According to China Hub Reports, Warehouse Space is Sufficient

Posted on by Audrey Spalding

We’ve been working for a while to get studies, draft studies, or reports from the Midwest China Hub Commission that might be able to show that $300 million in warehouse and facility construction subsidies  is warranted. After all, third party market research shows that there is a great deal of vacant, developed warehouse space available already.

So, when we received a bundle of studies, draft studies, and progress reports this week from the Midwest China Hub Commission, the first thing I looked for were documents showing that warehouse space was needed.

But those documents show something entirely different.

According to reports commissioned by the China Hub Commission:

[Existing warehouse space] provides a short, medium and long-term solution for warehousing and ground handling needs in respect to this project.

And:

[Runways, ground handling, and warehouse space are] sufficient to manage and handle wide body air cargo flights from China. A recent on-site visit by a major international logistics firm has provided validation.

In fact, a study commissioned by the St. Louis Regional Chamber & Growth Association (RCGA) estimated that 45 million kilograms of cargo could be shipped to international destinations. Incidentally, that is almost exactly the amount of cargo that could be handled by existing facilities, according to the Midwest China Hub Commission reports.

And yet, as legislators were debating creating $300 million in tax credits to subsidize warehouse or facility construction, the RCGA pushed to publish a report purporting to show that $300 million in construction tax credits would result in more than 27 million square feet of warehouse space being construction, and that 20,000 jobs would be needed to construct and operate that space.

To add insult to injury, KMOV recently reported that the RCGA receives a great deal of taxpayer money, and doesn’t keep track of it very well.

What floors me is that given previous studies commissioned by proponents — including the RCGA itself — that 27 million square feet RCGA estimate is nonsense. And so are the related jobs estimates.

All of this leaves me wondering, what is that $300 million actually for?

After all, based on warehouse space analysis commissioned by China Hub proponents, $300 million for construction subsidies is likely $300 million too much.


Aerotropolis: Aerostrata “Six (6) Month Progress Report,” July 2010

Posted on by Patrick Ishmael

Queued to Page 7, key portion highlighted:

 

Quote:

Major Findings

Lambert-St. Louis International Airport major infrastructure components:

  • Runways
  • Ground handling
  • Warehouse

All sufficient to manage and handle wide body air cargo flights from China. A recent on-site visit by a major international logistics firm has provided validation.

Referenced here and here.

Aerotropolis: The End of the Beginning

Posted on by Patrick Ishmael

Yesterday we received a firm date for the legislative special session that will include the proposed Aerotropolis tax credits — September 6. This move surprised basically no one, and Audrey and I have been preparing our share of revelatory facts for just this occasion. But, let’s recap what we’ve published so far:

  1. Neither an airplane nor exported products are required to get “Aerotropolis” tax credits. Proponents continue to suggest otherwise. They are incorrect. What sort of an “international air cargo hub” could subsidize warehouses that neither produce nor house a product for export, nor would ship a product by air?

  2. The Mayor of Saint Louis and other county executives are empowered to choose who does and doesn’t get tax credits. The legislation creates a system where elected representatives get to choose who wins and loses with the public’s money. The latest language included in this section of the legislation does not fix the problem.

  3. American beef is banned by China. Supporters have repeatedly tried to convince cattlemen and their representatives that American beef is on China’s import menu. It is not.

  4. The executive of the biggest beef exporter in the United States doesn’t think the China Hub will work for beef or pork. We found this out looking through the China Hub’s own documents. Which brings us to

  5. Where’s the beef study we were all promised? And

  6. Where’s the feasibility study? We found the preliminary report. How mainstream media outlets didn’t get their hands on it is anybody’s guess. More on this shortly.

  7. The legislation’s “new building” requirement doesn’t actually require that a “new building” be built. Members of the building trades should know that just because the authors of the bill are promising lots of work, that doesn’t mean that the language of the bill actually requires it. And finally,

  8. The China Hub’s own documents say that for Aerotropolis to be successful, it would require “volcanic demand.” One Chinese airline will create that demand? Seriously? See Point 6.

More soon. Stay tuned.

Visiting the Friendly Confines of Wrigley Field

Posted on by Charles Carson

There is no ballpark quite like Wrigley Field. Although I am a diehard Cardinals fan who passionately despises the Chicago Cubs, I can appreciate a truly great and historic ballpark when I see it.

Last weekend, I traveled to Chicago to see some college friends and visit Wrigley for the first time. I thought about driving, but that would have set me back about $100 in gas. I thought about flying, but airfare to Chicago was running above $250. I thought about Amtrak, but that would have set me back about $60 roundtrip.

Instead, I took Megabus to and from Chicago for a total of $21 roundtrip. That cost you, the taxpayer, next to nothing because private commercial buses receive an average federal subsidy of $0.10 per passenger per trip. Amtrak, on the other hand, receives an average federal subsidy of $57.04 per passenger per trip.

I personally don’t think subsidies are necessary and would willingly pay an extra 10 cents for my bus fare if federal subsidies were discontinued. Compared to Amtrak subsidies, however, the cost to taxpayers is negligible.

Through federal subsidies, intercity buses are partly exempt from the federal diesel fuel tax, paying 7.4 cents per gallon instead of 24.3 cents. Assuming that the bus got 4 miles to the gallon on the 300 mile trip to Chicago, Megabus would have paid $18.23 in tax to the federal government, but because of the subsidy, the company only paid $5.55. The company still paid the full state tax on fuel.

Commercial buses are a great example of the private sector stepping in to satisfy a demand that benefits consumers with a negligible burden on taxpayers.

I had an excellent trip because of Megabus. But next time I go to Wrigley, I better not see that silly white flag.

Saint Louis City Occupancy Permits (July 1-August 16, 2011)

Posted on by Patrick Ishmael
 

Report on Missouri Tax Credits Administered by the Department of Economic Development (February 2011)

Posted on by Patrick Ishmael
 

Local Governments License Public Information In Order To Charge Exorbitant Fees

Posted on by Audrey Spalding

Every journalism student at the University of Missouri is taught that the state has pretty good laws governing access to public information. After all, public agencies — according to the state’s Sunshine Law — can only charge the cost of reproduction for the information requested.

This openness is crucial to individuals who care about good government. For example, reporters can search campaign contribution reports for evidence of quid pro quo arrangements. The past three papers I have written at the Show-Me Institute relied entirely on information obtained from government entities: school superintendent contracts and salary information, meeting minutes for the Saint Louis land bank, and internal correspondence among public officials regarding the Aerotropolis tax credit proposal.

But open public records are important to others, as well. Consider the number of government records needed to say, start a business. You might want information about who owns property in your area, which would come from the local assessor’s office. You might want to know what zoning restrictions are in your area, information you could get from the local planning and zoning department. And so on.

So, I was shocked to learn that county governments routinely charge thousands of dollars for a single dataset.

For example, the Kansas City government charges $6,595 for its property database. This file is necessary in order to determine who owns what property in Kansas City, where properties are located, how much owners pay in taxes, and what land parcels are used for. This information is the most basic information necessary for someone interested in local tax or development issues.

But it doesn’t cost Kansas City $6,595 to make a copy of its database. And the state sunshine law says that charges for computer files should only include duplication costs.  So how does Kansas City justify charging so much for this data?

When it comes to public information that can be mapped, local governments can license that public information, making it no longer public, and can then charge an exorbitant amount for that information.

Here’s how it works, broadly:

1. State law allows local governments to close and then license public information if that information has a geospatial component — that is, if the information describes where the property is located.

2. The local government agency then “closes” the previously public information and sets license fees.

3. Individuals or companies who pay the license fees agree to terms that prohibit them from providing that information to others. For example, I had to sign a data licensing agreement with an assessor in order to receive information that, except for the state’s weird licensing law, is unarguably public. The agreement states that “…data obtained…may not be reproduced, for any purpose, without the prior, express written consent…”

So, this state law restricts public information so that local governments can charge exorbitant fees. What could possibly be the argument for such a policy?

The argument for charging such large fees is that the software used to maintain this data is expensive. I won’t argue that point. But this data would be maintained by local governments even if developers, engineers, reporters, and yes, think tank policy analysts, weren’t requesting it.

Maintaining geospatial data is a standard task of local government. Arguing that the associated costs should be included in the cost of providing data that can be easily copied with a few clicks of a mouse is akin to arguing that building and utility costs be included as well. The cost paid for information should reflect only the cost of reproducing that information — not infrastructure costs that are already paid for with tax revenues.

The law should be changed. There is no good reason for this law, and it serves only to stall or otherwise stop efforts to promote good, transparent government.

Both Kansas City Star and Kansas City Airport Question Aerotropolis

Posted on by Audrey Spalding

The Star‘s editorial board writes that the Aerotropolis tax credits, which would heavily subsidize warehouse and facility construction near the Lambert-St. Louis International Airport, become “more dubious the closer one looks.”

Despite Aerotropolis proponents’ tendency to dismiss every expert who dares to cast doubts on the proposal, yet another one has come forward. The latest person is none other than Tom McKenna, marketing director for the Kansas City International Airport. McKenna told the Star the following:

Not everybody can buy their way into being an air cargo hub or aerotropolis.

And:

To think you would get them to break out the Asian stuff, or just the China stuff, and incentivize them to aggregate that in St. Louis doesn’t make any sense. It’s not going to happen. … Missouri taxpayers should be very concerned about this.

At this point, the Aerotropolis tax credits make almost no sense. Proponents have not demonstrated that there is a lack of warehouse space, despite their plans to award up to $300 million to subsidize warehouse construction (or could the money actually end up going to existing structures?).

The very public commission pushing for the subsidies has not provided a feasibility study for the Aerotropolis concept. And what about the provision that appears to award a great deal of power to the mayor of Saint Louis or to the nearby county executives?

And now, McKenna is yet another high-ranking official questioning the wisdom of the project itself. He joins Roel Andriesson, senior vice president of international sales for Tyson (yes, that Tyson), Greg Lindsay, author of the very book on the Aerotropolis concept, and two air cargo consultants.

Supporters of the Show-Me Institute have said that we are “bold” to raise these questions. But really, what is bold about asking for a justification for taking $360 million from Missouri taxpayers in order to award it to a small group of well-connected individuals? Actually, isn’t it bold to ask for $360 million without any substantive analysis as to why the subsidy is needed?

I have to wonder, given the number of unanswered questions regarding the Aerotropolis legislation and the project itself, when will elected officials start voicing their private concerns about Aerotropolis publicly?

I agree with the Star. The cost of these tax credits, $360 million, is “eyebrow raising.” But raised eyebrows alone won’t fix it.

Kansas City: Grabbing the Pension Bull by the Horns?

Posted on by Greg Aubuchon

Kansas City has recently begun to confront its future pension crisis.  The issue is captured succinctly in the following quote from City Manager Troy Schulte, taken from a Kansas City Star editorial (emphasis mine):

City Manager Troy Schulte was appropriately blunt recently discussing Kansas City’s troubled pension system. He proposed good changes that could affect thousands of current and future city employees, while saving taxpayer dollars along the way.

“I don’t think our pension system is sustainable in the current structure,” Schulte told [the Pension System Task Force] evaluating the city’s retirement programs. The panel, which meets again today, should pay close attention to his recommendations.

The Task Force is presently comparing its systems (police, firefighters, and city employee systems) to those of a peer group of eight cities, including Oklahoma City, Denver, and Minneapolis.  And what are some of the preliminary findings? First, Kansas City taxpayers contribute an amount equal to 12.88 percent of a civilian employee’s salary towards his/her pension plan. This contribution rate is greater than rates in each of the peer group cities.

Second, the cost of living adjustment for retirees is three percent per year, higher than six of eight peer cities. Finally, the two percent per year multiplier is greater than those in seven of eight peer cities. Thus, retirees with 30 years of service receive 60 percent of their final average pay upon retirement.  In Indianapolis, by comparison, a retiree would only be entitled to 30 percent, based on a one percent per year multiplier.

While Kansas City’s self-analysis is fine so far as it goes, greater Missouri has approximately 130 government employee pension programs, ranging in size from the gargantuan Missouri State Employees’ Retirement System to the relatively miniscule Antonia Fire Protection District Pension Plan.  That’s right, 130!

Perhaps Kansas City is not alone, as the entire state of Missouri could be sitting on a pension time bomb.

Because public pensions are largely funded by Missouri taxpayers, taxpayers and their elected representatives need to address numerous issues in an open forum.  For example, are present and future liabilities underfunded, and if so by how much? Will future shortfalls be funded in the form of taxpayer legacy costs (i.e., future tax increases), by increased employee contributions, or by some combination of both? Should we begin now to require government employees to contribute to their pensions from current wages, thus tamping the insatiable demand for increased future benefits that arises when pension beneficiaries are not required to bear the costs? Have the managers of these pension funds reasonably estimated future portfolio returns, thus assuring that today’s contributions adequately support tomorrow’s payouts?

One may easily imagine a host of further questions that need to be asked.  That dialogue should occur soon, before time runs out.

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