher.

Actually, after looking over the statute, I think that Adams is being kind. One school semester is 87 days (half of the 174 required school days), and the law requires a 30-day notice before any hearing can occur. Once you start counting weekends, holidays, and everything else, it looks like it takes a lot more than just 100 days to remove a bad teacher from the classroom.

The city school district is struggling to boost student academic performance. It is one of the small number of unaccredited school districts in the state. And, it is common knowledge that teachers can have a large positive (or negative) impact on their students’ education. That is exactly why laws that severely limit districts’ ability to remove bad teachers hurt students.

Just think: Thanks to state law, an ineffective teacher could continue teaching students for more than 100 days. That teacher might have a little more job security, but those students will continue to receive a mediocre education. It is time to focus on helping students, instead of teacher job security.

Teacher Tenure: Why Should Educators Be Different?

Posted on by Audrey Spalding

 

All the children in Lake Wobegon are above average. In the past 10 years, the Parkway School District in Saint Louis County, which employs more than 1,200 teachers, has terminated five teachers. Perhaps all the teachers at Parkway are above average. More likely, poor-performing teachers continue to teach Parkway students.

Teachers can make all the difference in a child’s education. This is precisely why we should reward our best teachers while encouraging teachers with a track record of failure to find another job. The only way to do this is to reform Missouri’s existing teacher tenure law.

The Missouri Legislature is considering a bill that would end teacher tenure and help districts and school boards implement performance-based evaluation systems.

If the bill passes, teachers could be fired for doing a bad job. For most of us, consistently doing bad work means losing our job. Not so for teachers. Current laws state that a tenured teacher can be fired only for egregious conduct, such as willful or persistent violations of the school laws, excessive or unreasonable absences, and felony convictions. Even then, a severely truant (or criminal) teacher receives generous procedural protections. Teacher tenure reform would allow schools to dismiss teachers for unsatisfactory performance.

The reform bill would eliminate “permanent” teachers and indefinite contracts. Most of us operate with at-will employment. Again, not so for teachers. Currently, a teacher who survives a five-year probationary period becomes “permanent personnel” with an indefinite contract. Even if a district reduces staff due to budgetary constraints, school boards must thin the ranks on a last-in-first-out basis. The most senior teachers stay on the job regardless of their teaching ability.

The proposed legislation gives school administrators more discretion to retain the best teachers. Schools could contract directly with teachers for up to four years, but the board would retain the power to terminate a multi-year contract if the teacher scores poorly on evaluations. The last-in-first-out policy would be eliminated and school boards would be required to base staffing decisions on teacher performance.

Teacher tenure reform would ensure that teachers get paid for what they do, not how long they have done it. School districts currently are prohibited from basing salaries on performance-related criteria. Instead, districts pay their teachers based on length of service and level of education. The proposed bill removes this prohibition and requires school boards to consider teacher evaluations when making decisions related to pay, retention, promotion, and dismissal.

Enacting a performance-based scheme would be a big change for Missouri school districts. But the bill addresses implementation as well as substance. It requires districts to create a performance evaluation system, and mandates that certain criteria be considered in teacher evaluations, while allowing school boards and administrators to tailor the system to fit their own needs.

Not surprisingly, teachers’ unions have criticized tenure reform. Missouri National Education Association President Chris Guinther told the St. Louis Post-Dispatch that “we’ve got to be given the protection that we need to give those kids the quality education that they need.” Teachers do not need protection. They need accountability. A bad teacher can teach bad classes for years. Year after year, students cycle through this teacher’s classroom, only to receive an inadequate education. Wouldn’t these students have a better education if teachers were held accountable?

Teachers do not have a right to their jobs. The Missouri Constitution gives students the right to a public education, and they should have good teachers.

Audrey Spalding is a policy analyst and Ben Barnes is an intern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Passport Scholarship Program Is Good For School Choice

Posted on by Ben Barnes

In 2010, the Missouri Supreme Court held in Turner v. School District of Clayton that state law requires unaccredited school districts to pay the tuition of its students who choose to attend an accredited school in an adjoining district. The Turner mandate clarifies the rights of Missouri students stuck in failing schools, but as we reported here and here, implementing Turner has been no easy task. Suburban districts simply do not have the resources to accommodate all of the urban students from Saint Louis and Kansas City who want to transfer.

Herein lies the problem: students want to transfer, and have the right to transfer; but accredited schools cannot accommodate all of them. The “Passport Scholarship Program,” which Missouri Rep. Scott Dieckhaus (R-109) and Missouri Sen. Jane Cunningham (R-7) introduced in their respective houses, addresses at least part of this conflict. The program promotes school choice in the purest form, and could ease the burden that Turner created for suburban schools in the Saint Louis and Kansas City areas.

Under the Scholarship Program, private Missouri taxpayers would receive a tax credit for donating money to any “educational assistance organization,” which must be private, non-profit, charitable organizations. The educational assistance organizations would administer the donations, and distribute money to eligible students in the form of tuition scholarships. Any student residing in an unaccredited district could then apply for a scholarship to attend any qualifying private school in Missouri.

The Passport Scholarship Program has great potential for success in Missouri because it is a market-orientated solution that limits state involvement. Individual taxpayers personally decide whether to donate,  and the educational assistance organizations administer the funds privately. The government has only a minor oversight role in the process. And students could apply the funds to any private school, religious or not, because the Blaine amendment does not affect private scholarships. Any student receiving a scholarship could actually go to the school of his or her choice. So if our goal is school choice — and it should be — the Passport Scholarship Program is a step in the right direction for students stuck in failing schools.

Land Banking Is No Miracle

Posted on by Audrey Spalding

On Wednesday, Julie Porter wrote in the Kansas City Star that a land bank could help return vacant city property to private, productive use. Porter points to the Genesee County Land Bank, which has existed since 2002, as a shining example of land banking in Michigan.

Unfortunately, Porter fails to consider the 40-year-old land bank in her home state. Saint Louis has had a land bank, also known as the Land Reutilization Authority (LRA), since 1972. The LRA owns about 10,000 parcels, making it the largest land holder in the City of Saint Louis. The Saint Louis land bank’s track record should be considered before creating a similar entity in Kansas City.

Show-Me Institute research has found that for eight years, from 2003 through 2010, the Saint Louis land bank authority rejected almost half of all formal offers to purchase its property. The most frequent reason for rejection was that the property was being “held for future development.” Sadly, the hoped-for future development rarely materializes, and in just eight years, the Saint Louis land bank has turned down offers to purchase more than 2,200 different parcels.

Porter also fails to mention that there already is a government entity that deals with vacant land in Kansas City. The Jackson County Land Trust currently takes ownership of tax-delinquent properties that fail to sell at tax auction, and works to sell them.

There does not appear to be any evidence that the Jackson County Land Trust is doing a poor job of getting vacant property back into private, productive use. In fact, it seems to be doing quite well. During the past decade, in the course of acquiring property by default and trying to sell it, the land trust has added about 140 parcels to its inventory. The Saint Louis land bank has added 800.

However, the land bank bill, Missouri House Bill 1659, would be a land and money grab: All land trust properties in Kansas City would be transferred to the land bank, and it could take on an unlimited amount of debt.

Though Porter warns against private speculators, this bill would allow the Kansas City land bank to act as a speculator. The city would establish priorities for vacant land and use those to determine when to sell property. While this may sound innocuous, that is how Saint Louis was able to turn down so many offers to buy vacant property.

Consider this line from a letter of rejection from the Saint Louis land bank: “…her intended use is as rental property, and the alderman has indicated verbally that he will only support the sale to an owner occupant…” Years later, the property remains vacant, and the LRA still owns the land.

This bill would also let a Kansas City land bank bid directly against people who want to purchase vacant property. That certainly would go against the ostensible goal of alleviating vacancy in the city. The land bank would, when bidding against private buyers, be working directly to keep property vacant, and in government ownership.

HB 1659 creates an unnecessary expansion of government power. No strong evidence has been provided to show that the Jackson County Land Trust has failed, nor that a land bank could do a better job of getting vacant, city-owned property back into private, productive use. In fact, if Saint Louis is any example, the contrary will occur.

Audrey Spalding is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

A Gift? Or A Liability?

Posted on by Audrey Spalding

Kansas City officials announced today that Bank of America will be giving the city 75 vacant properties. The bank may provide cash as well — up to $20,000 for rehabs of the properties or up to $7,500 for each demolition.

City leaders are touting the transfer of these vacant properties as a “gift.”  The Kansas City Star‘s headline today reads: “Bank of America gift of vacant houses will aid KC’s urban core.”

But this gift comes with many risks. Kansas City will have to pay to maintain the properties until they are sold. Presumably, Bank of America was paying property taxes on the properties that it owned — taxes that will not be paid if the city takes ownership. The transfer could be a gift, but if Kansas City fails to sell the properties quickly, that gift will soon turn into a liability.

Though I may disagree with their proposed solution, city leaders and area legislators have openly stated that it is difficult to sell vacant property in the city. It is a real possibility that some of the so-called donations will remain vacant, and in city ownership for a very long period of time. That is the risk of owning vacant property, regardless of whether you are a city, or a private investor: There is the chance that no one else will want to buy your property.

For the sake of Kansas City residents and taxpayers, I hope the city finds private buyers who can put the property to productive use as quickly as possible. But I think, given the foreclosure crisis and associated risks, a better headline would have been: “Kansas City’s acceptance of low value properties will aid Bank of America’s bottom line.”

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