Susan Pendergrass speaks with Judge Glock, director of research and senior fellow at the Manhattan Institute and contributing editor at City Journal, about the growing debate over data centers in Missouri and across the country. They discuss why some communities are banning data centers while others are welcoming them, how Loudoun County, Virginia became the global epicenter of data center development and what it has meant for local tax revenue, whether concerns about noise, aesthetics, and energy use are valid, and more.

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Episode Transcript

Susan Pendergrass (00:00): Thank you for coming on the podcast again, Judge Glock. We’re going to talk about something that is certainly in the news and certainly good and bad for Missouri in the past week. We’ve had stories about both new data centers being announced and more communities banning them. What’s your take on that? You live in Virginia. In Missouri, we are certainly at odds with each other between one area that is going to have both a massive Amazon and a massive Google data center and then very close to that a large county that just banned them. Where do you think this is going?

Judge Glock (00:36): In some sense, it’s going the way of a lot of American projects in that there’s going to be a diversity of local responses to them, which I think is actually quite OK. One of the things I gather when I talk to some of my friends across the pond in the UK or in Europe is that they basically have to have this grand national debate about data centers, whether to allow them and where to allow them. That’s obviously an important and worthwhile debate, but in America what we’re going to have, and what we’ve already had, is a near infinitude of local debates about data centers. I think that’s the right path. When you nationalize or centralize these issues, you create more veto points for people who want to refuse any sort of growth. You also force certain kinds of growth on people in areas that aren’t necessarily favorable to them or most likely to benefit from them. The American system of fairly decentralized governance, combined with a fiscal horse-trading side where the main benefit of local data centers is the fiscal bump local communities can get, I think is going to lead to a more positive outcome than a more centralized system that tries to create a single answer for a whole country or state.

Susan Pendergrass (02:07): But we have at least one county in Missouri that within the last few days said, regardless of the money, we’re a community and these things ruin towns and communities. I wonder if it isn’t going to be like driving across some states like West Virginia where the biggest, ugliest, most pollution-spewing plants are there. I wonder if it’s because Virginia was willing to have them. Now you have these communities in Missouri that are like, we’ve got acres and acres of land and we don’t care what it looks like, versus these other communities that are saying we don’t want big white buildings everywhere. That to me is a very interesting dynamic, because I feel like they’re going to end up in places where nobody wants to build anything else.

Judge Glock (03:02): Yeah, and that might not be the worst outcome. Can I give a quick segue into the history of something called environmental racism? This was a movement started to some extent in the South in the 1970s and 1980s to meld general anti-industrial, pro-environmental sentiment with the burgeoning civil rights movement. The argument at that time was that evil polluters were forcing their factories into places that were poor and largely Black or minority-majority areas, and that this was a travesty because it was burdening people with increased environmental harm, pollution, and factory soot. The problem with that analysis, which has been carried out by the federal government for decades, is that a lot of times poor and minority communities really, really wanted these factories. They were willing to accept the trade-offs of the environmental harms for the fiscal and monetary benefits in a way that wealthier communities were not. Precisely because they were poor, they usually put a lower value on the environmental concerns that exercised a lot of high-income people and put a much higher value on getting good jobs and all the rest. There’s a famous case from the 1990s where I believe the Clinton administration sued a Louisiana parish and a company that was trying to place a factory in a majority-minority district, claiming it was an example of environmental racism. It actually turned out that the largely Black politicians in the local area were saying this was insane, that they were being sued by the federal government for being racist against themselves when they wanted the factory. That’s a long segue into environmental racism, but I think it’s the sort of analysis we should apply to data centers. There are going to be some areas that put a higher value on the fiscal benefits of data centers than others. On the whole, I imagine those will be poorer areas that care a bit more about reducing property taxes and perhaps the fairly small but not insignificant job benefits of data centers. Estimates suggest a finished data center will create around 50 or so permanent jobs, though certainly hundreds during construction. Some of those communities will be more likely to accept them than maybe wealthy suburbs or other areas that don’t want them for various reasons. Now there are exceptions to that general framework, and I’ve written a bit about Loudoun County, which is a very strange case study.

Susan Pendergrass (06:02): Tell me about that, because I’m surprised that it’s the data center capital of the world given what I’ve seen in Loudoun County.

Judge Glock (06:08): I happen to live in Fairfax, Virginia, in part of the suburbs, and grew up in the general area. So it surprised me to learn not too long ago that Loudoun County, just a little further west from Fairfax, a county generally considered ex-urban and rural, and by one measure, median income, the richest county in America, with a median household income of around $170,000 a year. And yet despite this reputation as a wealthy Northern Virginia ex-urban community, what Loudoun has actually become is the global epicenter of data centers. By some measure, the amount of gigawatts used by data centers, the only place close is Beijing, and they’re not even close, at about half the level of what Loudoun and Northern Virginia have. As I showed in an article I wrote for City Journal that got some attention, that came from a particular confluence of events, a history of Defense Department buildup that left a lot of what’s called dark fiber in the area, which created what’s known as low latency, meaning data centers there could communicate with each other very quickly. That made it a good place to locate internet and communication-focused data centers, and today data centers focused on inference for AI, that is the answering of AI queries. That history made it a particular location. But the other side of the Loudoun story is that for decades, and especially in the last decade, the county just recognized the fiscal benefits. Right now data centers are paying for 45% of all taxes in the county, which is pretty remarkable.

Susan Pendergrass (08:12): How much are they taking in from data centers in person?

Judge Glock (08:15): For the next fiscal year, the estimate is that data centers will bring in $1.3 billion in county revenue. That’s about 45% of all local tax revenue. But maybe an even more startling way to frame it is that all local government uses and projects outside of schools are a little less than what Loudoun raises from data centers alone. So the local residents of Loudoun County effectively get free police, free firefighters, free animal control, free roads, and so on.

Susan Pendergrass (09:00): Have they lowered their property taxes?

Judge Glock (09:02): Yes. Thanks to this absolute boom in data center revenue, Loudoun not only has very well-appointed and well-funded schools, roads, and police departments, but they’ve also lowered their property tax rate pretty continuously for over a decade. It’s about 40% lower than it was in the early 2010s. Now that’s offset to some extent by increases in assessments and other rates, but it is much lower than what I pay over here in Fairfax, about a third lower. So data centers for Loudoun, which can kind of be seen as the first area to really embrace them, and home to one of the first significant data centers in America built by a now large firm called Equinox in the late 1990s, has worked really, really well for that county. I don’t think it’s necessarily going to work as well for every possible county that doesn’t have the same advantages Loudoun does, but it does show that for those that embrace them, there can be real benefits. It clearly hasn’t hampered the ability to attract high-income, well-funded residents with good jobs and a nice community. On the whole it seems to have been beneficial, even if you’ve seen growing opposition there as you’ve seen elsewhere.

Susan Pendergrass (10:46): Virginia horse country. But now it feels like the word is out and people are hearing that there could be health risks, that the buildings buzz, that they use all the water. I’ve seen some recently that have like some blue stripes and stuff on them, but the originals were pretty plain. The latest vote in Missouri was in St. Charles, and people cheered and wrote all these emails saying we don’t want them in our backyard because of health risks and noise. How valid are those concerns?

Judge Glock (11:22): Before I was celebrating the local diversity of responses to data centers relative to the alternative, but I don’t want to slight the classic concerns with local NIMBYism, the not-in-my-backyard movement, or the idea that local governments often try very hard to restrict new development of housing or other projects in their area, which can be a substantial burden for people looking for housing or hoping for jobs and fiscal revenue. On the whole, I think the competitiveness of local governments will help wash that out. If St. Charles or another county refuses to build a data center, it’s often not too difficult to find another county willing to accept one. But I do think a lot of this anti-data center hysteria is driven by people with not just local concerns, which can be legitimate though to my mind often vastly overblown, but with a general anger at technological civilization and AI writ large. A lot of that has been strangely channeled into specific local opposition to data centers. That old leftist slogan of think globally and act locally presents a problem here: a lot of local issues don’t really map well to global concerns about climate change or AI. If someone has an issue with AI and they ban a local data center, that is in no way going to stop AI. Stopping a data center nearby is not going to stop the revolution. It will barely even slow it down. There is a lot of generalized opposition to modernity and technology that gets channeled into opposition to local data center construction, which is totally irrelevant to that debate. As for the actual local concerns, when I was reporting on the story for Loudoun, I spent some time driving around and checking out these data centers. For those who have not seen one, or frankly a park of them, it’s a pretty amazing sight. These things can be huge, nearly approaching a hundred feet tall, very solid concrete boxes, not often the most beautiful structures you’ve ever seen. The trend now is placing blind windows in them randomly to make them look better, though depending on your preference that may or may not help. I think a lot could be done to address the aesthetic concerns. Those are real. If you look at some parts of Loudoun and elsewhere, there are data centers built right next to housing subdivisions, and it can feel uncomfortable to have a looming concrete block right next door. The other local concern I think is somewhat legitimate but again overblown is the noise. Data centers, mainly because of their cooling systems, emit a fairly regular hum. It’s a low frequency, low decibel hum, but at a low frequency it can go through walls and subtly shake things. It can be irritating. I personally would not like a low frequency hum right next door. But the solution, as with the visual impact, is simply to push them back a bit. This is not like a local school that needs to be right next to a subdivision. If you’re talking a few hundred yards down the road, you’ve pretty much solved most of the hum and visual impact issues, especially if you surround it with some trees or berms or other methods to both hide the structure and limit the noise. Those two issues, the noise and the visual impact, are real. I understand why people are concerned, but they can be and have been easily addressed. In most of the debates you see, that’s not really the issue. It’s these generalized concerns about AI or false concerns about water.

Susan Pendergrass (16:03): What about the use of energy?

Judge Glock (16:19): Again, to some extent this is another local versus global problem where the local energy use of a data center is not really going to change the price people pay on their local residential energy bill. Most energy here in Virginia and elsewhere is part of a big interconnection, which is a market where different energy producers and power plants share electricity across large transmission lines. The price for electricity, besides state-level mandates, laws, or environmental regulations, is usually determined in that general market. Yes, a data center will drive up electricity costs somewhat in that general market, but it’s not necessarily a substantial driver of that. One new data center will have a very minimal impact on anybody’s bills across the whole region and will have no real effective impact on somebody’s local energy bills. To some extent, data center builders have also been doing a lot more work to construct what’s called off-the-grid or behind-the-grid energy production attached to the data centers. That can be problematic because of increased noise, even in Loudoun and elsewhere where a lot of places just have backup diesel generators that can produce a loud crack when the backup energy turns on, since data centers want to be running constantly. But in general, as before, you have very localized concerns about noise that you want to address with very localized attempts to limit those impacts, either through distancing the data center or finding ways to cover it and limit the noise it emits. The electricity issue is real in the sense that demand for electricity is going up because of data centers, and as economists like to say, supply is inelastic, meaning supply of energy is not going to ramp up as quickly as demand. That means prices are going to go up a little bit nationally because of that. But as long as the value of these data centers is there and people are going to build them, they’re not really going to have a meaningful impact on local electricity prices, and the data center builders are going to find other ways to get electricity and make sure that generation capacity comes online.

Susan Pendergrass (19:28): Missouri is building these two massive data centers not far from our one nuclear plant, and I know that’s something that has been discussed. When I hear that Loudoun County was the first to do this in such a massive way that they could bring in half of their income from data centers, it feels to me like when Colorado legalized cannabis and was the only state to do so. They took in so much money that residents got money back on their income taxes, and every other state said they were going to be just like Colorado. But Colorado was the one that did it first. Maybe Loudoun is the one that did it first with data centers. So now when a community brings in a data center, it’s not going to have the same impact it had in that first wild test case that was Loudoun County, right?

Judge Glock (20:18): I think that’s correct. I would note though that for some smaller communities, especially small rural communities with relatively small populations, such as some of these Texas counties, a single data center can become a third or more of the city’s or county’s budget overnight. So they can have a huge impact on smaller and poorer areas. But do most data centers as they’re built today have the huge fiscal impact that Loudoun got? Absolutely not. The other side of the fiscal story, though, and one that will apply more universally, is that data centers require very little in the way of services. When a city allows a new subdivision or apartment building, it gets more property taxes but also has to pay for schooling for the kids, roads, fire departments, and all the rest. When a city allows a new office park, there are similar property tax benefits but fewer service costs than residential development. According to one estimate I saw, for every dollar a typical office building or commercial retail project generates, a city spends about 25 cents on actual services to it. For data centers, because there’s basically no one in them, that number drops to about four or five cents. They basically need nothing. As I talked to some of the local officials in Loudoun, they said these things don’t send kids to school, they don’t even put cars on the road. There’s basically no impact on anything else. Once it’s built, it just sits there and throws off property tax revenues. No trash pickup, no breaking up fights at a local bar. It’s just money that keeps flowing in. So even if the property taxes aren’t as massive as they are in Loudoun, local communities still aren’t going to have to worry much about services, and they’re still likely going to see a big net benefit. Some people point out that data centers don’t offer many jobs over the long run, and a lot of industrial projects get approved because of job creation. But the flip side is that very few jobs also means low services and low impact. A big concern with local communities approving projects is traffic, and data centers just don’t create much of it for their size. So yes, other counties are not going to get the kind of deal Loudoun got and still is getting, because it remains the epicenter and data center builders want to build next to other data centers. But they are going to get a project that really doesn’t cost much of anything, still throws off at least some money, and doesn’t really burden local communities as long as it’s placed ever so slightly out of the way.

Susan Pendergrass (24:16): That brings me to another point. I’ve read that there are a lot of very smart engineers working on the problem of AI inference and how much energy and space it requires, and how to make it more productive. Eventually I think they’re going to solve this. We used to have server rooms that every business kept cool, and then everyone ended up with a laptop or even a phone. Eventually I think people are going to address this problem of requiring so much physical space to do what we need to do. I wonder if in a decade we’re just going to have empty white blocks sitting around because it’ll be too expensive to demo. What do you think?

Judge Glock (25:08): It could happen. You mean the data centers will be depopulated of their servers because they’ll be so miniaturized. That’s true, and it could be. To some extent, counties like Loudoun that have benefited massively from these data centers can and have set up rainy day funds, similar to counties that get a sudden oil influx, to say that if this ever starts to peter out, they’ll still have a long-term benefit they can continue placing into their budget and at the service of their residents. Right now I think we’re so far away from a potential data center bust that it really shouldn’t be a concern. As I’ve also pointed out, right now about one and a half percent of our whole economy is spent building data centers. This is just from basically zero just a few years back. This is a wild building boom, absolutely wild. We’re talking hundreds of billions of dollars a year. We need, if anything, to make sure that people can build out those data centers to do the other things that the AI revolution is going to require and demand, no matter what local opposition one county or another expresses. When you talk to people in the industry, the consensus is that we just can’t even build them fast enough. If very smart companies and very smart people are willing to invest hundreds of billions of dollars a year in data centers, and when I say data centers I mean mainly the servers and computers in them, I think they know it’s going to be a good return.

Susan Pendergrass (27:09): Well, it’s going to be interesting to see it play out in Missouri, because there’s definitely been backlash coming through the local town councils and the voters have been pretty loud in some areas. Have any Virginia counties banned them that you know of?

Judge Glock (27:29): Virginia has not only been the epicenter of the growth of data centers, it has been the epicenter of the opposition to data center movement as well. There is a group, something like Data Center Reform Watch, that has been monitoring local opposition. You’ve seen a bunch of counties take pretty strong steps against new data center construction. I forget if they’ve gone all the way to a formal and complete ban, but you definitely have votes in major counties either to block individual sites or to ban them from large swaths of the county. My take is that some other county is going to want and find ways to get those data centers, and when some of these counties realize they may have gone a little too far, they’re going to look at ways to pare it back and focus more on where to place the data centers rather than banning them outright and everywhere. I really struggle to find the logic in a local community banning a data center that’s going to be two and a half miles from anybody else. Frankly, as weird and big as they are, are they that different from, say, a local warehouse? A warehouse has trucks coming in and out all day, spewing pollution. One of these fulfillment centers is a big concrete box just like a data center, but with all that traffic on top of it. Data centers just seem much less problematic in that regard. In some sense they’re like a warehouse without all the trucks. If not for this huge generalized concern with AI, which is a separate debate, there doesn’t seem to be a lot of logic to just banning them completely.

Susan Pendergrass (29:42): Well, it is early days. I would love to have you come back again to talk to us when the dust settles a little bit, especially in Missouri. One of the first places I remember reading about a ban was Festus, Missouri, and now there are more. I’m also hearing about some of the biggest data centers going in there. So we’d love to have you back.

Judge Glock (30:02): That’d be great. I look forward to it.

Produced by Show-Me Opportunity

The post Are Data Centers Good for Communities? with Judge Glock appeared first on Show-Me Institute.

Festus is not alone in its debate. Nationwide, there have been significant disputes about whether communities should want data centers in their backyards. While data centers can bring investment to a community, there are concerns about electricity, water usage, and sound.

Of the hundreds of citizens participating in the recent Festus hearing, one gentleman’s comments captured my attention. The St. Louis Post-Dispatch reported:

He urged local governments to turn any revenue gain due to the new facility into lower property taxes for the general public. He also said a data center should pay for any increase in utility rates due to the extra energy usage it requires. And, he said, the city should not offer the data center any tax incentives.

I have to wonder—has this gentleman read this article I recently published?

Jokes aside, his comments convey a few key points that I think are important to keep in mind when considering a data center project in a community.

#1: Lower taxes help drive economic growth, so a reliable course of action is to return extra revenue to taxpaying citizens.

New data center revenue ought to be returned to taxpayers through lower tax rates, easing pressure on the entire tax base. Property tax abatements should not be handed out.

#2: Find innovative solutions for electricity needs.

Last year, a major energy omnibus bill, Senate Bill 4, included a provision that protects average ratepayers from “any unjust or unreasonable costs from service to such customers [such as data centers].” This should help shield average ratepayers from rate hikes to meet this new energy demand, but some burden will likely still fall on them.

While it is a state-level solution, Missouri should explore consumer-regulated electricity (CRE), which would allow new data centers and other large customers to be served by separate, independent grids. This idea could be beneficial for both ratepayers and developers. You can read more about CRE here.

#3: Remember what data center developers are prioritizing, and do not hand out subsidies.

Lastly, the actions of the biggest data center customers have made their priorities clear.

Money does not seem to be a big factor for these enormous developers. They instead seem focused on energy availability, speed to operation, and long-term stability. A clear example of this is Microsoft pouring an enormous amount of money into restarting Three Mile Island for its data centers.

Instead of handing out subsidies, a municipality could evaluate its own permitting rules. Reducing red tape could both accelerate speed to operation and signal that the community is a dependable, long-term location.

Festus will certainly not be the last community to have a heated debate about data center development. Keeping these key principles in mind, however, may help communities have productive debates on this topic.

The post The Data Center Debate Continues in Festus appeared first on Show-Me Institute.

One thing I noticed about all the cities that I listed is that they contain lots of “U’s” and “L’s,” so I guess we know who the patron saint of this blog post is.

A use tax is simply a sales tax imposed on goods you purchase online or via catalogue and have delivered to your home. Municipal use taxes in Missouri actually predate the internet, but not surprisingly, most cities didn’t pass them until online shopping took off over the past fifteen years or so.

I am generally unsympathetic to the idea that these cities need a tax increase. If Creve Coeur needs more tax revenue, why did it just pass an enormous tax abatement in a very prosperous area that absolutely does not need tax subsidies to encourage development? If Festus needs more tax revenue, why did it put the fix in to sell its water system to another public entity without going out for bids as good government principles require? I don’t have any specific criticisms of Ladue, but I highly doubt the city is in financial trouble. This famous doggerel about Boston Brahmins could easily have been written about Ladue:

And this is good old Boston,
The home of the bean and the cod,
Where the Lowells speak only to Cabots,
And the Cabots speak only to God.

My view is that use taxes are a good way to expand the tax base, level the playing field for businesses, and raise local revenues. However, this last point is key. They should not be used simply as a way for cities to get more revenue. Cutting other taxes after the use tax is imposed (should voters pass it)—especially if you have a particularly harmful tax — is a great way to achieve the above benefits without a tax windfall for the city. Cities can lower their property tax rates, reduce their utility tax rates, or adjust other sales taxes (altering sales tax rates is much trickier than other types of taxes).

I don’t know if any of these cities have pledged to reduce other taxes if the use tax passes. Without such a pledge, the use tax would likely be a significant revenue gain for the city. If you think your city, town, or village actually needs that revenue, then so be it. But I’d be hard-pressed to buy that for the cities listed above, especially Ladue, Creve Coeur, and Festus.

The post Use Taxes on the Ballot in Missouri This November appeared first on Show-Me Institute.

As systems evolve and become more complex over time, certain things that used to be commonly provided by cities and counties have moved beyond the realistic capacity of local governments. Two such examples are sewers and hospitals. The last public hospital in St. Louis closed in 1997, and municipal sewer systems in Arnold and Eureka have both been privatized recently. Not all of these changes result in the private sector taking over service provision. For example, in the City of St. Louis and most of St. Louis County, the Metropolitan Sewer District (MSD) is a large, independent public agency with the resources and expertise to manage the sewer system for our region. Local governments in two areas in our region are currently preparing to hand over responsibility for major services to outside providers, and in each instance the prospects for beneficial transformations are being put at risk by a process that is not being managed in the best interest of the public.

First, the sewers. Festus and Crystal City are considering selling their shared municipal sewer system to the Jefferson County Public Sewer District (JCPSD). Like MSD, this larger, regional system has more resources and expertise than the cities do. However, the leadership of both cities have missed an opportunity to get the best deal for their residents. Earlier this summer, both councils approved a plan to consider only JCPSD’s proposal for a $5 million sale of the sewer system—that is, to exclude any other potential applicants from participation—after quietly negotiating only with JCPSD for months. This is despite the fact that representatives from both Missouri-American Water, which has recently purchased systems in Jefferson County, and Central States Water Resources, which operates sewer systems throughout Missouri, expressed interest in making a proposal once the idea become public. Those private utilities have been denied the opportunity to participate thus far.

Leaders in both cities deserve credit for their willingness to consider major changes to their sewer system. JCPSD’s $5 million offer may well be the best overall proposal the cities receive. But how can the cities know it is the best deal for their residents if they don’t even take any other offers?

The hospital example is even more troubling. In Perry County, located between St. Louis and Cape Girardeau, the county hospital board is planning to sell county-owned and operated Perry County Memorial Hospital (PCMH) to Mercy. Such a deal is almost certainly necessary and likely beneficial for the county and its residents, but the manner in which it has been conducted would make former Kansas City political boss Tom Pendergast blush. While they probably don’t have smoke-filled rooms for politicians in Perry County hospital, they might as well have. There are two boards that run the hospital—one elected and one appointed—and the boards have gone so far as to deny vital financial information to elected members of the hospital’s own board who have had the audacity to ask tough questions about the deal. You read that right. Elected members of the hospital board who aren’t falling into lockstep are being shoved aside as the board majority forces the deal through. Things like the Sunshine law and open records requirements are not suggestions; they are the law, and someone needs to inform the Perry County hospital boards of that.

In general, I strongly support local government changes such as outsourcing services to the private sector or other, larger public bodies. Divesting entities like the Perry County hospital and the Festus–Crystal City sewer system could benefit both communities. However, elected officials in both places have a responsibility to go through the process in an open, transparent fashion. They have utterly failed that test in Perry County, and they aren’t off to a good start in Festus and Crystal City. Residents of Perry County, Festus, and Crystal City should demand better from their local leaders.

The post Good Ideas Done Poorly in Jefferson and Perry Counties appeared first on Show-Me Institute.

For some background, Festus and Crystal City—two adjoining cities in Jefferson County—are planning to sell their shared municipal sewer system. That, by itself, is a good thing they deserve credit for. However, the cities never went out for open bids on the project. They negotiated behind the scenes with only one other entity, the Jefferson County Public Sewer District (JCPSD), on the sale. They went public in June with the proposal and have entered into a formal arrangement to continue negotiations with the JCPSD. (Nobody has finalized anything yet, to be clear.)

JCPSD is offering $5 million for the system. While that may be a fair price and while JCPSD seems fully capable of running the sewer system for the community, how do the cities know if it is the best deal if they don’t accept other bids?

I filed a sunshine request with Festus last month for public records regarding the potential sale. I asked for the available records. I received the response last week. The city’s response is utterly worthless. There is nothing in it beyond copies of prior ordinances authorizing the sewer system, recent bills authorizing the city to negotiate with JCPSD, and copies of public notices. There is not one e-mail in the response, which means either no city officials or employees ever sent an e-mail on this topic over the past year—or they are claiming every e-mail is privileged. When we asked why there were no e-mails in the response, this is what they wrote me:

The City has reviewed the records within its custody which would be responsive to the requests. In response to those requests, we have provided those records which are responsive and which are open under the Missouri Sunshine Law. As noted in the City’s letter responding to the requests, certain records of the City were withheld as closed records, pursuant to Section 610.021, RSMo (1), (2), (12), and (17).

In fact, total secrecy was demanded by JCPSD and the two cities right from the beginning, despite the fact that openness, not secrecy, would have likely led to more bids and a better deal for the cities and taxpayers. Here is section eleven from the initial letter from the JCPSD to the cities dated November 17, 2022, but not made public until much later:

Without the prior written approval of the other parties, unless otherwise required by law, neither the JMUC, District, nor Cities will disclose the existence of this letter or any information concerning the transactions contemplated in this letter, to any third party, other than such party’s attorney, accountant, or professional advisor who needs to know such information to perform his or her duties in connection with this letter or intend or the transactions contemplated by this letter and who shall first agree to the confidentiality of this letter.

This has been anything but an open and transparent process. The public hearings on this matter were held shortly after the proposal was first announced, and the two city councils voted to approve the memorandum of understanding with JCPSD the exact same night as the public hearings. (Officials voting the same night is always a red flag that a public hearing is a dog-and-pony show.) The cities took no other bids or proposals, despite being well aware other entities would like to bid on the sewer systems. Now they are hiding behind legal exemptions to not share any records on the deliberations and discussions of the sale.

Festus and Crystal City selling their sewer system to a larger organization, public or private, with more resources is a great idea. Going about it all in this manner, however, is terrible government. It may be legal, but it is wrong.

The post An Airing of Grievances about Sewer Sales in Festus appeared first on Show-Me Institute.

The post Seeking Multiple Bids for the Sewer System Would Benefit Crystal City and Festus appeared first on Show-Me Institute.

The post The Festus Municipal Sewer System Proposal appeared first on Show-Me Institute.

What’s missing?

Other bidders.

That is not necessarily Crystal City or Festus’ fault. The bid by JCPWS was unsolicited (apparently) so we can’t say that other potential bidders such as Missouri-American Water or Liberty Utilities (both of whom have been active in sewer operations in Jefferson County in recent years) were intentionally excluded. However, moving forward without asking for more bids would be a serious violation of good government principles.

Both cities claim to be interested in keeping rates low:

“Both cities are concerned about maintaining the same level of service to residents and keeping the sewer fees as low as possible,” said Jason Eisenbeis, city administrator for Crystal City.

You know what other organization was interested in keeping rates low? The St. Louis water division, which has experienced a large number of water main breaks recently precisely because it kept rates low to appease voters. That didn’t give the water division enough money to properly maintain the system, and city residents are now paying the price for that, literally and figuratively.

Politicians keeping utility rates artificially low to benefit their voters is a terrible practice, and one of the primary reasons local utilities should be privatized in the first place.

It is great that Festus and Crystal City have received a bid for their sewers. As we know, the ability of small cities to operate utilities is getting harder and harder. As the municipal sewer commission explained in the article linked in the first paragraph:

The Festus-Crystal City Sewer Commission has been working toward improving the plant, but keeping up with federal sewage system regulations is a struggle, said Matt Unrein, the commission chair.

“We have been working hard these last few years to modernize the facility, but the regulations just keep changing,” he said.

Crystal City and Festus should open up their sewer system bid process to include all potential parties, not just some. Then, city officials can consider all options in a fully open and transparent process. If JCPWD has the best total bid, it can be selected by the cities. But anything less than an open process with multiple bidders would be a failure of local government.

The post Everyone Should Be Welcomed to the Party appeared first on Show-Me Institute.

Let me re-set the stage. Missouri’s Sunshine Law (RSMo 610) requires municipalities and other public bodies to provide records of public interest, with some exceptions. It also states that if there is a charge billed to the requester, the municipality fulfilling the request should use employees of the public body that will result in the lowest amount of charges for search, research, and copying time.

Obtaining records of city expenses over the last five years is central to our project, and because there are so many cities in Missouri, it has been interesting to see the wide variety of reactions we have received from our uniform request (available below). As my colleague Scott Tuttle has noted before, responses to our inquiries have been uneven, with many cities promptly providing us the information we requested for reasonable fees, while others were less responsive and charged more.

For instance, the city of Festus took several days, waived their fees (as they are allowed to do) and gave a detailed Excel spreadsheet of their spending, which can be filtered and easily searched. Smithville took one day to fulfill the request and charged $20.00 for its records in PDF form. Meanwhile, Manchester—which to be fair is a city larger (population ~18,000) than either Festus (~12,000) or Smithville (~9,500)—told us it would cost approximately $1,200 and take up to four weeks for its staff to complete the response to my request.

Why the huge discrepancy in cost? The law does not specify the format in which information should be kept, or what a reasonable fee to charge is. To some degree this ambiguity makes sense, because the law has to be flexible enough to address situations and requests not considered when the statute was written. But should that gray area allow locales to drag their feet or (arguably) overcharge for documents that should be easy to access, while nonetheless complying with the law?

Although the responses from these three cities fulfilled statutory obligations, Festus and Smithville’s responses seemed to be most faithful not only to the law, but also to its spirit. As for Manchester’s response, you can judge for yourself.

It is puzzling with the technology available today why our cities and counties don’t simply publish their “checkbook” information online. There are plenty of free or low-cost platforms to keep these records up-to-date and accessible (look at what Manchester’s neighbor Ballwin is doing), and given the taxpayer interest and treasure involved, why should obstacles get in the way of accessing that information?

Click on the link below to see the request we sent out

The post How Easy Is It to Get a Sunshine Request Fulfilled? It Depends. appeared first on Show-Me Institute.

Second, the city of St. Louis is bidding out the operation of its animal shelter. The well-known nonprofit organization Stray Rescue will apparently get the contract. Kansas City privatized the operation of its animal shelter last year, and the accounts I have read about it indicate that the shelter is operating smoothly under private management.

As governments at every level deal with serious budget issues, it’s important that the private sector be allowed to play a role previously played by the public sector, as a major part of the changes that state and local government need to make.

The post Privatization Moves Forward in the St. Louis Area appeared first on Show-Me Institute.

I should be clear that this particular airport is not being sold specifically so a private company can operate it as a for-profit business. That could happen, but they also might sell it to neighboring companies who would stop using the land for an airport entirely. I certainly hope the private operators who buy it will keep it in use as an airport, but that is my heart talking. My head says Festus should do whatever is best for the citizens of Festus, which is exactly what they are doing. Anyway, airport privatization is an interesting issue, and one that the city of St. Louis might have to consider for Lambert in the long run as a potential move.

The post Privatization Possibilitites Abound as Festus Sells Its Airport appeared first on Show-Me Institute.