The study by the Pew Charitable Trusts and the Center for Building in North America found that small apartment buildings with one stairwell are just as safe as those with two. But Missouri’s biggest cities—Springfield, St. Louis and Kansas City—use building codes that require two stairways in buildings taller than three stories. That rule drives up construction costs and makes many projects financially unworkable.

These two-stair rules are based on the International Building Code, the widely adopted national standard. But they block a housing type common in Europe and now gaining traction in U.S. cities such as New York and Seattle.

The data challenge the logic of the two-stair mandate. In New York, none of the 4,440 single-stair apartment buildings built since 2012—each equipped with fire sprinklers—has been tied to a fire death caused by blocked exits. Seattle shows the same pattern: no increase in fatalities for single-stair buildings.

What’s changed? Modern safety systems such as sprinklers, smoke detectors, and fire-resistant stairwells have significantly improved safety in multi-unit buildings. The redundancy of a second staircase adds cost without increasing safety.

That trade-off matters. A second staircase means longer hallways, less usable space, and fewer units—especially in tight or oddly shaped lots. For developers trying to build mid-size, lower-cost housing, the extra stairwell often kills the project.

Critics may argue redundancy is good policy. But the evidence shows single-stair buildings, built to modern standards, are safe. Other states are already adapting. Washington and California have created carve-outs or pilot programs allowing single-stair buildings under certain conditions—typically height limits and requirements to use safety features like sprinklers.

Although Missouri is one of a handful of states without its own statewide codes, if our cities want to expand housing options without major subsidies or rezonings, removing outdated design rules is a practical place to start.

The post Missouri Should Rethink Fire Code Rules that Block Small Apartments appeared first on Show-Me Institute.

The study by the Pew Charitable Trusts and the Center for Building in North America found that small apartment buildings with one stairwell are just as safe as those with two. But Missouri’s biggest cities—Springfield, St. Louis and Kansas City—use building codes that require two stairways in buildings taller than three stories. That rule drives up construction costs and makes many projects financially unworkable.

These two-stair rules are based on the International Building Code, the widely adopted national standard. But they block a housing type common in Europe and now gaining traction in U.S. cities such as New York and Seattle.

The data challenge the logic of the two-stair mandate. In New York, none of the 4,440 single-stair apartment buildings built since 2012—each equipped with fire sprinklers—has been tied to a fire death caused by blocked exits. Seattle shows the same pattern: no increase in fatalities for single-stair buildings.

What’s changed? Modern safety systems such as sprinklers, smoke detectors, and fire-resistant stairwells have significantly improved safety in multi-unit buildings. The redundancy of a second staircase adds cost without increasing safety.

That trade-off matters. A second staircase means longer hallways, less usable space, and fewer units—especially in tight or oddly shaped lots. For developers trying to build mid-size, lower-cost housing, the extra stairwell often kills the project.

Critics may argue redundancy is good policy. But the evidence shows single-stair buildings, built to modern standards, are safe. Other states are already adapting. Washington and California have created carve-outs or pilot programs allowing single-stair buildings under certain conditions—typically height limits and requirements to use safety features like sprinklers.

Although Missouri is one of a handful of states without its own statewide codes, if our cities want to expand housing options without major subsidies or rezonings, removing outdated design rules is a practical place to start.

The post Missouri Should Rethink Fire Code Rules that Block Small Apartments appeared first on Show-Me Institute.

The study, published by ASU’s Center for the Study of Economic Liberty, ranks St. Louis 31 out of 115 cities in North America in regulatory competitiveness. That ranking doesn’t seem half bad, but 31 out of the 66 U.S. cities included in the study isn’t great. Among American cities, St. Louis is just middling.

The table below shows how St. Louis fares in the various categories. St. Louis ranks 12 overall in “Paying Taxes,” but sales taxes are not included in the scoring. Anyone who’s shopped in the city knows how steep the city’s sales taxes are; St. Louis’s ranking would likely be lower if they were included. In addition, “resolving insolvency” is a ranking where all American cities are tied for first place, so not much should be made of that stat in this context.

In two critically important categories, St. Louis is less than impressive, ranking 60 in “Starting a Business” and 47 in “Employing Workers.” These scores incorporate regulatory costs to business owners, including compliance fees for mandatory procedures and wage regulations like overtime requirements and probationary periods. As our low rankings indicate, starting and staffing a business is a costly and onerous process in St. Louis—and that’s not the inviting economic environment that we want.

Policymakers must recognize that all business regulations carry costs for business owners, and St. Louis’s costs are too high. 46 other major U.S. cities have found less costly ways to meet their public policy objectives for employing workers. And St. Louis was outranked by cities in the U.S., Canada, and Mexico when it came to ease of starting a business!

All this suggests that St. Louis has a lot of room for improvement when it comes to business regulations. Policy changes like lowering licensing requirements, taxes, or procedural costs are just a few things that may get St. Louis a better ranking. Without reform, St. Louis will continue to be mired in mediocrity.

The post St. Louis Ranks Poorly in Ease of Doing Business Study appeared first on Show-Me Institute.

Nixa Public Schools outsourced maintenance to Sodexo, based out of Paris, France. St. Louis Public Schools contract with First Student, “the largest bus company in North America,” for transportation services. More than 100 public school districts contract with Chesterfield, Mo.-based Opaa! to provide food service for public school students.

I was reminded of this piece last week when I read an interesting story by Dale Singer of St. Louis Public Radio, “Outsourcing substitute teachers deemed a success.” Singer shares how several Saint Louis area school districts, including Parkway, Normandy, and Maplewood Richmond Heights, now use Kelly Educational Staffing to find substitutes. 

This arrangement of privatized substitute services has been beneficial for everyone. In Normandy, for example, a district that has had its fair share of trouble over the past few years, the district has struggled to fill classrooms when the teacher is absent. According to Singer, “the rate of filling classrooms with substitutes had been in the 55-60 percent range; that figure rose to around 90 percent” with Kelly Educational Staffing.  The arrangement also means school districts can cut down on administrative costs in the central office.

The system is even great for retired public school teachers who wish to teach. In Missouri, a retired teacher can only work 550 hours for a school district while collecting their pension benefits. When substitute teachers are outsourced to Kelly, they no longer work for the school district. They work for Kelly Educational Staffing. This means they can work more and still draw their pension.

This is just another example of how privatization can be a good thing. As I wrote in my piece two years ago,

Opponents of school choice like to throw out the word privatization as if it was a bad thing. Yet, public schools contract with private providers in nearly every aspect of our K-12 education system.

If the goal is to provide a world-class education to students, policymakers need to avoid the knee-jerk reaction against school choice and recognize that the private sector can help deliver on the promise that every child should have access to great schools.

The post Privatization: Still a Good Thing in Education appeared first on Show-Me Institute.

Which brings us to 2015: Bombardier, back in Canada, now needs a bailout.

The post Missouri Dodges A Bullet: Bombardier Seeks Billion Dollar Rescue in Canada appeared first on Show-Me Institute.

In a classic episode of The Three Stooges, the phrase “Niagara Falls” triggered a visceral reaction from Moe and Larry, which ended with Curly getting punched, slapped, and thrown to the ground. I am often reminded of that episode when I talk to policymakers and public school officials about school choice. Like Moe and Larry, they seem to have their own trigger word—privatization.

Many reject outright the idea of allowing public dollars to follow a student to the school of his or her choice—including a private school. Never mind that there is a long history of individuals using public dollars at privately operated pre-schools and universities. When faced with this proposition for K-12 education, Missouri Gov. Jay Nixon (D) said that is where he draws the line. Missouri Rep. Jeff Grisamore (R–Lee’s Summit) echoed his sentiment: “Public schools should be publicly funded and private schools should be privately funded, period.” Like the reaction to Niagara Falls, these responses are almost comical.

They are laughable because public dollars already flow to private institutions. Examples abound. Nixa Public Schools outsourced maintenance to Sodexo based out of Paris, France. St. Louis Public Schools contract with First Student, “the largest bus company in North America,” for transportation services. More than 100 public school districts contract with Chesterfield, Mo.-based Opaa! to provide food service for public school students.

Every day, school districts rely on private, for-profit providers to deliver services and supplies. Some even contract with private schools to serve their most at-risk students. Yet, for some reason there is strenuous objection to private school choice programs that allow individuals to direct their education dollars to the school of their choice.

Opponents of school choice claim that private schools are unaccountable. That is, they do not have to teach the state’s academic standards, administer state standardized exams, or comply with a host of burdensome regulations.

This argument assumes that the only way to have accountability is through government regulations. That is not the case. Accountability simply looks different in a school choice system.

When parents choose a school for their child, they essentially are entering into a contract with the school for the education of their child. In the traditional system, parents have little recourse if the school fails to meet that obligation. They can meet with teachers, principals, and central office staff. They can even take their plight to the school board. At the end of the day, however, they have very little ability to hold the school accountable for meeting their needs. They are dependent upon the school for change.

In a school choice system, however, the dynamic is very different. In fact, the arrangement between parents and schools in a school choice system closely resembles the contracts between public schools and private service providers. If Opaa! fails to provide nutritious meals, they can be fired. Similarly, if a school fails to keep a child safe or does not live up to the expectations of the parents, the school can be fired.

Choice is a powerful accountability tool.

Opponents of school choice like to throw out the word privatization as if it was a bad thing. Yet, public schools contract with private providers in nearly every aspect of our K-12 education system.

If the goal is to provide a world-class education to students, policymakers need to avoid the knee-jerk reaction against school choice and recognize that the private sector can help deliver on the promise that every child should have access to great schools.

James V. Shuls, Ph.D., is the director of education policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Privatization in Education-Not as Scary as Some Think appeared first on Show-Me Institute.

Here are five market-oriented resolutions for a more prosperous 2014:

1. Privatize the United States Postal Service (USPS). The United States should follow the lead of other Western nations, including Finland, Sweden, the Netherlands and Britain, in deregulating and privatizing mail service. It is a form of economic insanity, which can only be explained by the power of the postal union and its political friends, to require daily delivery of mountains of mostly junk mail to U.S. households. The USPS should have to compete with FedEx, UPS and other private concerns in the delivery of first-class mail.

2. Follow suit with other public services. Look for other ways to benefit consumers and taxpayers by deregulating or privatizing other public services, with airports, roads and public utilities at the top of the list. There is a reason vacation travel is much cheaper and more convenient within European and Mediterranean countries than it is in North America and the Caribbean. Europe has widespread airport privatization and greater reliance on market forces to allocate scarce resources. As travel writer Rick Steves says on his website, “Ryanair routinely flies from London to any one of dozens of European cities for less than $20” (through its most heavily discounted fares paid weeks or months in advance).

3. Do not buy the “living wage” rhetoric. Recognize the folly of calls to increase the minimum wage — now $7.25 nationally — to $10 or more at a time of sky-high youth and minority unemployment. Why would a fast-food restaurant — or any other business — want to hire someone for $10 an hour who adds, say, only $6 an hour in additional profit, before counting the cost of his or her wages? To do so would be to accept a $4-an-hour loss. Raising the minimum wage thus has the perverse effect of causing unemployment. It artificially reduces the demand for labor and makes the first rung on the job ladder higher than it ought to be for young and unskilled workers.

4. Break the health insurance oligopoly. The next stage in the seemingly never-ending debate about health care, now entering its sixth year, might be between full-scale nationalization — as one way of rescuing the Affordable Care Act from going into a full-scale “death spiral” in 2014 — and the creation of a much more market-oriented system than the status quo ante. The starting point for a market-oriented approach should be in freeing — and, indeed, forcing — insurers to compete across state lines on both price and range of product offerings, without a great assortment of government dictates or mandates at either the state or federal level.

That would give individual consumers the right to buy low-cost, low-price health insurance — from a far larger universe of sellers. And it would cause big insurers to lose the monopolistic or oligopolistic positions they have built up over the years through assiduous lobbying at statehouses around the country. Their cozy arrangements with state regulatory offices have resulted in mandates to cover everything from hair pieces and contraceptives to acupuncture and marriage counseling. Opening the insurance market to open-ended interstate commerce will cause all producers — both insurers and health care providers — to reduce costs and look for more and better ways to satisfy the health care customer.

5. Choose growth over class warfare. Be prepared for the proponents of big government to try to turn every debate — whether it is about health care, privatization, the minimum wage, entitlement reform, curbing the power and privileges of public sector unions or any other issue — into another rant on what President Obama has called “the defining issue of our time”: namely, income inequality. However, the president and others greatly exaggerate income disparities between different quintiles in the distribution of income by ignoring the effects of high taxes on high earners and, for lower earners, the effects of income tax rebates, food stamps and other welfare. One study finds that income inequality actually declined between 1993 and 2007, after adjusting for taxes and transfer payments.

But the real takeaway here is what the poor and the middle class really need to achieve a better life for themselves and their children. That is faster growth, not more income redistribution. It is the opportunity for self-improvement, not the fallback of welfare dependency.

Andrew B. Wilson is resident fellow and senior writer at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post Let Market Guide Us To Prosperity In ’14 appeared first on Show-Me Institute.

It is in that spirit that lawmakers in Jefferson City are now looking at the proposed legislation calling for creation of a “Midwest China hub,” or “Aerotropolis,” at Lambert-St. Louis International Airport.

According to newspaper reports, the legislature is prepared to scale back or totally eliminate $300 million in tax credits intended for owners of warehouses and real estate in and around the airport, while retaining $60 million in subsidies to encourage freight forwarders to route international freight through Lambert.

If so, that represents real progress – and a greater responsibility on the part of our lawmakers, including some of the prodigals who call themselves fiscal conservatives. However, while the final numbers are uncertain, talk of finding other means to funnel tax credits to Aerotropolis demonstrates a continuing blind spot on the part of legislators.

The question is: Why should the state of Missouri put up any money for Aerotropolis unless it supports the public good in some clear and identifiable way? Where is the justification for taking $60 million out of the pockets of Missouri taxpayers and giving it to unseen and unknown freight forwarders located in other cities around the world?

No one has advanced the slightest evidence that Missouri farmers or businesses have suffered a loss of exports – to China or anywhere else – because of inadequacies in the current transportation system.

Whether it is in shipping tools, pharmaceuticals, or frozen meat, there are fast and efficient means for Missouri exporters to reach key destinations around the world.

Supporters of Aerotropolis confuse economic incentives and competitive advantage. Yes, we can give taxpayers’ money to freight forwarders – the socalled travel agents of cargo – to offset obvious disadvantages in routing cargo through Lambert, which has no regularly-scheduled passenger or cargo flights to destinations outside North America. But that’s just asking people to take your money for doing something that doesn’t make any sense.

The real irony in the Aerotropolis saga is that our politicians and lawmakers – joined by business lobbying groups in St. Louis and Jefferson City – want to use taxpayers’ money to help Chinese carriers compete against U.S. carriers. In its eight-page economic impact report, the St. Louis Regional Chamber and Growth Association noted that “China has determined to grow their market share in air freight from 15-20% to 50%” in the transport of Chinese-made goods. Do we really want to help the Chinese government reach one of its objectives at the expense of our own carriers?

Our lawmakers may think that they should leave something on the table for the special interests that have lobbied long and hard for the Aerotropolis legislation.

But $60 million is not some trinket that a spendthrift might pick up upon leaving a store. It is taxpayers’ money and it is equal to the median household income in Missouri multiplied 1,300 times. Here’s a novel idea: Why not return the $60 million to Missouri taxpayers?

Andrew B. Wilson is a fellow at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.

The post The End of Aerotropolis Subsidies? appeared first on Show-Me Institute.

To say that things have not gone according to plan at Lambert-St. Louis International Airport is a considerable understatement. During the 1980s and 90s, Lambert ranked as the nation’s ninth or tenth busiest airport. Today it is no longer among the top 30. Since the year 2000, it has experienced a 60 percent decline in enplanements. Lambert also went from debt-free to being saddled with $877 million in long-term debt when the third runway opened for public use in 2006.

Because of the adverse combination of reduced traffic and heavy debt (now equal to seven times annual revenues), Lambert has been forced to raise its landing fees to more than double or even quadruple those of competing airports, and that, in turn, has caused a number of carriers to vote with their wings in shunning the airport.

The third runway is seldom used. It isn’t needed at today’s traffic levels (less than one third of what the airport’s planners were anticipating), and remaining airlines avoid using it unless forced to do so by bad weather (the two pre-existing runways are too close together to permit simultaneous instrument landings) because it is farther away from passenger terminals. Even the “International” in airport’s formal name has become a misnomer, as St. Louis has the unenviable distinction of being the biggest metropolitan area in the nation with no direct scheduled air service outside of North America.

All of which has led to an improbable question as political and civic leaders in the St. Louis region ponder the future: Can the self-styled “Gateway to the (American) West” reinvent itself a futuristic, airport-centered Gateway to the Far East?

Joined by the Saint Louis Regional Chamber and Growth Association (RCGA), political leaders in St. Louis City and County have appealed to the state of Missouri for assistance in boosting the ailing airport. That is to be expected. What is remarkable, however, is the broad bipartisan support that has emerged at the state level for a hastily conceived plan – described by RCGA and others as “The Big Idea” – aimed at inducing the Chinese government and world air carriers to establish a major air cargo hub at the under-utilized Lambert-St. Louis airport.

The proposed legislation would dole out $360 million of state tax credits for the purpose of creating a “China Hub” or “Aerotropolis” at Lambert. And that in itself is a tell-tale sign of an“investment opportunity” that is an accident waiting to happen. As we have argued in number of commentaries, targeted tax credits are very similar to “earmarks” – narrow public subsidies handed out to powerful special interests. We have shown that several of the likely applicants for Aerotropolis tax credits are warehouse and real estate developers already eligible to receive millions of dollars of state and local tax incentives.

In truth, for all that it has been touted as the “Big Idea,” the Aerotropolis plan seems to consist of little more than a hope and a prayer, accompanied by a good deal of political grandstanding with unrealistic projections of massive job growth and economic stimulus. The RCGA produced an eight-page statement making the claim that $300 million in public incentives for the Aerotropolis – to facilitate the construction of new warehousing space – would pay for itself more than 100 times over in just two decades – leading to $34 billion in private economic activity. Saying little about the methodology that was used, the organization cited a single computer forecasting model to support this extraordinary claim.

Neither the RCGA nor any other organization has produced a detailed feasibility study. No one supporting the Aerotropolis has produced evidence that Chinese authorities and major carriers are contractually or otherwise committed to turning Lambert into a major air cargo hub – provided that the airport is able to meet certain conditions in the provision of additional warehousing space and other facilities. In fact, we have shown that St. Louis already has acres and acres of surplus warehousing space in the immediate vicinity of the airport – enough, according to Michael Webber, an international air cargo consultant, to provide for the projected traffic of eight weekly freighters cited by Aerotropolis supporters.

So where is the evidence that massive tax credits are the magic ingredient needed to turn St. Louis into one of principal caravansaries along the aerial Silk Road of the future – connecting China and other Asian nations to the American Midwest, with onward connections for air cargo to other parts of the world as well?

There is none that we found in months of diligent searching. Instead, proponents rally support by making it sound as though other airports – in Detroit, Chicago, Cincinnati, Indianapolis or other cities – will seize the gold ring for themselves if the city and state fail to take preemptive action. It’s the old argument – Build it and they will come.

At the Show-Me Institute, we have cited numerous instances, both in the St. Louis region and around the state, where targeted tax credits have failed to produce promised economic results. The list includes failed shopping centers, a stalled “Ballpark Village” in downtown St. Louis, and other supposed economic wonders that have turned sour.

Meanwhile, the cost of this misguided corporate welfare has mounted. Over the past 12 years, tax credit redemptions in the state of Missouri have quintupled – growing from $103 million to $522 million per year. Every time our lawmakers pass out more “gifts” to some businesses, they are forced to dig deeper into the pockets of other taxpayers – both businesses and individuals.

That is not fair. And it is not smart public policy either.

More than a decade ago, Lambert-St. Louis International Airport rolled the dice on an ill-advised gamble on future growth that wasn’t there. Let’s hope it’s not about to repeat the same mistake.

Andrew B. Wilson is a fellow and Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri Public Policy.

The post A Starry-Eyed Proposal To Rescue an Airport and Revitalize a Region appeared first on Show-Me Institute.

St. Louis area business leaders and airport operators propose to divert regional air cargo now dominated by Chicago O’Hare International Airport to what locals call the “Midwest China Hub” and “the Big Idea”. Rather than test the likelihood of the hub’s success, proponents and their enablers simply assume Lambert will attract the required service and then promise benefits based on that success. The proposition’s champions and their consultants performed a meager analysis. Shockingly, the State of Missouri has already directed millions in public money on that basis and the Missouri Legislature almost approved hundreds of millions in additional support without any independent analysis.

Had an independent analysis been conducted, overwhelmingly critical concerns would have been exposed.

Mere context is damning enough. According to Airports Council International – North America, St. Louis ranked 39th among North American airports end of calendar year 2010. By comparison, Kansas City International Airport was ranked 45th and until 2009 had led St. Louis for a decade. In fact, St. Louis not only trailed Kansas City but also Des Moines. During a decade that found the U.S. air cargo industry in collapse, St. Louis’ annual air cargo volume declined 20% comparing 2010 levels with calendar year 2000. St. Louis’ air cargo slide is not atypical of the industry but nothing suggests it is in expansion mode.

Worse, an unprecedented surplus of on-airport air cargo capacity exists after a decade of nationwide contraction that witnessed the disappearance of such formerly common on-airport all-cargo names as Airborne Express and Emery Worldwide, as well as sharp contraction by BAX Global and DHL. Medium-sized U.S. airports are fortunate to still have both UPS and FedEx. The two integrated carriers account for at least 90% of air cargo at most U.S. airports, including St. Louis.

Lots, lots more at the link. Cross-state, Tony’s Kansas City picks up the story under the headline “MUST READ!!! GROUNDBREAKING EXPOSÉ UNCOVERS BIG MONEY STL AIR CARGO FACILITY “FLEECING” AND A SECOND-CLASS KANSAS CITY CONNECTION!!!”:

Just like most development schemes . . . The economic promises and utility of this project are suspect.

But even more importantly for this town, his reporting and analysis reveals. . .

WHILE IT MIGHT BE A BOONDOGGLE, KANSAS CITY WAS COMPLETELY OVERLOOKED IN THIS IMPENDING MISSOURI AIR-CARGO FACILITY HOT MESS!!!
[…]
Local politicos overlook this kind of IMPORTANT INVESTIGATIVE JOURNALISM at their own peril, and it’s troubling that $400 million of taxpayer cash to support a competitor across the state doesn’t arouse any concern from either our local legislators or local business media.

More is coming. Stay tuned.

The post Air Cargo Expert Hammers Aerotropolis Plan in Industry Publication appeared first on Show-Me Institute.

The result? A schizophrenic tax and tax-break policy that has business looking for the exits. The latest: Sears.

Sears Holdings Corp.’s confirmation Monday that it is considering leaving Illinois could push the fiscally crippled state to dole out incentives to another major company.

In 1989, Sears leveraged the possibility of moving to North Carolina to earn tax breaks that led it to leave Sears Tower (now Willis Tower) in the Loop for its Hoffman Estates campus, said Hoffman Estates Mayor William McLeod.
[…]
The threat looms large: Sears, a 125-year-old mail-order pioneer and retail institution, is the Chicago area’s fourth-largest publicly traded company by revenue ($43.3 billion in fiscal 2010). The parent of Sears and Kmart employs 280,000 in North America, including 6,200 at its 200-acre Prairie Stone campus.

Tax-credit mania!

The article continues (emphasis added):

The news follows Illinois’ $7 million tax credit to keep U.S. Cellular Corp., a $19 million tax break to Continental Tire, $65 million in tax breaks to keep Navistar and $100 million in tax incentives to retain Motorola Mobility’s Libertyville headquarters. Gov. [Pat] Quinn also scrambled to assure Caterpillar that Illinois is a business-friendly state.

One of the best ways to assure businesses that your state is “business-friendly” is to establish low, stable tax rates that don’t punish hard work or pick winners and losers. Tax increases aren’t the answer, and the list of states to which Sears might move — Georgia, New Jersey, North Carolina, South Carolina, Tennessee, and Texas — are mostly the usual, business-friendly suspects, some of whom may literally be laughing at Illinois’ economic policies all the way to the bank. For example, Illinois now applies a 5-percent income tax rate (formerly 3 percent) against its residents; Tennessee and Texas don’t even have an income tax. Under those conditions, where would you rather live and work?

But, Missourians, do note: Our income tax rate settles in at 6 percent. Missouri’s leaders haven’t written off fiscal discipline entirely, but the state’s income tax probably ought to be revisited sometime soon. Food for thought.

The post Illinois Scrambles as Sears Looks for an Exit appeared first on Show-Me Institute.

The new meters use radio signals to provide real-time readings accessible to customers online, which means residents should be able to spot potential problems or abnormalities in their average monthly water use.

Easier access to better information is always a good combination. But the best part of the article is not about O’Fallon. The best part is that it gives us a very good estimate of what it would cost the city of St. Louis to install water meters in the first place. If you frequent this blog you are probably aware that the city of St. Louis does not use water meters for home water use. In my opinion, that is insane.

If it costs O’Fallon $5.8 million to replace 15,000 meters, we can estimate it would cost the city of St. Louis $34 million to install water meters for its 87,000 residential customers without meters. That is approximately $390 per residential customer, and that number ignores the likelihood that the cost per unit would likely be lower for an order six times larger. Residents would then be able to adjust to higher water rates by using less water, something that businesses in the city are already doing.

Of course, I think the entire water division should be privatized in St. Louis, as well as in Kansas City, Springfield, Kirkwood, and Columbia. But at least those other cities make use of water meters. Privatized or not, the city and its water customers should expend the necessary funds to install and operate water meters.

The post O’Fallon Updates Its Water Meters – Why Not St. Louis? appeared first on Show-Me Institute.

The city of Saint Louis, with a population of approximately 350,000 people, provides water to its residents and firms via the common municipal water utility. The surrounding and politically separate Saint Louis County, with a population of slightly less than 1 million, has long used private utilities to provide water to almost all of its residents and businesses. Unless the city can demonstrate that private operation of the water supply would result in both lower overall water quality and higher real costs (after adjusting for the current subsidies that are common with municipal utilities), the city should strongly consider the financial opportunities of selling its water treatment and distribution systems.

If economics fundamentally entails the study of scarcity, it might seem odd to discuss the Saint Louis water supply in economic terms. Observers would likely not expect that a metropolitan area located at the confluence of the two largest rivers in North America would have water scarcity issues — and, indeed, it does not. An overabundance of water, in terms of flooding, is a much more pressing concern for Saint Louis. This abundance of water, however, allows for a direct comparison of water provisioning methods, without the necessity of considering issues of supply equity or rationing that can be found in much of the world, including the western United States.

The city of Saint Louis, with a population of approximately 350,000 people, provides water to its residents and firms via the common municipal water utility. The surrounding and politically separate Saint Louis County, with a population of slightly less than 1 million, has long used private utilities to provide water to almost all of its residents and businesses. While that is the primary difference between water systems in the city and county, there are similarities as well. They both get much of their water from the Missouri River, and they share the same sewer system (and its governing body), which directs the disposal of stormwater and wastewater.

One method of water delivery — via public or private utilities — is not inherently superior to the other. Indeed, all indications point to the water division of the city of Saint Louis as doing an excellent job. In 2007, the United States Conference of Mayors designated the city of Saint Louis as having the finest-tasting tap water in the country. Furthermore, the city’s fire department is the only fire department in the state of Missouri with a class 1 insurance rating. The quality of the city’s water hydrant system plays an important role in that rating. Finally, a 2001 report by the Mackinac Center for Public Policy, which advocated various privatization possibilities for Michigan, compared Detroit’s ratio of water system employees to two other large cities. According to that report, Detroit had 3.47 employees per million gallons of water produced per day (MGD), Philadelphia had 3.41, and Chicago had exactly 2.0. Saint Louis has 2.76 employees per MGD, which compares well to these three cities, especially considering that all three other cities have much larger water systems and — in theory, at least — might benefit from economies of scale more than Saint Louis does.

As a lifelong Saint Louisan who has traveled somewhat extensively around the United States, I can attest to the superior quality of the tap water in both Saint Louis city and county. The water used in the county is essentially the same quality as in the city; the city’s intake and treatment plants sometimes even supply a small portion of it. The potable water in both the city and county are of high quality, and because of the large and readily obtainable supply, its price should favorably compare to that of other cities.

In today’s terms, the Saint Louis water division can be described as a municipal utility that provides high-quality water at an affordable price to the people of Saint Louis. From another perspective, however, it is also a valuable asset that could be auctioned to a private water utility, generating an enormous amount of money for the city and its taxpayers. Simply put, the city’s water division is worth hundreds of millions of dollars. Unless the city can demonstrate that private operation of the water supply would result in both lower overall water quality and higher real costs (after adjusting for the current subsidies that are common with municipal utilities), the city should strongly consider the financial opportunities of selling its water treatment and distribution systems.

Related Links

The post Privatization of the Saint Louis Water Utility appeared first on Show-Me Institute.