Show-Me researchers might argue there is never a good time for government handouts such as this one, but times like these should add even greater scrutiny to government actions. We need to be disciplined about government priorities and reel in needless spending on projects that ought to be privately financed. This deal means that the government will lose out on $5.7 million it could otherwise spend on the needs of Missourians, and maybe more if the stadium garners additional subsidies in the coming years. We can all probably think of a few uses for that money right now.

Sure, the soccer stadium may give us hope for a time when social distancing is a thing of the past, but private endeavors shouldn’t be funded with government incentives. It’s unfair that some developers get tax credits while others pay in full; the government is again picking winners and losers, and this time the owners of the MLS franchise are the winners and taxpayers are the losers. If a project such as this needs government assistance to be built, then maybe it isn’t such a good idea in the first place.

Whether or not you support assistance to the soccer stadium, the question remains: Is this really the time to be carving out special deals for wealthy team ownership when our attention should be focused on so many basic needs?

The post The Absolute Worst Time to Ask for a Stadium Incentive Package appeared first on Show-Me Institute.

Listen to the segment here.

The post Graham Renz on the Marc Cox Morning Show appeared first on Show-Me Institute.

For this reason, when Governor Greitens blocked the issuance of low-income housing tax credits—a practice that Show-Me analysts have written for years should be exposed, sunsetted, and discontinued—it appeared that the state might have begun a journey toward putting tax credits in their proper place. Likewise, analysts have written about the wastefulness of stadium subsidies, and so we read with pleasure that Lt. Governor Parson voted against tax credits to build an ice rink and practice facility for the St. Louis Blues.

Unfortunately, further investigation reveals that there is less here than meets the eye.

Regarding the St. Louis Blues tax credit, the St. Louis Post Dispatch wrote that all three of the Governor’s appointments to the Missouri Development Finance Board voted in favor of issuing $2 million in tax credits for the ice rink. Parson was the sole vote against. His lone voice of opposition might be comforting to Missouri taxpayers until one reads further. According to the Post-Dispatch:

Parson said that while he appreciated the boost the project could give St. Louis’s economy, he could not vote to issue tax credits for a new sporting complex at a time when the state is refusing to issue any low-income housing tax credits.

The logic here is all wrong. We don’t need counterproductive tax credits to be evenly distributed (and for the record, the low-income housing credit is indeed counterproductive). What we need is for these credits to be eliminated.

If Missouri is to thrive, it needs a system of taxation that treats everyone equally, is efficient, and is dedicated to supporting the important functions of government. The tax credit system is none of those things. Even if the credits weren’t subject to abuse—and they are—and even if the state were good at delivering on economic development promises—and it isn’t—it’s long past time for Missouri’s leaders to focus on policies that hold promise for helping everyone by creating real jobs and real growth.

The post A Plague on Both Your Tax Credits! appeared first on Show-Me Institute.

But as it turns out, the company may be looking to get even more money from the big spenders in government—this time, from state and local officials.

Centene Corp. is seeking $147 million in taxpayer help for its proposed $771.8 million, multibuilding expansion project in downtown Clayton.

Under the company’s plan, described in a document submitted to the Missouri Development Finance Board, much of the taxpayer help would come from the city of Clayton, which over a period of years would provide nearly $95.6 million in property tax abatement on Centene’s huge downtown investment.

Centene also wants from Clayton nearly $3.2 million in personal property tax abatement and a $2.5 million commitment from a transportation development district.

The full proposal can be found here at the St. Louis Business Journal. In addition to the individual incentives described above, Centene is seeking an additional $35.7 million in state "Mega Works" tax credits, which lawmakers created three years ago by consolidating several existing (and failed) tax credit programs. At least $10 million in BUILD bonds have already been approved for the project, and if the region's track record of incentive profligacy is any indicator, the remaining tax incentives will probably to be approved without much delay.

Centene's subsidy demands may be "business as usual" in Missouri's broken tax-incentive universe. Yet, that Centene's business model is already highly reliant on extravagant public spending puts the company's latest tax incentive plan into a whole new class of corporate welfare and cronyism.

The post Regarding Centene’s Outrageous Corporate Welfare Demands appeared first on Show-Me Institute.

With the stadium expected to cost the public around $400 million, one might have hoped that planners would dedicate the $158 million to paying off the public portion of stadium debt. After all, economists agree that stadiums do not generate much return in terms of development of tax revenue, so the lower the public subsidy, the better. Unfortunately, the benefits from the sale of naming rights, like the benefits of the stadium in general, will likely redound to the NFL and Rams ownership, not Missouri residents.

Stadium backers fear that $400 million in public dollars might not be enough to keep the Rams in town, so the stadium task force wants to sweeten the deal for the Rams, or whatever team is willing to play in Saint Louis. As the Post-Dispatch reported:

“Regional leaders here expect it could be an enticing carrot for a team owner seeking to defray his own portion of stadium construction costs…It doesn’t mean the state or city will have to pay less for the stadium, Peacock [the head of the stadium task force] emphasized. “It provides certainty around the project, more than anything…”

This is what happened when Saint Louis lured the Rams two decades ago, turning over 75% of naming rights proceeds to the Rams (along with personal seat licenses, the relocation fee, etc.), even though the Edward Jones Dome was built entirely at the public’s expense.

The use of naming rights revenue to placate the NFL, rather than Missouri residents, makes some sense. After all, the governor and the Missouri Development Finance Board plan to unilaterally spend around $300 million in state funds on the stadium, without the vote of the legislature or the people. As for the city, an ordinance requiring a vote on public financing for stadium projects was struck down in court (but the mayor says they’ll get a vote on the next stadium). The only group left that might vote no, and can vote no, is NFL ownership.

 As University of Chicago economist Allen Sanderson said, talking about the riverfront stadium plan:

“The NFL, first of all, is a monopolist. And monopolists don’t leave much money on table.”

 Missourians might soon have the disadvantage of rediscovering just how little money that will be. 

The post Stadium Planners Sweeten the Deal . . . for Billionaires appeared first on Show-Me Institute.

Since the early 1990s, Saint Louis City, Saint Louis County, and the state of Missouri have joined together in paying a total of $24 million a year ($12 million from the state and $6 million each from the city and county) to retire the debt incurred from building the Edward Jones Dome in downtown Saint Louis. Incredibly, the owners of the Dome obtained private financing for only a tiny portion of the stadium’s cost (less than 10 percent) and even now are getting ready to seek a whole new set of subsidies to finance a major renovation of the Dome that could cost as much as $700 million.

A large body of academic literature supports the conclusion that local and state subsidies to sports stadiums provide no new net economic benefit to the state or region. According to a study by John Siegfried and Andrew Zimbalist, “Few fields of empirical economic research offer virtual unanimity of finding. Yet independent work on the economic impact of stadiums and arenas has uniformly found that there is no statistically significant positive correlation between sports facility construction and economic development.”

One reason such projects deliver little or no economic bang for the buck is the so-called “substitution effect.” New stadiums may attract a lot of customers, but they also take customers from other local businesses: If you spend $150 to attend a football game, that is $150 you likely will not spend going out to dinner and a movie.

Even so, the state has moved beyond financing the construction of stadiums to assisting owners with building projects that are near the stadium. The area surrounding Busch Stadium is now handling more than 3 million visitors every year. This should make that property extremely valuable. If the Cardinals’ plan is a good one, they should be able to obtain private financing for the accoutrements surrounding Busch Stadium just as they did when they privately financed almost all of the construction of the new Busch Stadium.

Having a fancy new development such as Ballpark Village might increase the prestige and glamour of downtown Saint Louis, but having the rest of the state help foot the bill hardly seems fair. Stop to think about it: Why should the people in Hannibal, Springfield, and other places across Missouri be asked to pick up part of the bill for another city’s shops and restaurants? If the people of Saint Louis really want a Ballpark Village, then they should pay for it themselves.

It should not take the entire state to raise this village.

Michael Rathbone is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Saint Louis Gets Ballpark Village And You Get The Bill appeared first on Show-Me Institute.

Why is Ballpark Village receiving public subsidies? The government, whether local, state, or federal, is the steward of taxpayer money. Yet, the government is spending taxpayer money to help build shops and restaurants. Isn’t there anything else a bit higher up on the public’s list of priorities on which the government can spend money? There are legitimate roles for government, being a developer is not one of them.

It is possible the government sees that helping to finance the construction of Ballpark Village will boost economic growth. However, it should be noted that while these new shops and restaurants may do well and attract customers, other shops and restaurants located in the city may lose business. The disposable income of the average citizen is limited and by spending money in one place, they may be declining to spend money in another. If you are a private investor, this is not something to worry about as long as it is your business attracting the customers. However, what is the net benefit to the economy as a whole and why is the government in the position to favor one business over another?

A lot of people might enjoy Ballpark Village once it is built. However, that does not mean I support Ballpark Village being built with the aid of public money. There are legitimate things on which government should spend money; Ballpark Village is not one of those things.

The post So This Is Happening . . . appeared first on Show-Me Institute.

The Worse News? It looks like taxpayers could end up paying almost as much for Stifel’s new business plan as Stifel is.

In this case, according to the application, Stifel is seeking $2.8 million in Build Missouri Bonds, a state program designed to defray the cost of expansions. That request will go before the Missouri Development Finance Board next week.

The company also plans to apply for $2.6 million in Missouri Quality Jobs tax credits, which reimburse companies that create jobs paying above-average wages.

Stifel predicts the average new employee will earn $65,000 a year.

From the city of St. Louis, it plans to request a $15 million allocation of federal New Markets Tax Credits, which translates into $3 million in equity for the project. Stifel also will seek property and earnings tax breaks worth $5 million over 10 years, and up to $500,000 a year in breaks on other local taxes — though Stifel agreed to make payments to St. Louis Public Schools.

Much of that aid, including all the state incentives, are dependent on Stifel actually creating the jobs it is promising. All of it, after expenses are counted for, will amount to $17.1 million in public financing for the $35 million project. The rest will come out of Stifel’s pocket.  (Emphasis mine).

“The rest will come out of Stifel’s pocket.” Thankfully.

The Post-Dispatch’s Bill McClellan highlights the contradiction at play here.

Of all the businesses that ought to understand the business of business, it’s Stifel. It’s a brokerage and investment banking firm. The people who run Stifel profess a belief in capitalism.

Except, of course, when it comes to their own affairs. Risk and reward? Nonsense! No investment without incentives.

Well, fine. I can understand the sentiment. If you can get public money, why not get it? What I can’t understand is the way the public always goes along with this stuff.

Just two days ago, David wrote a blog post about how some young entrepreneurs are looking for government assistance to get their businesses off the ground. Unfortunately, it seems they learned the wrong lessons from their predecessors.

The post So, Does This Mean Taxpayers Will Own Half of Stifel Nicolaus’ New Building? appeared first on Show-Me Institute.

The vacancy rate for commercial space in downtown St. Louis is higher than 22 percent, yet the state of Missouri continues to fund the construction of new commercial buildings within walking distance of each other. In this particular case, the proposed use of the building (pictured below) as a movie theater raises its own questions. Why will this theater succeed where two others failed? And why is the government stepping in to pick up part of the tab for people to watch movies and eat popcorn? Where’s the sense in that?

The Parking Garage Formerly Known as St. Louis Centre, View to Northwest

Located at Sixth and Washington, the St. Louis Centre redevelopment combines public funding from a variety of sources, including federal New Markets Tax Credits, Recovery Zone Facility Bonds, and equity from the Missouri Development Finance Board. In total, the project to convert the former shopping mall into a parking garage with a ground floor movie theater will cost more than $30 million.

Stadium Cinema Grand Opening, 1967, 1967-68 Downtown St. Louis, Inc. Annual Report

Undoubtedly, some will herald the opening of a new downtown movie theater as a sign of great progress and excitement to come. For downtown observers, however, the prospect of yet another publicly subsidized movie theater recalls St. Louisan Yogi Berra’s saying, “It’s like déjà vu all over again.” Consider this: Downtown St. Louis, Inc., celebrated the first theater to open on the ground level of a parking garage in 1967. The Stadium Cine at Chestnut and Broadway operated until May 1984, when the St. Louis Post-Dispatch reported in a front-page article: “The last of the first-run movie houses in the city, the Stadium 1 and 2 Cine downtown, will close indefinitely after Sunday’s movies.” Today, the space is fully leased to other retail tenants.

Union Station 10 Movie Theater, View to Southwest

The same is not true of the next movie theater to open downtown after the Stadium Cine’s closure: The Union Station 10 Cinema — which opened in 1988, closed briefly between 1996 and 1998, and ceased operating in 2003 — stands vacant and available for use today. A leasing guide for the facility describes “The Theater at Union Station” as containing a “[l]arge glass vestibule, open lobby area and expansive ceilings” in addition to its “10 existing theaters, concession area and seating area.” How its vestibule differs from the shiny state-funded parking garage on Washington Avenue is anyone’s guess.

A July 10, 1988, column by St. Louis Post-Dispatch film critic Joe Pollack, “First-Run Movies Come Back To City,” offered a description of Union Station 10: “In the pattern of today’s movie houses, the new theater will have a luxurious look and, more important, big concession areas. It will house a delicatessen, an ice cream parlor, and a bar.” From available information sources, the only difference between it and the new, new downtown theater on Washington Avenue is that Union Station 10 had seven more screens but no touch pads for placing beer orders. Apparently, that’s the reason for taxpayers to subsidize another new facility.

We’ve seen this movie before — not once, but twice. I did not expect Missouri to fund a third. For taxpayers, this deal deserves two thumbs down.

The post Two Thumbs Down for Downtown Theater Subsidy appeared first on Show-Me Institute.

A regular Show-Me Daily reader alerts me to an article in the Kansas City Star reporting that the Missouri Development Finance Board recently issued $343,000 in tax credits toward a new livestock pavilion at the Missouri State Fair.

While representing the Show-Me Institute at the Missouri State Fair last August, I noticed that the state government already has a large footprint on the fairgrounds. Most notably, there is the Missouri Department of Transportation’s expansive Highway Gardens, which I have discussed previously on this blog. There were many private companies represented at the state fair (e.g., farm equipment manufacturers, RV and trailers, etc.), but they were located on a section of the fairgrounds that was comparatively compact.

To what extent is the state government crowding out private investment at the state fair? Has the state government investigated whether a private company would be willing to sponsor the livestock pavilion or the highway gardens?

Additionally, this presents a possible opportunity for tax credit stacking. Will the livestock pavilion feature cows that received qualified beef tax credits? As Thomas Duda has explained in the context of subsidizing housing developments, tax stacking contributes to the crowding out of private investment.

Furthermore, this fact from the article thoroughly disappoints me:

The board waived its normal two-presentation requirement for applicants in order to approve the State Fair project under its 2010 allotment of tax credits […].

If the government doesn’t go through its review process, what’s the point of having one at all? What attributes make a project worthy of skipping review? Are these attributes completely arbitrary and subject to political pressure?

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