But a recent news story gave another twist to the idea of cities as romantic partners.

The St. Louis Post-Dispatch reported that NorthPoint Development called off a $120 million apartment complex of over 300 units and will soon sell the site. Why? Because the city was constantly making additional demands. What started as a yes was becoming a maybe. NorthPoint backed out.

The Post-Dispatch quoted St. Louis Development Corp. Executive Director Otis Williams as saying, “if we just stuck to whatever we said we wanted to do,” the project would have continued.

Alderman Michael Browning alleged the city wasn’t “good-faith negotiators. With all of the unpredictable things in development, the city does not need to be the thing that constantly changes.”

Yes, the city needs to be consistent. But that does not mean the city should crank the subsidy spigot to full blast.

The story notes the number of projects receiving subsidies from the St. Louis Land Clearance for Redevelopment Authority (LCRA) has dropped since 2018. The chairman of the LCRA, Matt McBride, argued that because there are so few developers wanting to work with the city, “we need to be encouraging of those who are taking the risks to do so.” I suspect by “encourage” he means, “subsidize.” The folks who hand out subsidies always want more to hand out.

Perhaps there is another way. Perhaps, instead of overregulating the market, instead of demanding ever increasing concessions, instead of imposing costly application, permitting, and approval stages, the city just got out of the way of those who want to build in St. Louis?

City leaders should work to address barriers to development rather than leaving them in place and cutting checks to offset them. They’ve already shown a willingness to do so with liquor regulations and parking mandates.

Unfortunately, Megan Green, president of the board of aldermen, wants to further increase the city’s demands of developers regarding affordable housing and community benefits. But that will just increase the costs for developers and, in turn, increase the amount of taxpayer subsidies. “St. Louis,” she says, “has been a cheap date for way too long, and we should not be a cheap date.”

It calls to mind the bawdy punchline: ‘We’ve already established that, madam. Now we’re just haggling over the price.”

Unfortunately, taxpayers are picking up the tab for these dalliances. Instead of seeking more expensive dates, St. Louis should make itself a more attractive partner by ditching its baggage and focusing on stable, long-term relationships.

The post St. Louis Needs to Stop Dating and Settle Down appeared first on Show-Me Institute.

• The new Alderwoman for both areas, Tina Pihl (Ward 17) has been more hesitant to grant tax subsidies for projects in her ward. This is a beneficial policy change from her predecessor, and the new Alderwoman deserves credit for this.
• The quickest way to get tax subsidies in Ward 17 appears to be to agree to make a donation to the city’s new Affordable Housing Trust Fund. This is a terrible policy that reeks of impropriety. “You get your tax deal after my favorite fund gets its money,” is an awful way to run government, and Alderwoman Pihl deserves criticism for this.
• The St. Louis Land Clearance for Redevelopment Authority (LCRA) board has approved substantial increases in tax subsidies for certain projects in Ward 17 without approval from the Board of Alderman, and against the wishes of the alderwoman. The LCRA took a subsidy package that had been approved by the elected Board of Alderman, changed it significantly, and then approved the larger package of tax subsidies. The LCRA board is completely out of line here and seems to continue to function primarily as a shill for corporate welfare interests. Alderwoman Pihl is correct here in her request that the proposal should go back to the Board of Aldermen, as our game of policy tennis continues.
• Finally, there are complaints that the alderwoman is moving too slowly in approving various things for her ward and slowing development. Time is money for everyone but the government. The key part here is that some of these projects being held back are over minor issues, such as simple variances, that if the necessary legal conditions are met, should be able to be approved by city departments without the local Alderperson weighing in. From the article:

But for Lengyel — he isn’t seeking tax abatement for the three houses — it was never clear what she wanted. He still has never spoken to Pihl

If a project meets the zoning regulations for the area (or requires only modest variances), and the developer is not asking for any tax subsidies, then why shouldn’t city staff make the approval decision (presumably giving the go-ahead)? Why should the local alderman be involved in the process at all, except in rare instances? In most other Missouri cities, minor permitting issues do not involve elected officials at all. For zoning changes or variances, elected officials would usually just be involved at the end of the process, which makes everything move faster.

The delay in approvals for generally routine matters (which is bad) is being caused by a new alderwoman who wants to be more cautious about tax giveaways (which is good). But the real problem here is the tradition and assumption within the City of St. Louis’s government that a ward’s alderperson is entitled to approve or halt any project, no matter how large, small, unique, or routine the proposal may be. Many of these smaller projects should never go to the alderperson for approval in the first place, and eliminating this unnecessary step is a would benefit the City of St. Louis.

The post Broken Approval Process Slows Development appeared first on Show-Me Institute.

Ulysses S. Grant was known to say that in war, anything was better than inaction or indecision. Doing something was always necessary to make sure that the enemy was responding to you, not dictating to you. Even doing the wrong thing was preferable to inaction, as you could realize it was wrong, stop what you were doing, and do something else. General Grant may have saved our Union and helped free millions from bondage with those beliefs, but clearly he never served on a TIF commission.

That key part about realizing that what you are doing is not working and doing something else could be a vital lesson to the members of the various Kansas City tax incentive boards. Kansas City, like many other American urban areas, has been generously handing out tax incentives like candy on Halloween for decades now. These subsidies include tax-increment financing (TIF), enhanced enterprise zones (EEZ), subsidies offered through the Land Clearance for Redevelopment Authority (LCRA), and several property tax abatement programs authorized under Chapters 100 and 353 of Missouri law. Over the past decades, Kansas City has given out billions of dollars in total incentives to attract and retain business and development. In 2018 alone, the total tax abatements in Kansas City were worth $175 million in foregone taxes.

Do these incentives work? If by “work,” you mean giving economic development officials and politicians the appearance of “doing something” for the voters, then I guess they do work. But if you’re asking whether the incentives grow the economy in a way that both exceeds the cost of the incentives and extends beyond the growth that would have happened without them, the answer is decisively no.

In 2018 the Kansas City Council requested a study of the impacts of economic development programs such as the subsidies described above on Kansas City. The council wanted an independent, comprehensive review of the costs, benefits, and risks of the use of these subsidies. That is not what the council received. The report presented to the city council by the Council of Development Finance Agencies (CDFA) was biased propaganda with indefensible and wildly exaggerated claims of huge fiscal benefits from subsidies. The CDFA study stands in stark contrast with the overwhelming majority of economic studies about the benefits of local tax subsidy programs. The independent academic research into local economic tax subsidies has been consistent in finding that such programs produce either no benefit or very limited benefits that in no way justify the expenses.

Ordinance No. 200497, now before the city council, would tighten limits on the amount of tax subsidies included in the many types of economic development incentives used by Kansas City. The proposal would cap the maximum subsidy at 70 percent of the tax otherwise owed. This would guarantee that, at a minimum, the person or entity who received the incentive would pay at least 30 percent of their taxes. Maintaining a wide tax base to support public services is important in order to avoid high tax rates, and these reforms will help to accomplish that. The ordinance would guarantee that future economic growth would support local taxing districts with at least 30 percent of future tax revenues. This would lessen the consistent demand to increase taxes on the many people and businesses that do not have a tax subsidy. While these reforms would still allow for generous incentives and subsidies, the tighter limits on them would be a worthwhile change.

It is long past time for Kansas City to adopt significant revisions of the use of tax subsidies within the city. Tax subsidies such as those that would be limited by this ordinance do not grow the economy. Instead, they reduce the tax base and they favor politically connected entities over the majority of citizens. They are part of a failed race to the bottom. Ordinance 200497 would be beneficial to the overall Kansas City community. With it, the various boards that oversee tax subsidies could at least slow down the harm they are doing and start walking the right direction. Ulysses S. Grant would approve.

The post Tax Incentive Reforms Would Benefit Kansas City appeared first on Show-Me Institute.

The EDC’s primary job seems to be the promotion of economic development subsidies in Kansas City. It lobbies on behalf of such subsidies before the city council and is funded largely through fees collected on projects that are approved to receive taxpayer subsidies. Nothing is wrong with any of that, in a vacuum.

The problem is that the EDC is also funded out of the city’s general fund to provide staffing assistance to the city’s several economic development agencies, such as the Tax Increment Financing (TIF) Commission, the Planned Industrial Expansion Authority (PIEA), and the Land Clearance for Redevelopment Authority (LCRA). The EDC even assists PortKC, which many fear is facilitating and approving subsidies that elected leaders would oppose. It is important to note that the members of these commissions and authorities are not paid and are free to vote as they see fit. But the staff they depend upon for advice and council have a financial interest in every vote. The more subsidies these agencies hand out, the fatter the EDC’s bottom line—and the EDC’s budget has doubled since 2000.

In 2015, for example, $1 million of the EDC’s $5 million organizational budget was funded through the Kansas City general fund, but $3 million came from fees the EDC received from the TIFs it approved. So the EDC is getting three times more money from TIF projects than from the general fund.

Show-Me Institute analysts have published concerns about this before, and others—including those at the Kansas City Business Journal—have as well. Steve Vockrodt and Steve Roberts wrote this in the Business Journal back in 2010:

Among the options the EDC executive committee has explored are consolidating boards that deal with tax incentives—the Tax Increment Financing Commission, Land Clearance for Redevelopment Authority and others—and having the city finance the agency to remove the potential for conflict that exists because the EDC is partly financed by revenue and fees from development projects.

The manifestations of the EDC’s conflict of interest are numerous. Consider the following:

• Back in 2015 members of the TIF Commission were so frustrated with the lack of financial transparency and professional services that they threatened leaving the EDC. Mayor James and the city council intervened and changed the process. TIF recipients now pay fees to city hall instead of the EDC, and financial reporting and auditing of TIF projects is now contracted out, instead of being handled by the EDC.
• The EDC apparently adheres to no long-term vision of what is best for Kansas City. Instead, it merely acts to assess each developer request as they are submitted. The EDC’s online application form suggests no particular policy goals that subsidies are meant to achieve, only that “Applications will be reviewed by EDC staff to determine the best course of action.” The recent discovery that at least one hotel was seeking a subsidy to protect itself from the overdevelopment of hotels suggests that no one at the EDC is taking a long-term view.
• The recent Strata deal—in which developers claimed a downtown office tower project was infeasible without public subsidies—was reworked by the city council to dramatically reduce overall subsidies and remove them completely for the tower itself. One wonders whether the EDC is capable and willing  to substantively vet developer applications for subsidies.
• Back in 2017 when Kansas City was trying to measure the value of its economic development policies, the then-CEO of the EDC wrote to the city hall staffer overseeing the study:

We need a report that explains and supports the city’s economic development policy in the context of local and regional competition. Such a report would be helpful in dealing with the KCMO Library and citizen petitioners interfering with an orderly eco-devo policy.

Kansas City spends at least $175 million each year on economic development subsidies. The organization charged with helping city leaders discern good subsidies from bad has demonstrated it is not up to the task, not looking out for the interests of Kansas City, and possessing an attitude of self-preservation that creates significant conflicts of interest. The EDC’s role should be significantly reformed or discarded altogether.

The post Kansas City’s Economic Development Corporation Is in Need of Overhaul appeared first on Show-Me Institute.

According to the St. Louis Post-Dispatch, the St. Louis Land Clearance for Redevelopment Authority (LCRA) has recommended that Balke Brown Transwestern receive 10 years of property “tax assurance” for a proposed housing development in the Central West End. The deal involves the current property being deemed blighted.

The property? A parking lot—a good-looking, useful one at that. The lot is pictured at the top of this post. Does it look blighted to you?

And what exactly is the “tax assurance” Balke Brown is receiving? The resolution by the LCRA explains this a bit (pg. 44):

ten (10) years tax assurance that includes a fixed schedule of payments in lieu of taxes (PILOTs) equaling annual real estate taxes of $850 per unit, and annual real estate tax increases of 2.5%

Translation? It’s a tax break. Instead of paying taxes on the multimillion-dollar apartment complex as most St. Louis property owners would, the developer will pay a lesser, stair-stepped but nonetheless fixed amount each year. We continuously see developers try to bargain their way out of their tax burden and city officials can’t seem to tell them no.

While a new apartment complex in the Central West End may seem great, the tax assurance deal does not. To get the best deal for taxpayers and consumers, what Show-Me Institute analysts have said before bears repeating: If a developer can’t afford a project without assistance, maybe it shouldn’t be doing it. Local officials shouldn’t pick winners and losers, and they shouldn’t feed the appetite for incentives—especially in one of St. Louis’s wealthiest neighborhoods.

The post St. Louis Officials Recommend “Blight Designation” for . . . A Gated Parking Lot appeared first on Show-Me Institute.

That cut was apparently enough to instantly scuttle the project.

Seconds after the LCRA unanimously voted to approved the abatement package, Foutch shook his head and stood up from the 17th floor boardroom at Town Pavilion, where the agency holds its meetings.

“We’re not going to do the project,” Foutch told LCRA commissioners.

“That’s your choice,” LCRA chairman Michael Duffy responded.

…After the meeting, Foutch said that the financing for his project was “razor thin” and that the package that the LCRA approved was insufficient to make financing for his project work. He added that if interest rates or capitalization rates move “even a decimal,” it would affect his project’s financing.

Let's be crystal clear here: Taxpayers gave Foutch most of what he wanted. And if your financing margin for error is "razor thin" for a mixed-use project that sells upscale apartments in a growing district, then the bank is telling you that it doesn't think your project is a good one for their money. That Foutch was willing to cut bait immediately when he couldn't get all the taxpayer money he wanted tells you that Foutch doesn't think the project is a great project for his money either.

It isn't the role of taxpayers to be the investors of first resort for developments like this. Foutch's snap reaction to the LCRA's verdict suggests taxpayers may be dodging a bullet here with the developer's withdrawal from the project. And if the project is somehow resurrected? It shouldn't receive a wooden nickel of taxpayer support.

The post Developer Reportedly Ends Project After LCRA Vote 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.

At the Del Taco with Show-Me Institute intern Bruce Stahl. Photo by Josh Smith.

At the Show-Me Institute, we first heard of Del Taco’s uncertain fate at last week’s Land Clearance for Reclamation Authority (LCRA) meeting. At the meeting, the agency declared the property blighted.

Blighting sounds bad, doesn’t it? The word calls to mind disease, destruction, and decay. Yet as anyone who has visited or driven by this Del Taco can attest, there’s a functioning business on the property. You can still get your burrito and fries at 1:00 a.m. at the Del Taco.

So, why would a city agency vote to find this building blighted?

The sad fact is, blighting in city of Saint Louis and throughout Missouri frequently has very little to do with the actual condition of a property, and everything to do with awarding tax subsidy. Colin Gordon, author of Mapping Decline: St. Louis and the Fate of the American City highlights one of my favorite examples of a contorted blight finding: Officials blighted a thriving shopping mall because it didn’t have a Nordstrom’s.

In Columbia, city officials almost blighted a functioning downtown hotel in order to award the building tax increment financing (TIF). At the last minute, perhaps after realizing how strikingly apparent it was that the hotel was not diseased, destroyed, or decaying, the council used a different portion of TIF law to award the subsidy. After all, it’s really just about the money, isn’t it?

Missouri law limits forms of property tax subsidy to properties that are blighted — most notably property tax abatement and tax increment financing (TIF). So the first step for anyone hoping to get tax subsidy for their development in the city of Saint Louis is to get city officials to declare the property blighted.

This isn’t the first time that Del Taco has been blighted.

In 2008, the Saint Louis Board of Aldermen blighted the property in order to enact a TIF agreement. Under TIF law, “blight” is defined as:

[…] an area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use;

Well, for the sake of everyone who has eaten at Del Taco since the city blighted the property, I hope that the restaurant wasn’t blighted because it was a “menace to the public health,” or was “unsanitary.”

If you look at the blight definition closely, it becomes clear that certain definitions could be interpreted to include just about any property. For example, what property doesn’t have “deterioration of site improvements”? Paint fades and wood ages. And, I wonder, what qualifies as “inadequate street layout”? I find the phrase “social liability” troubling. Who decides what is a “social liability”? Would a bar qualify? How about low-income housing? And what could possibly be considered a menace to “public morals”?

In case you’re wondering, the Board of Aldermen’s TIF ordinance didn’t specify which conditions rendered the saucer-shaped building blighted.

At last week’s LCRA meeting, the agency voted to declare the Del Taco property blighted again. Apparently, the city’s earlier TIF agreement didn’t fix the problem.

If pretty much any property can be blighted under state law in order to award tax subsidy, why do only certain properties receive tax breaks? I’m going to state the obvious: If the definition of “blight” is so broad that it can be applied (and re-applied) to pretty much any property in order to award tax breaks, the application is arbitrary.

TIF and tax abatement is not being applied to the worst buildings in an area, as illustrated by the cases of Del Taco and the Regency Hotel. Instead, those tax breaks are awarded to particular properties and areas that catch a politician’s eye.

The East-West Gateway Council of Governments has studied TIF and tax abatement, and concluded that using TIF where there really wasn’t any blight didn’t make much sense. From the St. Louis Post-Dispatch:

Maggie Hales, East-West Gateway deputy executive director, reported on the study to the St. Charles County Council during a work session Monday. Hales told council members the three-year study covered eight counties in two states. She said that overall, TIFs have a negative effect on communities and there are racial and economic disparities when and where they’re used.

“The TIF statute was originally designed to alleviate blight,” Hales said after the work session. “In areas where there isn’t any blight, I don’t know as a policy matter it’s a good investment of public tax dollars. […]”

Instead of blighting and re-blighting properties like Del Taco, here’s a better idea: Lower property taxes for everyone. Take politicians out of the process entirely.

The post Del Blighto appeared first on Show-Me Institute.

The LCRA reviews applications to designate properties “blighted.” This designation allows property taxes to be frozen at some base level, while development increases the property value. Many of the projects reviewed Tuesday were for development activities costing millions of dollars. Who is to say whether such projects are more worthy than smaller projects of receiving tax abatement? Why don’t people receive tax abatement for marginal projects, such as maintaining their lawn or washing their windows? Surely, the property would not be as developed if property owners never engaged in these routine activities. I can only imagine how blighted my house would be with an unkempt lawn, dirt-covered glass, and a broken fence. What about all the times I spent hedging the bushes and vacuuming the floor? Why doesn’t everyone receive abatements?

Tax credits and abatements have two types of effects: the observed and the unobserved. We all see the developer who builds a beautiful house using the tax incentives. We see the lumber producers selling more wood and the tool manufacturers selling equipment. We see the businesses and the jobs created and maintained from the endeavor. But we don’t see what does not happen because the tax incentives were awarded. We don’t see the local school that would have received additional revenue, the relatively lower taxes that would have been levied for everyone else, or the forgone purchases these taxpayers would have made. We don’t the additional teachers that could have been hired in school classrooms, or the taxpayers who could have purchased another gallon of gas. We don’t see all the jobs that would have been created and new purchases that would have been made if the money to fund those tax incentives had not been taken away from the people who would have otherwise used it. We are only able to observe the activities that have been granted official approval by the state and the LCRA.

The unobserved effects of the tax credits are that the people paying taxes are less able to purchase what they like most. Instead, they pay relatively higher taxes in order to fund incentives that generate undesirable products, such as subsidized homes costing $340,000 that will fetch only a $140,000 price.

Tax credits and abatements award businesses with revenue disproportionate to the value that consumers would place on their product. These are poor government policies, and ought to be abandoned.

The post Less for More appeared first on Show-Me Institute.

One stark difference is the amount of information that each board expects from the petitioners. When presenting before the LRA board, an individual has to demonstrate financial ability and provide the written endorsement of an alderperson, as contributors to Show-Me Daily have communicated previously. When presenting before the LCRA board, apparently, the presenter provides neither. He only has to cite the dollar amount that the developer is spending on the project, as well as the projected number of jobs that will be created.

As a related point of contrast, committee members of the LRA board pose probing questions to petitioners, whereas those of the LCRA members ask few, if any.

As a point of similarity, both the LRA and the LCRA promote policies that remove properties from the tax base and therefore reduce the amount of property tax revenue received by the city. Each has a different way to accomplish this, however — the LRA board denies proposals from individuals to buy properties that are withheld by the city, and the LCRA board approves proposals from private corporate developers to abate property taxes.

I encourage you to compare the number of suits in the first photo below to the number in the second photo.

To me, it begs the following question: Whom is Saint Louis City government serving: taxpaying individuals or corporate developers?

Land Clearance for Redevelopment Authority (LCRA) Meeting, August 24, 2010

Photo Credit: Thomas Duda

Land Reutilization Authority (LRA) Meeting, June 30, 2010

Photo Credit: Thomas Duda

The post Compare and Contrast: LRA and LCRA 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.

The post Under the Color of State Authority appeared first on Show-Me Institute.

As it turns out, the city — and especially the Land Clearance Redevelopment Authority (LCRA) — didn’t much care for the criticism. The government cited Roos for illegally displaying a sign without a permit. Even though his right to free speech means that the city had no proper authority to require Roos to seek their permission to express his opinion about eminent domain, Roos complied with the city’s directive and applied for a permit. The LCRA persuaded the city’s Building and Inspection (B&I) Division to deny the permit, because Roos had not first gotten the LCRA’s permission to file the application. When Roos then sought the LCRA’s permission to pursue a sign permit, the LCRA denied his request. With the help of the Institute for Justice, Roos sued to enforce his constitutional rights to free speech.

When the city saw that the lawsuit sought to hold the LCRA accountable for its role in denying Roos’ constitutional freedoms, officials argued that the court should not hold the LCRA accountable because it had no authority to deny the permit in the first place. In other words, the city argued (and, remarkably, the trial court agreed!) that Roos was not entitled to a judgment that the LCRA had acted unlawfully because … well … the LCRA had acted unlawfully.

It is important for all of us that the Eighth Circuit reverses the lower court’s decision. If judges refuse to punish (or even recognize) constitutional violations resulting from improper assertions of governmental authority, agencies such as the LCRA will be able to continue intimidating people without fear of reprisal. These agencies already bully too many people just by using the powers already given them under the law — they surely should not be allowed to get away with making up new rules in order to exercise even more control over our lives.

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