I attended the city council meeting where the relevant bill was introduced. Supporters of the proposal offered two different reasons why this was a good move for the city. First, supporters said the leases for the businesses in the building would pay the costs of the purchases, so the city would come out ahead. According to the Chesterfield city manager, the current leases “would mean the building would create no annual cost for the city.” This reminds me of the famous story of when former St. Louis Mayor Vince Schoemehl told some veteran members of the St. Louis Board of Aldermen that the new convention center downtown would not cost the city anything, and longtime alderman Red Villa responded with, “Well then, why don’t we build two of them?”

The other reason why supporters like the purchase is because Chesterfield could use some of the building for its own future needs, such as a police substation, civic center, or parks department headquarters (all these examples were given at the meeting). But here is the problem: If you use the building for city offices or needs (which may be the more defensible position), then you don’t have the paying tenants who will cover the price of the purchase for the city. Yes, the building’s parking lot would come in handy for some events at the nearby park, but, as opponents noted, that is just a few events each year.

Then there is the belief by the city that they won’t have to pay property taxes on the building, leading to a higher profit margin for the city (stated by a member of the board and elsewhere). That is a very dubious argument. There is plenty of case law that says if a tax-exempt entity owns property but that property is not used for tax-exempt purposes that property taxes are still owed. (Scroll down here for citations.)

If one believes that buying and operating a commercial office building is the proper role of local government, then I wonder what limits there would possibly be on the role of government? If a municipality can do this, what can’t it do? That’s the scary part.

The post Municipalities Should Not Be Commercial Landlords (I’m Looking at You, Chesterfield) appeared first on Show-Me Institute.

Now there is one more “doom loop” article about the challenges facing St. Louis. Governing magazine wrote recently about how declining downtown activity leads to economic decline. Its observations are similar to those in the Journal. Cities like St. Louis, where vacant office spaces drive down property values, are experiencing a vicious cycle where diminished tax revenues lead to reduced public services, further pushing businesses and residents away. According to Jason Bram, an economist interviewed in the article, “It’s a very slow-moving, long-term trend that’s only gotten worse.”

This pattern of urban decline is related to the broader challenges facing cities that fail to address fundamental issues like public safety, infrastructure, and housing. St. Louis, already burdened by economic stagnation, could face further setbacks unless city leaders refocus on foundational public services.

Flashy developments like downtown stadia won’t cut it; St. Louis needs to avoid repeating those expensive mistakes. Instead, cities should prioritize core services. For St. Louis, that means investing in improving public safety, maintaining infrastructure, and focusing on policies that encourage growth.

Without addressing these fundamental issues, St. Louis risks being caught in a permanent cycle of decline. Other cities should also heed this warning and ensure that they focus on sustaining a healthy urban core before chasing grandiose development projects.

The post The Many Doom Loops of St. Louis appeared first on Show-Me Institute.

This November, Clay County residents will vote on reducing an obscure tax that places the county at a competitive disadvantage compared to its neighboring communities.

In 1985 the State of Missouri changed the way local governments tax commercial and industrial property. It eliminated the tax on business merchandise and inventory and replaced it with a surtax on the value of commercial real estate. Every county that year calculated the new surtax at a revenue-neutral replacement level for the lost business inventory taxes. Among the reasons for the change was a desire to base the tax on the value of real estate, which is more consistent than the ever-changing values of inventories. The change, made by an amendment to the state’s constitution, was explicit that the replacement levy calculated by the counties could be lowered only by voters, not elected officials, and that the surtax would not adjust downward as assessed valuations increased. This puts the commercial surtax at odds with most other property taxes in Missouri, for which the tax rate is supposed to go down as assessed valuations go up.

When the rates were established in 1985, most of the collar counties around Kansas City and St. Louis were much smaller than they are today, with fewer businesses. Consequently, these collar counties set their commercial surtaxes at a low rate. But Clay County, likely because of inventory taxes generated by its massive Claycomo Ford Plant, bucked that trend. It set its surtax rate at $1.59 per $100 of assessed valuation. That is the third-highest rate in the state, and the highest in Western Missouri. By comparison, Jackson County has a commercial surtax of $1.44, while Cass’s rate is much lower at $0.54 and Platte’s surtax is a mere $0.36.

Assessed valuations have grown enormously since the tax was introduced. For example, the commercial assessments in Clay County have gone up 287 percent between 1985 and 2021, from $302 million to $1.17 billion, yet the surtax rate has never been reduced to offset that increase. The combination of a high tax rate and the difficulty of reducing it puts Clay County at a competitive disadvantage compared to other counties in its area, especially its Northland neighbor and competitor, Platte County.

This is a problem for Clay County. These differences may not have been a big deal in 1985, when the tax alteration was a neutral one for Missouri businesses and more of them were located in our central business districts. But it is a problem now. After much discussion and debate, the Clay County Commission decided in July to propose lowering Clay County’s surtax to $1.44, equal to Jackson County’s rate. If passed by voters, this modest reduction in the commercial surtax rate would both spur economic activity in Clay County and reduce the perceived need for tax incentives. As Clay County continues to grow and assessed valuations continue to increase, revenue reductions for local governments that receive the tax money will be miniscule or nonexistent. Even with the tax cut, revenues from the tax will almost certainly grow past current levels in the near future. That’s not voodoo economics; it simply reflects expected growth in population, business, and assessed valuation.

Clay County leaders deserve credit for placing this surtax reduction proposal on the ballot this November so voters can have a say in making their community more economically competitive. If approved, this reasonable and beneficial tax cut will help grow Clay County’s economy, and everyone benefits from that.

The post Clay County Should Reduce Its Commercial Property Tax Surcharge appeared first on Show-Me Institute.

In November, voters in Clay County (and also Laclede County) will have the opportunity be the first counties in Missouri to reduce their commercial property surtax rate.

See a map of commercial surtax rates across Missouri here.

The commercial surtax is a property tax levied at the county level on commercial property only. Unlike other property taxes, it does not adjust downward as assessment value increases, and it cannot be lowered by elected officials. Per the Missouri Constitution, it cannot be raised, and only voters can lower it. To date, voters in Missouri have never lowered a surcharge tax rate, but in November, voters in Clay County will have the opportunity to be the first to do so. The modest reduction Clay County is proposing to equalize itself with Jackson County, in my opinion, is very good public policy, but more on that later.

The tax rate varies by county based on the amount of money the tax it replaced—a commercial inventory-based tax—raised in each county in 1985. If your county had many businesses that generated products subject to the inventory tax, such as Clay County with the Claycomo Ford Plant, you probably have a high replacement tax rate. If you are a county that had a lot of businesses that did not generate much taxable inventory, such as counties in the Lake of the Ozarks region with its tourism economy, you likely have a low commercial surtax rate. But the real issue is that because of the difficulty in adjusting the rate, counties still have the rate based on the economic conditions of 1985.

The post WATCH: Clay County Voters to Decide on Tax Reduction appeared first on Show-Me Institute.

The timing of this change is important. In 1985, Perry County set its rate at $1.06 per $100 of assessed commercial valuation. This is a much higher rate than other counties in the region. Perry County has long had a strong manufacturing base, and it is likely that those industrial companies generated substantial inventory taxes that necessitated—at the time—a high surcharge replacement tax rate. By comparison, Bollinger County’s rate is much lower, at $0.13, St. Francois’ rate is a mere $0.20, St. Genevieve is just above that at $0.21, Madison’s rate is $0.25, and Cape Girardeau tops out the rest of the area at $0.37. Perry County is almost triple the surcharge tax rate for its region.

Assessed valuations have grown enormously since the tax was introduced. For example, in 1986 (the first year after the current assessment system was implemented) the total assessed valuation of Perry County was $84 million and $11 million of that was commercial property. As of the most recent reassessment in 2021, the total assessed valuation of Perry County is $404 million, with $74 million being commercial (an increase in commercial valuation of more than 500 percent). The surcharge rate has never been reduced to offset that significant rise in commercial assessed valuation, as happens with other property taxes. The combination of a high tax rate and the difficulty involved with reducing it puts Perry County at a competitive disadvantage with the rest of the region in 2022.

This is a problem, but a problem without blame. These differences were probably not a big deal in 1985, when the tax alteration described earlier had a neutral effect for Missouri businesses. But it is a major problem now. Reducing rates as commercial assessments rise is simply an issue of fairness. It would not lead to a tax revenue decrease but would simply mean treating the commercial surcharge like other property taxes in Missouri.

Another issue with reducing the tax might be more complicated. Lowering the commercial surcharge rate could both spur economic activity and reduce the perceived need for tax incentives. Frankly, from a government revenue perspective, many of the dollars lost to the surcharge reduction could be replaced by a reduction in the tax incentives that have been given to select businesses. Perry County and Perryville have each engaged in harmful tax subsidies like tax-increment financing. Reducing the surcharge rate for all businesses while eliminating the use of tax subsidies for a few, select businesses would be a public policy win–win for Perry County.

The elected officials in Perry County should place surcharge tax reduction proposals on the ballot so that voters can have a say in making their region more economically competitive. The state legislature should then authorize a vote on changing the Missouri Constitution to allow the commercial surcharge to be reduced as assessments increase, like other property taxes. These two changes would help grow the economies of both Perry County and Missouri, and everyone benefits from that.

The post Perry County Should Reduce Its Commercial Property Tax Surcharge appeared first on Show-Me Institute.

The tax rate varies by county based on the amount of money the tax it replaced—a commercial inventory-based tax—raised in each county in 1985. If your county had many businesses that generated products subject to the inventory tax, such as Clay County with the Claycomo Ford Plant, you probably have a high replacement tax rate. If you are a county that had a lot of businesses that did not generate much taxable inventory, such as counties in the Lake of the Ozarks region with its tourism economy, you likely have a low commercial surtax rate. But the real issue is that because of the difficulty in adjusting the rate, counties still have the rate based on the economic conditions of 1985.

That is why we built this map. The map below shows the commercial surtax rate for every county in Missouri. The redder the county, the higher the rate. The rate varies from $1.70 per $100 of assessed commercial valuation in St. Louis County to $0.01 in Reynolds County. The unweighted average rate is $0.53; the median rate is $0.41. Please check out the map (there is also a download link at the bottom of the post) and see where your county fits.

The post Map of Commercial Property Tax Surcharges in Missouri appeared first on Show-Me Institute.

According to information I have received, personal property tax revenues are expected to increase by more than 20 percent in the following counties: St Louis, Jackson, Warren, Lincoln, Cape Girardeau, St. Charles, and St. Louis City. St. Charles County is taking the lead here; the county council passed a resolution declaring its intention to reduce the personal property tax rate this fall (after final numbers are in) to a revenue-neutral level to offset the large increase in assessed valuations. Good for them. Many local governments in Missouri need to follow this example, especially school districts, which receive the bulk of your property tax payments. Increased used car valuations should not be a revenue windfall for local governments.

I commend the St. Charles County Council and the county executive for this move. Hopefully others will follow the example of St. Charles County. I would love to see Hancock Amendment rollback provisions extended to personal property in the future. (Now they only apply to land and buildings.)

On the other side of the state, Clay County is moving forward with the first commercial surcharge property tax reduction in Missouri history. The county commission approved placing it before the voters on the November ballot. Clay County has one of the highest commercial surcharges in the state, and this proposal for a modest reduction to match Jackson County’s level is a smart, reasonable one. (For the reasons why the rate can only be lowered by voters, why Clay County’s rate is so high, and more history of this special tax, please read this.)

I also commend the Clay County Commission and the rest of the Clay County leadership team for putting this proposal before the voters of their community. There are a few other counties that I think need to strongly consider reducing their commercial surcharge taxes—I’m looking at you, Perry County.

The post Good News on Property Taxes in St. Charles and Clay Counties appeared first on Show-Me Institute.

The new order affects new constructions, major remodels, parking lot reconstruction and overlay projects, and changes in use or occupancy classification. The changes apply to properties zoned for commercial, industrial, institutional, recreational, cultural, or municipal and park land uses. These properties must equip 2 percent of their parking spaces with electric vehicle (EV) chargers and have the electric wiring ready for another 10 percent of spaces on standby.

Not every property will be affected by this decision. But why should any?

The bill’s sponsor stated that its purpose is to incentivize more Missourians to drive EVs. However, EV ownership in Missouri, while small, is already increasing. Why not let property owners add EV charging spaces on their own and compete for EV drivers rather than force every renovating business to do so?

In addition to the bill’s warped incentives, it reeks of what economists call rent seeking, which is when companies use the political process to pad their bottom lines rather than providing a better service to customers. In this case, a prime beneficiary of the new requirements is local monopoly utility Ameren (which according to one councilmember lobbied heavily in the bill’s favor), which gets to make more money from captive customers simply by governmental order.

Another major problem is that installing EV charging stations is not cheap (they cost roughly $5,000 per unit). But the bill makes no mention of how property owners will pay for this. This is a government mandate that will squeeze business and property owners while only benefiting the existing electricity monopoly.

EV ownership is a personal preference. If more Missourians purchase EVs, businesses can make their own decisions about installing  EV charging stations and competing for customers’ business. Shouldn’t competitive markets decide these kinds of things instead of government bureaucrats?

The post St Louis County Council Mandates Businesses Install EV Charging Stations appeared first on Show-Me Institute.

This is good news. If the company really is building the hotel on their own, without incentives or tax credits, it represents a real investment in Kansas City. Next time someone argues that without such taxpayer subsidies, “we may as well put up a sign that says Kansas City is once again closed for business,” be aware that they might just be shilling for wealthy developers.

The post Kansas City Hotel Privately Built? appeared first on Show-Me Institute.

The proposed office building, called Strata, has spurred controversy for months. The combined tower and parking garage would cost $132 million; of that, roughly $63 million would come from public subsidies, including a direct $27 million public investment in the offices.

The editorial board is correct on their call, and while their analysis of market demand and public risk is correct, there are even more reasons to be skeptical of the developers’ claims. Part of the argument for Strata is that Kansas City needs more high-end office space that Strata would provide, but it’s hard to find evidence to support that claim.

In testimony before the Kansas City Finance and Governance Committee on June 26, 2019, a Strata developer asserted that Starbucks recently considered Kansas City for an office location [starts at 9:05]:

Jobs are being lost in Kansas City, opportunities are passing us by because we don’t physically have the space created. So I think that, uh, Starbucks is the example that gets used a lot toward the end of last year where there just was not Class A space on the shelf.

This same argument appeared in a number of outlets. FOX4 in Kansas City reported on June 26 that:

In recent months, a big employer, Starbucks, cited a lack of quality office space downtown as one factor in its decision to take about 1,500 jobs to Atlanta instead of Kansas City.

CitySceneKC, a blog funded by the pro-development subsidies Downtown Council, claimed in December 2018:

But Starbucks needed 100,000 square feet of Class A space relatively quickly, and it would take 18- to 24 months to build it in downtown KC. They went to Atlanta instead where there’s already “four- to five cranes in the air.”

Starbucks did choose Atlanta, Georgia for its new office location. But its operation looked nothing like what advocates for development subsidies claimed the company was seeking in Kansas City. They sought only 85,000 square feet and planned on only 500 new jobs, not the 100,000 square feet and 1,500 jobs alleged by Kansas City developers and their acolytes.

Note: the Atlanta job numbers were reported in August 2018, but developer sources in Kansas City kept using the inflated numbers in their blogs and comments to the media months later.

Furthermore, Kansas City and Atlanta are not in the same league. Atlanta’s metropolitan population is the country’s ninth-largest with just shy of 6 million people—2.5 times the size of Kansas City—and has grown 12.5 percent since 2010. (Kansas City’s metropolitan area is ranked the 31^st largest, and has only grown 7 percent since 2010.) Atlanta is growing rapidly and is the headquarters city for 18 of the Fortune 500. (Kansas City has only one.) Atlanta is also home to the busiest airport in the United States, providing executives with direct routes to most places they might want to travel. (Incidentally, the Atlanta Journal Constitution article that detailed Starbucks investment also offered a caveat about the incentives offered to Starbucks.)

It’s also noteworthy that the “most compelling reason” for their decision, according to a July 2018 email from a senior executive at the Kansas City Area Development Council, is Starbucks already had an operation center in Atlanta and the company had a “comfort level in their ability to scale that workforce based on experience.” Also, Starbucks’ Chief Financial Officer had “strong ties” to The Big Peach. Could any of this have been overcome by more readily available office space?

Developers will always seek public handouts to build what they cannot fund through private investment. While it is understandable that Kansas City leaders look toward Denver and Atlanta and New York City, we have a long way to go before we can compete with those places. We won’t get there through subsidies—but through the long arduous work of supporting infrastructure, public safety, and education while being business friendly and an efficient steward of public funds.

The post The Strata Deal Is Built on Misinformation appeared first on Show-Me Institute.

To which group the new owner of the Chesterfield Mall—Hull Property Group—belongs, we’ve yet to see. Hull acquired the mall earlier this month and, even though it currently has no plans to redevelop it, Hull is already asking taxpayers for a handout.

In a statement, Hull said the mall is “too important to fail,” and that, without community support (read: your money), “the marketplace may dictate an unfortunate and unforgiving future.”

Those don’t sound like a fool’s words to me.

Hull has an impressive portfolio of dozens of malls and redeveloped retail centers across the southeast. It didn’t purchase the mall without a plan, or from some sense of benevolence. Hull knows what it’s doing.

Trickster? Maybe.

“All communities need their enclosed mall and the surrounding retail corridor to succeed as it is a symbol of a thriving community,” Hull’s website reads. Really? Is the entire Chesterfield Valley not such a symbol, with its dozens and dozens of retailers and other malls? And in Chesterfield, where the median household income in Chesterfield is over $97,000—tens of thousands more than most of the region and country—does anyone really believe that the mall—sitting lonesome atop a hill—is the lifeblood of Chesterfield?

Genius? Perhaps.

Hull purchased the property for a cool $13 million, less than 5% of what it was valued at in 2006. For acres and acres of land, replete with infrastructure and a massive improvement, directly adjacent to the interstate, that isn’t a bad deal. Whether because of changes in broader economic trends or a creative repurposing, the mall could become incredibly valuable again. Perhaps the mall is repurposed for retail or a mix of uses, razed and platted for a subdivision, or just sat on and later sold. Whatever happens, the property has a huge upside potential.

Whether fool, trickster, or genius, Hull shouldn’t be given a handout. If its plans are foolish, taxpayers shouldn’t have to bear the risk. If it’s a trickster, the public shouldn’t pad its bottom line. And if it’s a genius, no public money should have to be involved at all. Plus, given how much taxpayer money has already been doled out to developers and landowners in the Valley (especially to the outlet malls, one of which is already slated for redevelopment a mere five years after opening!), now is as good a time as any for officials to turn the spigots off.

Fortunately, Chesterfield officials have intimated that incentives won’t be forthcoming. Given that it is was just last year that other city officials suggested a special taxing district be created to help subsidize the mall, this is very welcome news.

Let’s hope that policymakers in Chesterfield stick to their guns and continue to stand up for taxpayers.

The post Chesterfield Should Protect Taxpayers in Mall’s Redevelopment appeared first on Show-Me Institute.

For those unfamiliar with the proposed project, Centene is seeking public subsidies to assist in the expansion of its headquarters in downtown Clayton.  The total expansion’s costs are estimated at $771.8, million and Clayco (the project’s developer) expects roughly a fifth of that to be covered through public subsidies. 

Centene’s proposal says it will bring 2,000 jobs to the area and that part of the new expansion will be leased out to third parties, as is occurring at the current headquarters.  It’s somewhat unsettling that the healthcare giant is leasing out roughly half of its current headquarters’ office space while at the same time claiming that expansions are necessary to house 2,000 new employees, and it seems that the company has no intention of changing this pattern. 

With Centene planning to lease office space, we should ask if subsidization is proper for this kind of business venture.  Why should tax dollars pay for leasing space that will simply bring more revenue back to Centene?  It’s a bad bargain, both for citizens and for competing lessors who would lack the competitive advantage of subsidization. 

If Centene wishes to move further into the leasing game, they certainly have the right to do so—on their own dime.  But it’s hard to see why taxpayers should foot the bill for a profitable investment in such a prime place for development.

The post Feeding Clayton’s Healthcare Giant appeared first on Show-Me Institute.

* Edmundson's Commercial Rate of 0.5 was just raised to 1.0.

** The total commercial property in these cities is so small that it raises very little money, whatever the rate may be.

Assessed values and rates are 2014 figures taken from the Missouri State Auditor's Office 2014 Property Tax Rates

Former Show-Me Institute Policy Researcher Michael Rathbone has taken Edmundson to task over this issue before, but the other municipalities listed have similar (if less extreme) taxation policies, shifting much of the cost of government services away from residents and onto commercial property owners. Residents in these areas might enjoy the low tax rates on their property (if they pay property tax at all), but it is short-sighted—not to mention unfair—to expect the owners of commercial property to pick up the slack.

The post Higher Property Taxes: The Cost of Doing Business? appeared first on Show-Me Institute.

You see, ever since Senate Bill 5 became law, the city has had to find new ways to fund city government other than fining motorists. Thus the city zeroed in on raising property taxes.

Raising property taxes is sometimes a necessary evil, but when a city decides to raise property taxes on only one kind of property, it just seems, if not exactly evil, definitely unfair, and what’s especially galling is that (1) commercial properties in Edmundson—and the rest of Missouri for that matter—are already assessed at a higher rate (32 percent) than residential property (19 percent); and (2) commercial properties already pay a much higher property tax rate than residential properties (who pay zero property taxes) in Edmundson.

This commercial property tax hike goes up for a vote on November 3, and I won’t be surprised if city residents vote for a tax that someone else has to pay. But that doesn’t make this proposal good policy. Businesses in Edmundson could be facing tens of thousands of dollars in additional property taxes. Some businesses might even leave if this property tax increase is enacted. Property tax rates should be uniform (or very close to it) and low for everybody. If cities don’t have the self-discipline to have uniform rates, then the state should step in and make it so.

It’s readily apparent that the passage of Senate Bill 5 has caused some municipalities to scramble for new ways to raise revenue. A general property tax increase may or may not be the right way to go. However, singling out a specific type of property for a tax increase is bad policy.

The post It Must Be Nice to Own a House in Edmundson appeared first on Show-Me Institute.

Last week, the St. Louis Post-Dispatch reported that Saint Louis bed & breakfast owners are upset over the city assessor’s decision to assess their property (or at least the part used as B&Bs) as commercial properties. I can understand why these owners would be upset. According to the way properties are assessed for property tax purposes, if B&Bs were even partially assessed as commercial properties, the owners’ property tax bills would go up substantially.

I sympathize with any business owner that is facing a higher tax bill. However, I do not oppose this change. Saint Louis is doing the right thing here. If a property is engaged in commercial activity, the city should assess it as a commercial property. The situation is trickier with people renting rooms through airbnb. These lodgings are not necessarily full-time establishments, and so some mechanism needs to be in place to make sure they don’t get a tax advantage compared to traditional B&Bs.

Having a large property tax base is important. It’s especially important in Saint Louis because it can serve as a way to reduce (or even eliminate) the earnings tax. The Show-Me Institute released a paper arguing that the earnings tax could be replaced by a two-tier property tax (this differs from a traditional property tax in that the two-tier approach taxes the land more heavily than any improvements on the land). Even if the city sticks with a traditional property tax system, a wider base can generate more revenue to offset any reductions in the earnings tax.

Paying more in taxes is never fun, but low taxes for some shouldn’t come at the cost of a hollowed-out property tax base.

The post Shocking Support for Taxing Bed and Breakfasts appeared first on Show-Me Institute.

During his talk, Van Loh mentioned that the airport hired a company called Trammel Crow Co. to develop a portion of the land not used for aviation and that the airport now has a tenant, Blount International. According to Van Loh, Blount moved to Kansas City from Colorado. “This is what airports do,” he said, to increase their revenue.

It may be what airports do, but it is having very negative effects on the Kansas City area. First, Blount International did not move into the airport space from Colorado. It moved there from the East Bottoms, where it had, for decades, rented considerable space  from Karbank Real Estate Company LLP, a successful Kansas City-based property developer.

This is a bad deal for the region in at least two ways. As the Aviation Department is part of city government, it can develop property at a small fraction of the cost that private companies pay. It does not have to conduct the myriad of impact assessments such as traffic impact fees and platting fees, as do private companies, nor does it have to pay things such as city utility taxes. The government can therefore undercut private businesses and charge much less for rent. The city’s tenants pay no taxes, which depresses the market rates, which in turn decreases values across the city, having a huge negative effect on property values city-wide and certainly to the airport sub-market.

The Aviation Department has made it clear that it will continue to operate as a property developer and landlord to offset its own deficits. In effect, the airport is cannibalizing the city’s tax base and creating hardships for private developers.

The post ‘This Is What Airports Do,’ Part 1 appeared first on Show-Me Institute.

Many cities conduct economic development with offers of tax incentives to commercial developers in hopes of bringing them to their neighborhoods. Offering these subsidies is often bad practice for many reasons.  Discounted taxes for the select few means marginally higher taxes for everyone else.

Last week, the Kansas City Star reported about property developer Nathaniel Hagedorn’s success in placing a tenant in a 200,000-square-foot building in Riverside, Mo. Riverside did not provide subsidies or incentives to attract this business. The city’s government simply did its job in an efficient and business-friendly manner.

Hagedorn reported that Riverside was the only city in the metro area that took just two weeks to provide all permit approvals for the building project — a valuable feature for businesses. Very few businesses want to sit around and watch the leaves turn while they wait to open a new space. Time is money.

A few months ago, the Society for Industrial Office Realtors (SIOR) and a group of real estate students at the Bloch School of Business at the University of Missouri-Kansas City completed a study of the typical time and cost of having a commercial real estate building project approved. They analyzed 17 municipalities in the Kansas City metro area and found that the average length of time to approve a project is about nine and one-half weeks. This study is very interesting and I hope someone does similar work for Saint Louis.

Shortening the time it takes to approve developments is a simple fix cities can make to improve their business climate. Instead of pulling out the big guns with popular programs like TIF (Tax Increment Financing), TDD (Transportation Development District), and Community Improvement District (CID), municipalities could make small changes that would benefit all new businesses, not just a select few.

The post Give An Inch, Not A Mile appeared first on Show-Me Institute.

Legislators, after all, are in a rush to pass a bill that would award $300 million to subsidize the construction of new warehouses. That collection of subsidies is known as the “Aerotropolis” bill. Proponents of the $300 million in subsidies say that the creation of new warehouses is crucial to getting more international freight traffic to Saint Louis, primarily from China.

There is a lot of space available near the airport.

I spoke with David Randolph, vice president of CB Richard Ellis, the brokerage company looking to lease the 405,000-square-foot building shown below. Randolph said that he hasn’t seen a shortage of warehouse space.

“If someone’s looking for space, we have space available,” he said.

Randolph disagreed with making tax credits available for the developers of new buildings.

“I personally think it would be a disadvantage to current owners of buildings that exist,” Randolph said, “that only new buildings get tax credits but old buildings do not.”

Matt Harrington, marketing manager at CB Richard Ellis, estimates that there is about 200 million square feet in developed warehouse, manufacturing, and flex space in the Saint Louis metro area, excluding Illinois. With a vacancy rate of 9 percent, about 18 million square feet is available, he said.

Here is some more space available for lease:

And some more:

This blog post could go on. There were many warehouses available for sale or rent. So, why exactly are legislators looking to award $300 million to subsidize the creation of new warehouses? There certainly seems to be no shortage of space for lease.

Christine and I would be happy to provide a tour to any legislators who are unaware that warehouse space is available. Or they could call David Randolph. His company’s phone number is listed on the “Available” sign above.

The post “If Someone’s Looking for Space, We Have Space Available” appeared first on Show-Me Institute.

A mere mile northeast of the failed Union Station 10 theater, state and federal taxpayers are shelling out tens of millions to build a new theater and parking garage on Washington Avenue. The new theater is certainly more visible than the Union Station 10 theater, but is it more viable? With its commercial vacancy rate of more than 22 percent, and some of the lowest lease rates in the region, downtown Saint Louis is a challenging market for any type of real estate development. Does building new while foreclosing on the old make any sense? This taxpayer wants to know.

The post Am I Missing Something? appeared first on Show-Me Institute.

• Make it easier for counties to lower the surcharge if they want.
• Require the surcharge to roll back like all other real property taxes.
• Sunset the entire tax in five years.

Counties would be able to adjust to the sunsetting of the tax without unduly putting the burden on residents by adopting the St. Louis County system of setting different rates for different property classifications. First, they would have to adopt that system, and legislation might be required to reopen that option. These surcharge changes would be terrific for the economies of Missouri’s larger counties, and I am excited that they will again be considered in special session.

The post A Different Strategy for Manufacturing in Missouri appeared first on Show-Me Institute.