I am not a lawyer, and I have no intention of commenting on the legal merits or demerits of the suit. Rather, I’d like to use this as an opportunity to think about the policy fundamentals underlying the public funding of arenas.

But first, some facts about the current project*:

• The city owns the property and leases it out for $1 a year.
• Scottrade currently brings in about $6 million in sales and other tax revenue a year to the city.
• The bonds would cost the city a total of $106 million over 30 years.
• Based on projections, renovations will bring in an additional $145 million in tax revenue over 30 years, meaning the city would make a $40 million “profit” over that period.
• If the facility isn’t renovated, it is projected to generate less and less, finally bottoming out at $4 million a year. (These are just projections from the Scottrade Center’s consultants—click on the link below to see their full 32-year set of estimates).

*For arguments sake, I am assuming the projections are accurate. But, as an aside, these figures were produced by a consulting firm which regularly is off by margins of 50%.  

So what are we to make of the current situation? For one, “investing” in the facility is not a get-rich-quick (or even a get-rich-slow) proposition for the city. Taxpayers could see a much higher return on a similar investment in a diversified portfolio. Alternatively, no taxpayer investment could be made at all, and the city would still see $4 million come in every year.

Nor will investing in Scottrade significantly contribute to urban core revitalization. For one, if the city doesn’t fund these improvements, the facility will not disappear from the face of the earth. In addition, stadiums and mega-events are overwhelmingly considered by economists as poor ways to grow an economy. It is radically unscientific to claim stadiums and arenas are boons for the economy.

Now one might say that the city owns the building, and so, like any decent landlord, should pay to keep things up. This line of thought is understandable (though some claim the city doesn’t own the facility, but just the land it sits on), but it appears misguided. I understand that a landlord has an obligation to keep property in good shape if a tenant pays rent. The Blues pay neither rent nor property taxes. (Sure, events at Scottrade generate sales tax revenue, but that’s an ancillary benefit of the arena, not an excuse to avoid paying for use of the building or for upgrading it.) Plus, many of the slated improvements are things like new scoreboards and sound systems, not just building fundamentals like piping, furnaces, and other mechanical improvements. Demanding the city pay for upgrades is akin to demanding a landlord install big screen TVs for the squatters living on his or her property.

If the Blues have had the facility rent and tax free, and take in all the revenue from NHL and other events it hosts, isn’t it reasonable for them to pay for upgrades themselves? Perhaps the city can help put in new pipes, but is there any good reason for city, and potentially state, taxpayers to fix up a facility that primarily benefits wealthy team owners?

Why is our city so desperate to hand out tax dollars it simply doesn’t have? 

The post Stadium Subsidies, All Over Again . . . appeared first on Show-Me Institute.

Senate Bill 469 (SB 469) would have allowed for up to $6 million a year in state funding for renovations to the hockey arena. All in all, proponents of the bill were asking state taxpayers for $70 million. Fortunately for taxpayers across Missouri, the bill didn’t make it to the governor’s desk.

SB 469 was poor policy. It would have forced all Missourians, from Maryville to Branson to Kirksville, to subsidize an arena benefiting wealthy team owners. While proponents touted a variety of economic benefits, from construction jobs to gushing tax revenues, they failed to acknowledge decades of economic consensus: stadiums and sports teams don’t grow the economy. As Dennis Coates and Brad Humphreys put it in their 2008 Econ Journal Watch paper:

No matter what cities or geographical areas are examined, no matter what estimators are used, no matter what model specifications are used, and no matter what variables are used, articles published in peer reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.

Does SB 469’s demise mean the Scottrade Center will fall into disrepair? Almost certainly not, as local policymakers in Saint Louis have already committed 64 million in taxpayer dollars to the facility earlier this year—without a public vote. And since the facility is abated from all property taxes, it should have cash on hand to make some of the upgrades it wants.

But just because SB 469 wasn’t codified into law this legislative session doesn’t mean a similar bill cannot or will not be introduced next year. Before state policymakers conjure up another package of subsidies, they would do well to take a sober look at the research on sports stadiums.

(For more on the economics of stadium subsidies, see here, here, here, and here.)

The post Another Stadium Subsidy Bites the Dust appeared first on Show-Me Institute.

Let’s start with some uncontroversial data.

• The hospitality industry constitutes a small fraction of the Saint Louis economy. Less than 4% of the city’s payroll comes from the hotel and restaurant industry.
• Nearly all convention business in Saint Louis could be accommodated by existing hotel and event space. In 2015, only 9 conventions had more than 10,000 attendees. In 2016 that figure rose, modestly, to 11. For 2017, Saint Louis is currently slated to host only 10 events with 10,000 or more guests.
• The Saint Louis Visitors Commission, which runs the convention center, loses some $16 million a year.

Now let’s review convention center history.

• The Saint Louis convention center opened in 1977, underwent a $150 million expansion in the late 1980s, and was flanked by the $280 million Edward Jones Dome in 1995. The expansion and dome were promised to boost hotel “room nights”—a measure used to assess convention center success—to more than 800,000 annually. But in 1999, convention business generated barely over 200,000 room nights. In 2014, annual room nights were just over 425,000.
• Nationally, nearly every convention center expansion or renovation has dramatically underperformed. Washington D.C.’s convention center saw roughly 36% of the room nights that were projected when renovation was undertaken. Austin’s saw 47%; and Portland’s saw 44%.
• While the America’s Center and dome were supposed to be profitable ventures for the city over the long term, the public still owes some $100 million on them, and won’t pay off that debt for at least 5 or so more years.  

In short, empirical evidence suggests that the financial prospects for a major overhaul of the convention center are bleak. Perhaps that’s why no private developers are interested in funding the project. But if the private market indicates that the investment isn’t worthwhile, should taxpayers be saddled with the risk?

Convention-center boosters will object, insisting that a renovation will help the local economy, especially because a high percentage of convention spending comes from out-of-towners. This objection misses the mark in several ways. For one, demand for convention center space has remained flat over the last few decades. Is investing hundreds of millions of public dollars in a buyer’s market the best way to get windfall returns? Secondly, the tax revenue that would pay for a renovation could be used in myriad other ways that would have a much greater impact on the economy, regardless of whether that revenue came from outsiders. If we’re really interested in economic growth, why not spend the money on meaningful infrastructure or use it to provide tax relief to city residents and businesses?

The driving force behind massively expensive convention center renovations—much like sports stadiums, light rail expansions, and other “transformative projects”—appears to be a desire to rebuild the downtown core. But like most transformative projects dangled in front of taxpayers, the prospects for success are low and the costs dispersed; a small and well-connected few are given a sweetheart deal while taxpayers are left on the hook.

For what it’s worth, the economist Heywood Sanders, in his 2014 book, Convention Center Follies, devotes an entire 78-page chapter to the failures of Saint Louis’s convention center. Perhaps that, if anything, is an indication that we should be skeptical of proposals to reinvent the convention center with taxpayer dollars.

The post Convention Center Renovations: Picking Winners and Losers with Taxpayers’ Money appeared first on Show-Me Institute.

The post Brenda Talent on Donnybrook, July 7 appeared first on Show-Me Institute.

The post Show-Me Now! The Blues’ Multi-Million Dollar Handout appeared first on Show-Me Institute.

The Scottrade Center, originally Kiel Auditorium, cost $135 million to build and first opened its doors in 1994. While private interests covered most of the price tag, the city of Saint Louis provided $15 million in construction subsidies (the city also built the stadium’s western parking lot at a cost of nearly $10 million). Aside from direct handouts, Saint Louis worked to reduce the stadium’s tax liabilities. Like Busch Stadium and the Dome formerly known as Edward Jones, the Scottrade Center sits on public land, shielding the Blues’ ownership from standard tax rates. In addition, the LCRA (a city body), and not the stadium’s owners, issued all the bonds for the stadium’s construction, making those bonds tax-exempt.

Now, a little over two decades after the Scottrade Center opened, the Blues no longer find their accommodations adequate. They want a larger scoreboard, better seating, and an expanded team store. Perhaps with a jealous eye toward Ballpark Village, the Blues hope to build a year-round beer garden at the stadium. They estimate that these upgrades will cost $160 million, which, adjusting for inflation, is slightly more than the original cost estimate of the Scottrade Center when financing got underway in 1990 (yet more evidence that cities should only expect about 20 years out of their stadiums before they have to pay for them all over again). But who will pay this time around?

All we know right now is that, like in the ‘90s, the Blues expect the city to issue the bonds for the stadium’s construction so they can avoid taxation. But for the city’s bottom line, who will pay those bonds back is the most important question. Last time around, the city covered about 10% of those costs and stadium owners paid 90%. There’s no guarantee that the Blues won’t ask for more support this time, especially after the city last year showed itself willing to spend well over $100 million to keep the Rams in town. Of course the Blues could pay the whole cost themselves, although the fact they are negotiating with the city to come up with a financing deal likely means that’s out of the question.

Still, it will be better for Saint Louis residents if the Blues pay for the costly upgrades themselves. The proposed improvements, from a larger team store to a “Blues-park Village,” are clear examples of nice-to-have amenities that would greatly add to the Blue’s assets. The impact of the improvements on city’s bottom line or its economy is difficult to determine, but given the evidence, it’s likely negligible.  It’s time the city focused on getting the basics of civic governance right instead of involving itself once more in how Saint Louisans spend their spare time.

The post Who’s Paying for $160 Million in Blues Upgrades? appeared first on Show-Me Institute.

“The entire region should be outraged by this because what happens in the central business district, the economic engine and heart of the St. Louis region affects us all. It affects our national reputation. It affects what businesses consider St. Louis when exploring options for their headquarters. Most importantly, it affects each of our families. Downtown St. Louis is the region’s Downtown. We all own it. We all deserve to feel safe visiting the many assets that can only be found in the heart of our city.”

Of course, violent crime is nothing new to Saint Louis, and downtown is far from the most dangerous neighborhood in the city. However, safety problems in the CBD tend to generate much more response than similar crimes in other areas do. Saint Louis leaders are eager to defend the “heart” of Saint Louis, and to call on the whole region to support the downtown.

But what exactly is Saint Louis’s CBD the heart of? Certainly not the region’s population. As we’ve written before, Saint Louis’s downtown actually has a lower population density than areas farther away from the core, like the Central West End. Furthermore, the region’s population is extremely dispersed, with large sections of the population living more than 20 miles from city hall. The Saint Louis metropolitan area is region with more than 2.8 million residents, only a few thousand of whom live downtown:

What of the CBD’s status as the business heart, or the economic engine, of Saint Louis? Today, less than 1% of the region’s annual payroll comes from businesses in the CBD. If we look at the zip codes that contain Saint Louis’s CBD, we find that areas in Saint Louis County, specifically Chesterfield and Creve Coeur, contain more businesses, contain more employees, and generate higher payroll than downtown. Looking at the maps below, we don’t see an economically dominant CBD surrounded by bedroom communities; instead we find dispersed areas of high employment. These areas include a broad central corridor that contains the CBD (but also Clayton and the Central West End) and a highly productive corridor in West County along I-270 that has more businesses and higher payrolls. The Saint Louis economy is so geographically dispersed that it might be difficult for a person not familiar with the region to locate downtown from economic data alone:

What of culture? The Saint Louis CBD has the Arch grounds. It also has the Scottrade Center, museums, libraries, theatres, and a sculpture garden. And of course, it has Busch Stadium, home to the Saint Louis Cardinals. For decades, the Saint Louis region as whole has poured tax money into amenities downtown, from the Dome formerly known as Edward Jones to the Arch grounds. Even as population and business activity left downtown, very few publicly funded civic projects were considered for any area but downtown (Forest Park being a notable exception). If public monuments, sports stadiums, and astro-turfed urbanism are all there is to culture, certainly downtown is unrivaled.

Whether or not Saint Louis’s downtown is truly its cultural heart, the region is undeniably diverse and dispersed. People live all over and work all over the map. To look at the region realistically (and plan for it effectively), we have to understand that St. Louis’s CBD is just one neighborhood among many, and we need to stop pretending that it has the economic and demographic dominance it did at the turn of the 20th century. Whether the problem is crime or economic growth, we’re unlikely to find a way forward when we can’t admit where we are.

The post Saint Louis’s Central Business District: The Heart of What? appeared first on Show-Me Institute.

The idea of building new soccer venues in Saint Louis County is not a new one. Multiple projects were in the works during Charlie Dooley’s term as County Executive. But there’s always been the question, which has yet to be satisfactorily answered, of whether Saint Louis County ought to be getting into the soccer business. The new agreement with the city will allow some of the hotel/motel tax revenue the county uses to support the convention center and stadiums downtown to fund soccer fields in the County. Officials claim this will allow the County to get the fields without using any “new” taxes.

For anyone who reads this blog, alarm bells should be going off with any mention of the hotel/motel tax. The fact is, the hotel/motel tax revenue stream drives the most expensive shell game in the Saint Louis region. These taxes supposedly support the America Center, the Edward Jones Dome, the Convention Center Hotel, and Busch Stadium, among others. But the yearly revenue stream from both the city and county’s hotel taxes (less than $20 million) is nowhere near enough to cover annual cost of all these projects (more than $30 million). And that’s before considering the estimated costs of rehabbing the Dome, renovating the convention center, and improving the Scottrade Center. Restaurant tax and general revenue in the city, along with sizable state subsidies, cover the funding gap.

So why would the Saint Louis Visitors and Convention Commission (CVC), which coordinates these expenditures, allow money it does not have to go toward new fields in the County? According to the Post-Dispatch, this may be part of a larger deal. About half of the County’s hotel taxes currently go to pay debt on the Dome. Both that debt and the tax that supports it are set to retire in the next few years. The idea is that promising money for something the County government wants may induce County officials to keep the hotel tax in place—and its revenue flowing to the CVC. In essence, spending money on soccer fields is about being able to spend more money on convention centers.

While the idea of the County going all in on soccer and convention center gambits is unappetizing enough, it gets worse. According to the manager of a similar set of soccer fields in Kansas City, the County’s $14 million cost estimate is much too low, and the plan is “a drag-a-long, tag-a-long boondoggle that will end with county taxpayers funding the difference between the projected and real cost.” Not like we haven’t seen that before.

The post Soccer Mania Strikes Saint Louis County appeared first on Show-Me Institute.

A new soccer stadium could cost anywhere from $40 million to more than $300 million, depending on the design. One might hope the lower price tag, especially compared with the NFL and other major sports leagues, would prompt MLS owners to pay for these stadiums without public support. Unfortunately, that has not been the case. Only two MLS stadiums, the Stubhub Center in Los Angeles and the Columbus Crew Stadium in Columbus, Ohio, were built without any public support in the last fifteen years. And for anyone who hoped that a new Saint Louis team could play in the now-vacant Edward Jones Dome, no dice. Soccer-only stadiums are in vogue, and an MLS team has not located to a stadium not built specifically for soccer since 2002.

As with other pro sports ventures, many hope that increased tax revenue will justify public subsidies for an MLS team. But there is no good evidence for that. In fact, there is the counter-example of Toyota Park (IL), the home of the Chicago Fire, which is quickly bankrupting the small suburb of Bridgeview.

While professional soccer would be a welcome addition to Saint Louis, there is no reason residents should have to pay for a stadium with tax revenue, especially in light of the big asks the city is already getting for the Scottrade Center and the Convention Center.  Let’s leave the construction of soccer stadiums to league owners and soccer fans. 

The post MLS Stadiums Dig Deep Into Public Coffers appeared first on Show-Me Institute.

According to the Saint Louis Convention and Visitors Commission (CVC), the Scottrade Center, the America Center, and the Edward Jones Dome are in need of expensive renovations. The suggestion is that the Scottrade Center requires $100 million in upgrades, the America Center needs $120 million to remain competitive, and as for Dome, the head of CVC didn’t even have estimate. If the Post-Dispatch is to be believed, the Dome will need $64 million just to maintain its current condition. The price tag for any major changes is likely to be much higher. Altogether, the cost of renovations to just these three facilities would come to more than $280 million.

So who will pay for these renovations? With the convention center and dome, it will almost certainly come from the public, and probably from Saint Louis City. The Scottrade Center was mainly a privately funded enterprise, but there is no guarantee that renovations would be handled in the same manner.

If the city is forced to shoulder the burden of these upgrades, it could be backbreaking. The city’s outstanding debt on the convention center, dome, and Scottrade Center is about $420 million already, requiring more than $20 million in annual debt service. The city also spends an additional $5.7 million on conventions and tourism, most of which goes to convention center operations. These costs far outstrip the total revenue of the city’s hotel and restaurant taxes ($13.5 million in 2014), which were set up to support the convention center.  If the city were to take on the debt necessary to fund the renovations above, its yearly convention/stadium spending would increase to about $46 million per year. For comparison, in 2014 the city spent $49 million on health and welfare and $70 million on streets. 

Spending hundreds of millions of public dollars and tying up the city in debt for decades to compete in the increasingly cutthroat convention center arms race is questionable policy. But what should be galling to city residents is the fact that, whatever had happened with the Rams, these upgrades would still be thought necessary. They would still cost hundreds of millions of dollars and still be public liabilities. If the Rams had been forced to remain in Saint Louis, city residents would have been committed to spending $150 million on a new stadium, only to be told that the city’s old stadiums needed $300 million themselves.

Sound policy would be to make sure we can afford what we have before we try to build something new. Regional leadership is taking the opposite approach. 

The post With Riverfront Stadium Dead, City Leaders Back Other Expensive Projects appeared first on Show-Me Institute.

Proponents of a new $311 million hotel claim that the project will create construction jobs. At a recent hearing before the City Council, developer Mike Burke said [begins at 46:35], 

Let me talk a little bit about jobs. During the course of construction, which is about 27 months, there are about 1,300 jobs on the site.

Let's be clear about this: there won't be 1,300 jobs for 27 months. If someone were to ask Mr. Burke about this directly, he would probably walk it back immediately. Some jobs, such as heavy digging and foundation, may exist for a few months at the start. Those will transition to other, different jobs once the structure is being raised, and then finally there will be the finishing jobs once the hotel is ready for its final touches. 

Moreover, even the time spent building the hotel won't result in new jobs. The hotel will be just be a new project for those workers who already have jobs. This is why the economic impact statistics for projects such as hotels, stadiums, and airports are so suspect. Proponents want to pretend that without the project in question, people wouldnt be working or traveling or staying in hotels. As my colleague Joe Miller wrote last month regarding a proposed riverfront stadium in St. Louis:

In fact, a paper from an economist at the University of Missouri studied the impact of the Edwards Jones Dome and the Kiel Center (now the Scottrade Center) in Saint Louis specifically. The author found:

By econometrically modeling construction employment during the 1970’s, 1980’s and 1990’s, it was found that there was no more nor no less construction employment within the St. Louis MSA during the time the Kiel Center and the Trans World Dome [Edward Jones Dome] were being constructed…

…instead of creating new construction jobs, jobs were shifted from projects that would otherwise have been undertaken, resulting in no net new job creation in the construction industry.

The author concluded:

These results, coupled with the more extensive analysis given in the article on construction employment, suggest that the net impact of stadium construction on construction employment and worker incomes is zero.

The post Will Building the Convention Hotel Create Jobs? appeared first on Show-Me Institute.

This post will not discuss the timing of the proposed ordinance. We can only note that the city could have scheduled a vote on public funding for a new stadium months ago. If the city had actually sought public approval, instead of trying to make an end run around democracy, timing would not be an issue.

However, in its effort to justify opposition to a public vote, the mayor’s representatives have again made claims about the stadium’s impact that fly in the face of economic evidence. According to city representatives, the stadium project will create an amazing 3,000 new construction jobs. But academic economists have studied the impact of stadium projects on the construction industry, and found that they have little or no positive effect.

In fact, a paper from an economist at the University of Missouri studied the impact of the Edwards Jones Dome and the Kiel Center (now the Scottrade Center) in Saint Louis specifically. The author found:

“By econometrically modeling construction employment during the 1970’s, 1980’s and 1990’s, it was found that there was no more nor no less construction employment within the St. Louis MSA during the time the Kiel Center and the Trans World Dome [Edward Jones Dome] were being constructed…”

This perhaps counter-intuitive result happened because:

“…instead of creating new construction jobs, jobs were shifted from projects that would otherwise have been undertaken, resulting in no net new job creation in the construction industry.”

The author concluded:

“These results, coupled with the more extensive analysis given in the article on construction employment, suggest that the net impact of stadium construction on construction employment and worker incomes is zero.”

This finding is in line with the bulk of the economic literature: stadiums do not boost economic growth, greatly increase tax revenue, or spur revitalization. A new football stadium is an expensive want, not a need, in Saint Louis City. With its lack of economic merits, civic leaders should reject the public funding for the stadium. If they cannot bring themselves to do so, they should at least allow residents to accept or reject a plan to use public funds for football.     

The post Riverfront Stadium Unlikely to Increase Construction Jobs in Saint Louis appeared first on Show-Me Institute.

The number of events matter because it factors into how the authors calculate additional sales taxes a new stadium would generate. They estimate that the new stadium development would host 123 events, including professional soccer and high-school sports. For the sake of discussion, let’s grant that a new stadium will keep the Rams here. What of these other events?

It is no sure thing that Major League Soccer (MLS) will locate a soccer team here. This is important because MLS spending makes up a quarter of the authors’ calculation. The authors should not be counting on soccer revenue without a guarantee that a new team will actually exist.

Beyond the MLS, how many concerts, high-school/college sports, and other events do the authors think are available for the stadium to host? Saint Louis is not lacking in venues. The Scottrade Center, Chaifetz Arena, and the Edward Jones Dome can all serve as hosts. How many net new events will this stadium attract? This study doesn’t say. Based on the authors’ other calculations, it’s possible that they would count any event as a net gain for the city, regardless of whether it came at the expense of another local venue.

Determining the number of events the proposed stadium development would attract is a difficult task. However, given the hundreds of millions in taxpayer dollars on the line, it would be more prudent to have conservative estimates. The region doesn’t need another development to fall short of expectations. 

The post Where Did All of These Events Come From? appeared first on Show-Me Institute.

OK, so we did not actually go into the concert. And this post is not really about teen heartthrob Justin Bieber. But we did have conversations with some friendly folks about their tickets for the concert. We will release a video of these interviews in the upcoming weeks. Did you know that Ticketmaster, venues, and sports teams want to use a new paperless ticketing technology that limits what we can do with our event tickets?

These paperless tickets may sound convenient and good for the environment (waste fewer trees), but they restrict our choices of how we can buy, share, or resell tickets. Most people feel that when they buy an event ticket, they own it and can do what they want with it. And rightfully so. If you buy a Justin Bieber CD and decide you do not want it anymore, do you have to return it to the store? Of course not.

We should not be forced to return our event tickets to Ticketmaster if we get sick, have a conflict, or simply want to give them to a friend. Ticketmaster claims they would be protecting us from the free market. But a recent investigation revealed that only 7 percent of tickets to a Justin Bieber concert in Nashville were directly available to fans. It does not look like Ticketmaster has the typical event-goer’s welfare in mind.

The post Bieber Fever 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.

At present, the city supports its Refuse Division with an approximately $15 million annual appropriation, of which almost 90 percent comes from General Fund revenues. The controversial earnings tax is the largest component revenue stream of the General Fund, accompanied by property, sales, payroll, franchise, and license taxes, in addition to departmental fines and fees, intergovernmental revenues, and other fund sources.

If approved by the St. Louis Board of Aldermen, Board Bill 99 will institute a reported $11 monthly fee per dwelling unit for the provision of “Solid Waste Services.” Current spending on the Refuse Division totals $42.38 annually per resident, while the proposed fee should yield a comparable amount in revenue, considering our estimated number of occupied dwelling units.

Although I am confident that nearly all of my colleagues here would prefer that local government discontinue its direct delivery of service by perhaps privatizing the Refuse Division, I am personally more sympathetic to the notion that a public agency can operate according to market forces through a financing mechanism of user fees, passed through an independent enterprise fund.

This is precisely what Board Bill 99 attempts to do, which should make me and other free-market advocates happier than the status quo. That said, I believe that the proposed legislation presents many problems for those who support intelligent and limited allocations of public resources and deployments of governmental power.

The bill opens by obliquely identifying a fiscal problem:

[…] the City is no longer able to bear the entire cost of providing [solid waste collection and disposal services for residential dwelling units] from its general revenue […]

It then proceeds to claim authority to impose a trash fee under Section 260.215 of the Revised Statutes of Missouri. (Incidentally, this is a heavy-handed mechanism to foist the fee upon St. Louisans, because the Missouri Supreme Court held in Craig v. City of Macon, 543 S.W.2d 772 (1976) that “the accumulation of garbage is a serious threat to public health” and, as such, a municipally-legislated “mandatory service charge” to facilitate “solid waste disposal” and enabling legislation are “valid as reasonable exercises of the police power.”)

Board Bill 99 then begins a series of legislative contortions to target those who shall pay the proposed “service charge for solid waste collection and disposal services.” From the bill’s text, it appears that both a “Customer” — or recipient of a city water bill — and an “Owner” — the person on file at the assessor’s office recorded as owning a parcel on which a “Dwelling Unit” sits — share responsibility for payment of the fee.

Collection of the charge will be the responsibility of the city’s collector of revenue, who must consult with the assessor to “determine the number of Dwelling Units for which each Customer receives water service […]” The customer will receive a bill for the monthly charge.

If a customer fails to pay the assessed fee, then the collector, under Section 99.700 of the Revised Statutes of Missouri, “may proceed to file a lien upon the Property […] for the amount of delinquent Solid Waste Services Fee payments,” and also “shall have power to sue any Customer […] in a civil action to recover any sums due for Solid Waste Services Fees, plus a reasonable attorney’s fee to be fixed by the court.” (In other words, the bill conflates responsibility for payment of the fee with the source of refuse and the site of its disposal.)

Enforcement of the ordinance falls on the Building Division, which must verify that the solid waste services fees for a dwelling unit are paid prior to issuing a certificate of inspection for the property. A failure to pay the fee or a failure to seek exemption from the fee is an ordinance violation, punishable by a $500 fine for each day that the owner of the property does not have “appropriate and adequate” solid waste service.

The bill offers a fluid mechanism for exemption from the fee. In an intelligent move, the bill seems to envision that certain properties may not actually produce solid waste and, therefore, not be subject to the fine for violation (page 8, line 16). In a questionable and dubious infringement on the market for private waste disposal services, the bill unfortunately affords the refuse commissioner discretion to grant exemptions from the disposal fee for housing units if the units receive “adequate Solid Waste Services from a Private Solid Waste Contractor pursuant to a binding contract […]” (the St. Louis City Revised Code outlines regulations for private solid waste contractors). The city’s director of streets grants both “hauling” and “vehicle” permits to private trash haulers, who otherwise are ineligible to dispose of refuse in the city.

Legislative language is too often confounding at worst and annoying at best, but a close reading of Board Bill 99 elicits both reactions.

Firstly, how many city departments does it take to assess and collect a trash fee?

• At least five, but probably more. (Confounding.)

Secondly, why is the city instituting a mandatory charge for trash service?

• The Board of Aldermen’s penchant for selectively absolving powerful interests of their tax burdens without even pretending to account for the fiscal impacts of the board’s legislation. (Annoying.)

Wait, doesn’t this mean that the proposed “service charge for solid waste collection and disposal services” is nothing more than a subsidy to backfill unfunded grants of public money from the city’s General Fund?

• Yes. (Confounding and annoying.)

Consider this: Board Bill 99 proposes to use the city’s police power to take additional funds from its residents in order to provide continued funding for the city’s Refuse Division, whose present operating funds derive from taxation and grant funding. St. Louis’ decade of legislation that pretended there was no cost associated with special interest tax forgiveness is hitting home hard — and at the worst possible time. We simply do not have the funds to continue throwing money into public systems and agencies that stand unaccountable to the vicissitudes of the marketplace.

Board Bill 99 displays an unwillingness to account transparently for the forces and the decisions that have led us to the point of its economic coercion. Furthermore, the bill fixes service fees according to current levels of Refuse Division spending, not the true costs of service delivery in a free market. In addition, the bill appears to authorize a mechanism through which the city could very well attempt to profit from the sale of recyclable materials that its residents dispose of (page 2, lines 3–5, 18).

I would prefer to continue receiving trash service than to pay for an unneeded performing arts facility. Money is fungible, however, and government mandates are inherently oppressive, so city residents will soon begin paying for Kiel in monthly $11 installments. No wonder so many “developers” choose to reside outside the city limits. They aren’t chumps.

My only question to St. Louis city government is whether it will honor the spirit of Hancock Amendment by allowing a public vote on this fee. Tax forgiveness requires no vote, but the last time I checked, the addition of user fees and new taxes does.

The post Police Power and Public Finance: How A Proposed Local Government Mandate Will Trash St. Louisans’ Pocketbooks appeared first on Show-Me Institute.

• An $11 million mortgage loan.
• A combined $2.9 million in developer equity.
• $12 million in equity from federal historic tax credits.
• $2.7 million in equity from New Markets Tax Credits.
• $12.4 million in state historic tax credit equity.
• $872,100 in Brownfield tax credit proceeds.
• $13.5 million in Series A bonds.
• $18.7 million in Series B bonds.

The above sources total more than $74 million, of which only $13.9 million appears remotely like private capital that flows independent of a government guarantee. Thinking about it, though, even the private mortgage loan has implicit public backing, because the project that it supports would not exist in the absence of a legislative quagmire of market distortion.

First, in 2009, Ordinance 68380 amended the city of St. Louis’ 5-percent gross receipts tax on ticketed entertainment productions, intending to incentivize the “owner, primary tenant, occupant or operator, or [a]ffiliate” of a “Contiguous Recreation Facility […] contiguous to a historic theatre, opera house or concert hall” to redevelop said historic theater for “$50,000,000-$99,999,999” (hyperlink added). The redevelopment would be subject to the following guideline:

• “[with] a redevelopment plan approved by the City by ordinance and a Redevelopment Agreement approved by the LCRA.”

Lo and behold, the development team for the upcoming Kiel Opera House renovation — which includes the ownership group for the St. Louis Blues hockey team and Scottrade Center — sought and received each of the above approvals. St. Louis Ordinance 68381 authorizes a redevelopment plan for the Kiel Opera House and affirms LCRA’s approval of the project.

St. Louis did not stop there, however, as Ordinances 68382, 68383, 68384, and 68385 collectively tweak the terms of a lease agreement on the city-owned Kiel Opera House facility, earmark funds from a previously approved Community Improvement District (Ordinance 68377) to support the Opera House’s redevelopment, and bring the entire legislative morass full circle by using taxes abated in accordance with Ordinance 68380 to provide debt service on the project’s city-issued bonds.

If the project’s bonds ultimately find buyers, then a combination of federal, state, and St. Louis taxpayers, hockey fans, and service users would foot the vast majority of the costs for restoring one of St. Louis’ architectural gems. Most will do so unwittingly, because St. Louis city does not examine, account for, or consider fiscal and economic impacts when passing legislation.

Please do not hear me wrong; the last thing that I want to see is another building sit vacant for decades on end. That said, I cannot cheer a rehabilitation project that relies so heavily on bloated and unwieldy allocations of taxpayer capital. Can Kiel Opera House return to life as “a 3,200-seat theater for concerts, Broadway shows, and family and holiday programs [with] four side banquet halls […] available for weddings, conferences and other events” in the absence of public subsidy?

Perhaps not.

But, then again, did you know that the Fabulous Fox Theater in St. Louis sprang back to life without state tax credits or city-backed bonds?

I predict that Kiel’s future success — whatever form it may take — will come at the expense of other performing arts venues throughout the region. The failure of the Kiel project to attract private capital investment suggests to me that it may simply displace performance activities that would otherwise occur elsewhere, at privately supported venues throughout St. Louis.

Although there are strong arguments that markets tend to underproduce artistic work relative to growth in other sectors of the economy and that public subsidy can increase access to art and yield positive externalities, these arguments do not apply to the question of whether St. Louis city is underproducing space for such art downtown. At present, the vacancy rate in downtown’s myriad office buildings is nearly 19 percent, which means that competition for tenants is fierce and that already-low lease rates are falling still lower. Simply stated, the facilitation of architectural space is the last thing that St. Louis City needs to subsidize. Of Kiel’s proposed $74 million renovation cost, $43.4 million will go to the contractor and an indeterminate amount will fund professional services like attorneys’ and bond underwriters’ fees. None of the project’s costs will fund artistic production.

Many contend that tax credits create jobs. However, I see no evidence to suggest that they ever have or ever will.

The post Can St. Louis Really Support Another Performing Arts Facility? Local Government Certainly Thinks So appeared first on Show-Me Institute.