Our results in the previous blog post indicate that Kansas City may have an affordable housing problem, but one that doesn’t affect most residents. These findings don’t seem to match public perception on the issue. According to a recent national poll, approximately 90% of respondents stated they believe housing affordability to be a major issue where they live. According to the table below, using data from the same American Community Survey as used previously in this series, many households in Kansas City say they are spending more than 30% of their income on housing. Does that confirm there’s an affordability problem or is there more to the story?

Using household income as our primary measure for housing affordability may make the most sense based on the data our government collects, but it is not a perfect measure for gaining insight into what households find affordable, especially for those with lower incomes. For example, if you don’t have a car or another means of transportation, housing that’s miles away from your place of work that costs 30% of your income is likely not affordable once daily commute costs are taken into account.

In times with record-breaking inflation like we’re seeing now, and rising home prices, it’s easy to feel like there’s a housing affordability problem. Because for many people, the place they live or want to live has become more expensive to them. And as long as all Kansas Citians, regardless of income, are allowed to freely choose where they live and pay how much they feel they can afford to pay to live there, these same data will show some level of housing unaffordability that is not reflective of a need for government intervention, but a result of consumer choice.

That’s also why when discussing housing affordability and the public policies that are aimed at combatting the issue, we have to be careful and say specifically what we mean or the policies that follow will be sure to miss the mark. As I hope my posts have made clear, affordable housing policy is hard. Moreover, with house prices, rents, and interest rates rising more rapidly than incomes, the debate over housing affordability is likely to grow, and with it, the potential for misleading analysis and counterproductive policy solutions. In particular, any one-size-fits-all policy that aims to improve housing affordability in Kansas City by treating households with varying incomes the same would likely not be successful at achieving the desired results.

The post Part 8: Does Kansas City Have and Affordable Housing Problem? appeared first on Show-Me Institute.

As earlier posts in this series have explained, defining an affordable housing problem is complicated. So too, is solving one. Because the issue is so complex, the definitions and data used to characterize the issue are incredibly important. Over the next two posts, I’ll walk through an analysis that sheds light on the affordable housing situation in Kansas City, which can then serve as a jumping-off point for a discussion of potential solutions for the region.

Even though the U.S. Department of Housing and Urban Development (HUD) defines “affordable housing” as a household spending no more than 30% of their income on housing, it is important to distinguish between situations where households exceed that threshold out of necessity because of a lack of sufficient options versus situations where they actively choose to spend more than 30% of their income on housing even when more affordable and still viable options are available.

Every household is free to choose where they want to live and pay what they feel they can afford to pay regardless of whether the government would view their choice as “affordable.” Conversely, there is nothing wrong with choosing to spend as little on housing as possible. The point is that while an aggregate story tells a tale, the personal stories of individual Kansas Citians shouldn’t be lost in our discussion.

For these reasons, this post focuses on estimating the potential demand for affordable housing–namely, the number of units needed at different cost points to accommodate Kansas City households if they were to spend no more than 30% of their income on housing. This analysis is primarily about households making less than the area’s median income (AMI), as the term is defined and published by HUD. In Kansas City, the AMI for a family of three is $78,000 per year.

To determine the potential demand for affordable housing, we need an estimate for the number of households in different income ranges, and then we can multiply each income range by 30% and divide by 12 to arrive at the monthly housing cost range that would be affordable to those households. The definition of income we use comes from the U.S. Census Bureau’s American Community Survey (ACS) and encompasses labor market earnings, self-employment income, interest and dividends, retirement income, and “any public assistance or welfare payments from the state or local welfare office” but not other sources of government assistance such as Medicaid.

In principle, one could consider augmenting this measure to include non-cash benefits like Medicare for retirees, Medicaid, employer-provided health insurance and other such fringe benefits in the income measure for purposes of calculating the 30% affordability thresholds. But obtaining data on each of these items is quite difficult, and deviating from the widely used ACS definition would entail making judgment calls about the cash value that households attach to them.

For example, if a household receives $20,000 of income a year according to the ACS income definition, the 30% of income affordability threshold for the household would be $500 (= $20,000 x 30% x 1/12) in rent or mortgage payments. If the household also receives Medicaid benefits that cost the government $6,000 to provide—and if the household would have otherwise chosen to spend that same $6,000 itself absent Medicaid—then the household’s income effectively rises to $26,000, and one could argue that the affordability threshold should increase to $650 (= $26,000 x 30% x 1/12). However, if the household would not have spent a full $6,000 to obtain alternative health insurance in the absence of Medicaid, the cash equivalent value is less, and the affordability threshold would be between $500 and $650. Thus, you cannot assume that various government benefits are the equivalent of income.

You can see in the table below based on data from the ACS and compiled by HUD that there are approximately 820,000 households in the Kansas City metropolitan area. Additionally, the majority of those making less than the AMI are renters (which should make some intuitive sense).

The table below gives an idea of how much a family of three with various incomes below the AMI can pay for housing that is considered affordable using the 30% rule of thumb from HUD.

Taken together, we have an idea of how much housing could be needed in Kansas City, and at what price points. The next question is how those figures compare to the reported supply of housing in Kansas City, which will be the topic of the next post.

The post Part 6: Does Kansas City Have and Affordable Housing Problem? appeared first on Show-Me Institute.

About 1,500 children and 3,800 people total live in poverty in Mississippi County, and it has Missouri’s highest overall poverty rate at 31.7 percent. In other words, one of every two kids and one of every three people in this county are living below the federal poverty line, which was $24,600 in annual income for a family of four in 2017.

Even if you take into account the large (±9.1 percentage points) margin of error for Mississippi County’s child poverty rate, in the best-case scenario it would have a child poverty rate of 41.8 percent—which would still be the second highest child poverty rate in the state. If you want to see the latest data on the rest of the state, check out these interactive maps.

While the state’s overall poverty rate is decreasing, pockets of poverty like Mississippi County should not be ignored. In a pair of forthcoming essays, I explore the consequences for the rest of the state of having such areas of poverty. For now, Missourians should at least be aware that some parts of the state are faring much worse than others.

The post The Child Poverty Rate in Mississippi County Is How High? appeared first on Show-Me Institute.

For starters, the report refers to “greater downtown” Kansas City, which extends as far south as 33rd Street and includes the campus of Penn Valley Community College, two miles away from the Sprint Center. That may be a defensible standard, but I’m guessing it doesn’t fit with most Kansas Citians’ understanding. The photo above is of the KC skyline from a point within the area considered “greater downtown.”

The Downtown Council also released a chart of downtown population growth with projections for future growth, and the outlook is decidedly positive. But if you examine the x axis, you’ll see that 1990 is as far from 2000 as 2019 is from 2020. This scale makes for a misleading presentation of the data.

We took the exact same data points and spaced them more evenly on a time series chart. What you see is largely flat growth from 1990 through 2016. Then the population projection lines rocket upward. The report concedes that this is “unprecedented growth,” but does little to explain exactly why the next few years will be so radically different than the past few decades.

Is it credible that between 2010 and 2020, “greater downtown” Kansas City will see a 46% population growth? For some context, researchers at the University of Virginia project that Kansas and Missouri are only supposed to see a population growth of 4 percent and 3 percent, respectively, in the same time period.

The Downtown Council offers questionable analysis when it discusses which generations choose to live downtown. The text of the report states:

At 41%, Greater Downtown Kansas City has the highest percent of millennials in our community. As you move farther away from downtown, the percentage drops to 26% for Kansas City, MO and 22% for the regional MSA.

The report goes on to tell us:

The data demonstrates that the living, location, and employment patterns of millennials is generally consistent across the country. They are choosing downtown for all their needs.

The report seems to say that because 41 percent of greater downtown residents are millennials that 41percent of millennials live in the greater downtown area. In fact, millennials are not “choosing downtown for all their needs.” Looking at the same 2016 ACS Census data and breaking it down by age group instead of by region, we learn that there are 548,588 millennials (aged 15 to 34) in the Kansas City MO-KS regional MSA. Just over 140,000 live in the city of Kansas City, MO, and according to the Downtown Council, 9,388 live in the “greater downtown.” This means that 74 percent of millennials reside in the region outside Kansas City, MO; 24 percent live inside Kansas City, MO but outside the greater downtown area; and 2 percent live downtown. In other words, downtown may have a large percentage of millennials, but among millennials themselves, only a tiny fraction live downtown.

Everyone wants Kansas City to do well, and promoting a city requires sound policy that rests on solid research. The “State of Downtown” report seems to provide neither. In fact, by presenting population projections wildly at odds with both recent history and state trends, and by overlooking where millennials chose to live, this report appears to deliver little more than mere boosterism.

The post The Downtown Council’s Fuzzy Math appeared first on Show-Me Institute.

The outcome has been overshadowed by the breaking story that one candidate, Catina Taylor, is alleged  to have organized an unsanctioned field trip from the school where she was substitute teaching to have students help her campaign.

But, setting that nugget aside, let’s look at the results, because I think they tell us something interesting.

According to the American Community Survey, there are 148,810 individuals of voting age who live within the boundaries of the Kansas City Missouri Public Schools. That means that Lewis, with 1,852 votes, was elected by 1.2% of voters. Fierro, with 554 votes, was elected by 0.4%, and Morris, with 651 votes, was elected with 0.4%. Even if you divide the total population by 6 (for each of the 6 subdistricts), they earned the support of 7.4%, 2.2%, and 2.6% of their subdistrict’s voters, respectively.

As I have written before, a common argument of those opposed to school choice is that the only way for families and the community to have a voice in the public education system is to have elected bodies oversee the schools.  Given these results, just how representative of the body politic were these candidates? What is their mandate?

Elections are decided by those who show up, and I’d like to give the candidates credit for sticking their necks out and running in a tough environment for an unattractive job leading an unpopular organization. But moments like this are an opportunity to take stock and think about where the community’s involvement is in education. It clearly isn’t in the large, bureaucratic, top-down school district. 

The post What to Make of the Kansas City School Board Elections appeared first on Show-Me Institute.

                The Survey provides a current, comprehensive look at various characteristics of American society, from economic to social to demographic.  The data are available at the national and state level.  Though there are hundreds of possible data sets to look at, I chose two that are key indicators of Missouri’s current and future economic health:  household income and educational attainment.        

Missouri ranked 36th in median household income when compared with all other states.  (The median means there are just as many households above this number as below.) The national median household income at $53,657, and the number for Missouri is $48,363.  At least we’re better off than Mississippi, where the median household income was only $39,680.  In terms of education, the percentage of adults with a bachelor’s degree or more shows how well Missouri is doing at producing (and keeping) or attracting from other places those individuals ready for the modern workplace.  Here again Missouri’s record is mediocre at best:  27.5 percent of Missouri adults have a BA or better, below the national average of 30.1 percent.  Missouri ranks 32nd on this measure of education.

                Are the two related?  The weight of evidence says yes: better educated people tend to earn higher incomes.  The 2014 Survey data show that of the top 25 states in terms of median household income, on average 32 percent of the adults had least a BA.  For the bottom 25 states (in terms of income) on average just a little more than one-quarter of the adults had at least a BA.  Moreover, if you statistically compare the median household income and BA attainment data, the correlation (how closely they are related statistically) between these two series is 0.83.  With a correlation of 1.0 representing one-to-one correspondence between the two, this suggests that median household income and education are related.

                Is this correlation reflecting the fact that more education is associated with higher income, or is it that higher income areas attract those with more education?  Either way, Missouri is coming up short.  We are not generating and keeping those with college degrees nor are we attracting them from other places.  Continued failure to do so will ensure a lackluster economic future.

The post Latest economic data paints same picture: Missouri in bottom half of states appeared first on Show-Me Institute.

These contradictory accounts of the city’s performance point to a more complex reality, a tale of different populations and neighborhoods. The bad news is that wages are stagnant and the poor and middle class continue to leave the city. From 2005 to 2013, Saint Louis City households whose income was less than $75,000 per year (more than twice the city’s median income) fell by 7.8 percent. But the good news is that wealthy households (earning more than $100,000 per year) increased by 78 percent. Households earning $200,000-plus per year more than doubled over the same period.

But as the map below demonstrates, lower income residents are most predominant in North and South Saint Louis City, while the very wealthy are most populous in the central corridor. That means increasing growth where growth is most visible, and stagnation and decline where it is out of sight, out of mind.

Saint Louis City’s planning strategies may have contributed to this bifurcated outcome. We have written before about the city’s attempt to generate density, walkable neighborhoods, and a vital downtown through lopsided investments to the central corridor. The city also uses tax incentives to subsidize high-end living and entertainment districts. Instead of fostering economic opportunity, which draws residents who will generate local culture from the bottom up, the city instead will become an entertainment machine, which will draw the creative class, who in turn will create jobs.

Even where this upended model succeeds (and there is no guarantee of that), there are questions as to whether this actually helps middle-class or poor residents, or simply makes them former middle-class or poor residents. Urban “renewal” in boutique cities like New York City and San Francisco has resulted in a displacement of the poor and middle class and rapidly rising income inequality. Although Saint Louis City is not NYC, income inequality is rising quickly. From 2005 to 2013, the city’s median income fell from 75.3 percent to 69.6 percent of the city’s mean income, indicating an increasingly top-heavy income distribution. This trend, compared to that of Saint Louis County, is shown below:

If leaders focus on making the city a safe, affordable, and easy place to live and do business, it is possible Saint Louis City could enjoy an expansive resurgence. But as things stand, the city is pushing more publicly supported bar districts, luxury apartments, and expensive amenities to draw the rich into the city center and hope the wealth trickles down to the rest. For areas like North Saint Louis, that could be a long wait.

The post Saint Louis City’s Growth: Trickle-Down Urbanism? appeared first on Show-Me Institute.

This amounts to a total of $171.28 for each Missouri resident spent on tax credit projects in just one of the state’s 34 Senate districts.

If we look in greater detail at the more than $600 million expended by the state for “Redevelopment” in the Fifth Senate District, we see that  $530 million was devoted to historic preservation.

Of the state historic preservation spending in the Fifth Senate District, $375 million went to projects that also received the Federal Historic Preservation Tax Credit. Missouri’s preservation tax credit reimburses 25 percent of project costs, and the federal tax credit reimburses 20 percent of project costs, so we can estimate total Federal Historic Preservation Tax Credit spending in Missouri’s Fifth Senate District at $300 million.

This amounts to $0.98 in federal funds spent on historic preservation in Missouri’s Fifth Senate District for every resident of the United States.

When we consider local tax increment financing (TIF), using data from the Missouri Department of Economic Development’s 2009 TIF Annual Report, we can account for an additional $600 million in taxpayer funding for development in St. Louis city. As we can see in the chart below, as of 2009, less than $100 million of this spending has been paid for.

Given current estimates of St. Louis city’s population from the American Community Survey, TIF expenditures amount to $1,768.61 for each city resident.

The total amount of public funding for real estate development in St. Louis city may be unknowable, given the complex interplay between various modes of taxpayer financing. Data exists for Community Improvement Districts, federal grants, state and local industrial development bond financing, local real property tax abatement, and other public programs, but is much harder to aggregate.

A person almost has to go to law school to appreciate how development in St. Louis works. For those of us living here without the benefit of a legal education, though, it is readily apparent that, although state and local governments spend lots of taxpayer monies on real estate development, no one is providing quantitative evidence that the benefits of these expenditures exceed the costs.

The post Real Estate Development With Public Dollars Provides No Demonstrable Net Benefit appeared first on Show-Me Institute.

With vacancy pervasive throughout our community, St. Louisans may often logically conclude that said emptiness is the direct consequence of the stark reality that persons simply do not want to live here in the same numbers that they once did. In fact, it would be difficult to argue that losing nearly two-thirds of the city’s peak population would have a negligible impact on the appearance of the city’s landscape.

But does so much property necessarily remain vacant from a lack of market demand for single-family homes, larger yards, and new business locations, or could vacancy be the product of market distortion by a governmental agency?

At the urging of a colleague, I attended my first ever hearing of the St. Louis Land Reutilization Authority (LRA) on Wednesday morning, looking for an answer.

Within moments of its commencement, the meeting shattered every expectation that I had for a body with the following statutory mandate (emphasis and link added):

The land reutilization authority is hereby created to foster the public purpose of returning land which is in a nonrevenue generating nontax producing status, to effective utilization in order to provide housing, new industry, and jobs for the citizens of any city operating under the provisions of sections 92.700 to 92.920 and new tax revenues for said city.

Instead of operating in a manner consistent with its above-enumerated legislative intent, the LRA appeared to operate according to a morass of opaque cultural practices that stand divorced from any legislative language. Indeed, the insistence by the assembled commissioners that prospective buyers of tax-foreclosed properties have the express written support of the alderman representing the ward that is home to the vacant property struck me as patently absurd. (After all, the word “alderman” does not appear in Chapter 92 of the Revised Statutes of Missouri.) Five people attempted to purchase property from the LRA this month without a letter of support from their alderman. Of those five, four offers were rejected, because the LRA purportedly treats a lack of aldermanic support as a reason to reject a prospective buyer’s offer.

After witnessing Wednesday’s proceedings and perusing the many purchase offers on the LRA agenda, I can say with great certainty that much of the vacancy subject to the LRA’s jurisdiction in St. Louis city is not a consequence of a lack of private demand for property; rather, much of it derives from government legitimation and infringements on the free market.

The post Vacancy, Legitimated appeared first on Show-Me Institute.

While commenters have repeatedly suggested that this report demonstrates the failure of Milwaukee’s Parental Choice Program, it is vitally important to note that the report was limited to an attempt to guess the levels of parental involvement in the public schools, and the decisionmaking process of parents exercising public school choice — all based solely on the demographic characteristics of parents in the school district. These guesses were based on data for Milwaukee supplied by the Census Bureau’s 2005 American Community Survey, and on demographic-based trends for parent and family involvement in education reported by the National Household Education Surveys Program. The NHESP data amounts to demographic assumptions about the effect of parents’ educational attainment, race, and ethnicity, household composition (single-parent v. two-parent), and mothers’ employment status. The author of the WPRI report simply applied these assumptions to the census data for Milwaukee families.

The report concluded that less than half of Milwaukee parents whose children are in public schools consider more than one school when deciding where their children will attend, and only two-thirds of those who do consider two or more schools factor academic performance into their choices. The author further assumed that only about one-third of Milwaukee public school parents are highly involved in their children’s schools, and that less than half are projected to participate at home in their children’s educations. According to the author, because Milwaukee’s demographics suggest that the city’s parents are unlikely to be involved with their children’s educations and unlikely to consider academic credentials when choosing among public schools, the city’s public schools should not be expected to realize significant improvements from the impact of public school choice.

This report’s methodology renders it practically worthless, for several reasons:

1. The report makes no effort to describe realities in Milwaukee. The author points to no local study that demonstrates how Milwaukee’s parents might mirror (or diverge from) the results of the national research. Put simply: the author’s report isn’t about Milwaukee, it’s about what you might expect from a nationwide random sample of people whose demographics roughly match those of parents with children in Milwaukee’s public schools. One of the reasons this assumption should be challenged is the fact that the city has had a school choice program in place for nearly twenty years, whereas the vast majority of parents nationwide still have no choice. Given this unique history with school choice, why would the author assume that Milwaukee’s parents’ decisionmaking must still conform to national norms? Because it is completely divorced from the reality of Milwaukee’s situation, this report would have yielded exactly the same results even if Milwaukee had no school choice program.
2. The report provides no basis for comparing the current levels of educational attainment in Milwaukee Public Schools with those prior to the adoption of the choice program. The author shows that the city’s public schools currently lag behind the rest of the state, but fails to point out that the achievement gap is narrower today for schools exposed to competition than it was before the introduction of competition.
3. Similarly, the report does not compare academic outcomes between schools insulated from competition, and those exposed to competition, which improved. This report has absolutely nothing to say about how competition and choice has affected Milwaukee’s public schools.
4. The report suggests that public school choice should be considered a failure if parents place more value on non-academic factors when deciding where their children should attend. Parents prefer schools based on a huge array of considerations, and many families believe themselves to be best served by schools that are conveniently located, safe, or values-based. The power of choice — and the reason that choice programs routinely have long waiting lists — is that parents can make decisions based on what they think is best for their children and family, not what is important to or convenient for bureaucrats.

The fact of the matter is that the best available research — and there is a lot of it — shows that school choice in Milwaukee has been fantastic for kids who are given the chance to attend private schools, but that it has also driven improvements in public schools as well. School choice is no longer an unknown commodity, and two recent books make a compelling argument that choice is remarkably effective at generating improvement in failing public schools. Because I live in the St. Louis Public School District, I can only hope that Missouri will accept the wisdom of school choice by the time I have school-age kids.

The post “I Do Not Think It Means What You Think It Means…” appeared first on Show-Me Institute.