In reading reports of Tuesday’s NFL “hearing” at the Peabody Opera House, I was reminded of that old nursery song, which is really a parable about scarce resources.

In the nursery song, there are four woolly sheep of different colors (black, white, grey, and brown), plus a fifth sheep that has already been fleeced. Beginning with the black sheep, the four sheep all give “three bags full” of wool for others to use:

One for the master,
one for the dame,
and one for the little boy
who lives down the lane.

But then, of course, you come to the last sheep, and there’s the problem:

Baa, baa, bare sheep,
have you any wool?
No sir, no sir, no bags full.
None for the master,
none for the dame,
and none for the little boy
who lives down the lane.

Alternately rowdy and tearful, some 1,000 Saint Louis Rams fans showed up to plead with NFL officials to keep the team in Saint Louis. The passionate fans who wore NFL jerseys featuring the names of their favorite players see themselves in the role of the sheep that has been fleeced – or are about to be – assuming the owner Stan Kroenke succeeds in moving the team to the Los Angeles area. That is an understandable reaction to the disappointment of losing a favorite team.

However, from an economic viewpoint, it is really the taxpayers in the state of Missouri who were fleeced once – and are about to be fleeced again – if the plan to build a new $1 billion public/private downtown stadium along with the riverfront goes ahead – with the expenditure of some $400 million in public money through issuance of bonds, state tax credits, and infrastructure grants.

The Edward Jones Dome (or TWA Dome, as it was formerly called) was a 100 percent publicly financed project. The Rams pay an annual rent of just $240,000, which is just 1 percent of the $24 million annual cost that taxpayers have paid (and will continue to pay until 2022) to service the debt on its construction.

There is no legitimate reason to subsidize professional football, which is a hugely profitable business in its own right. Saint Louis and the state of Missouri shouldn’t have to sweeten the pot at public expense to keep the Rams in the St. Louis. It would be better to let them go.

The post Keeping the Rams – Lessons from a Nursery Song appeared first on Show-Me Institute.

The two most important arguments in the debate over whether Kansas City taxpayers should subsidize a private convention hotel are made by the proponents:

• First, they argue that it does not make business sense to build a hotel of this size in downtown Kansas City right now. Consequently, they need taxpayers to invest first, and they need taxpayers to invest to the point that it does make sense. (This is the argument with every TIF project, by the way.) The difference here is scale: the project requires the public to subsidize half the cost.
• Second, they claim that demand will increase simply by increasing hotel room supply. The proponents are not doing anything else, such as increasing the visitor and tourism budget so that they can dedicate more resources to attracting conventions. They're just building a hotel. That's all.

But Kansas City doesn't need more hotel rooms; we're already oversupplied. According to the same consultants hired by the developers for this project, the occupancy rates (the number of rooms sold divided by the number of rooms available) at existing downtown hotels is a paltry 50% to 55%. That means we're only selling half the rooms we have. According to the chart above, taken from an HVS report from 2015, hotel room supply has outpaced hotel room demand in all of Kansas City for years. 

Exactly how increasing room supply (represented by the red bars on the chart) by building a new hotel will increase demand (the yellow bars) or the occupancy rate (the red line), is unclear. But taxpayers are being asked to invest $165,000,000 on that very proposition.

The post Convention Hotel Field of Dreams 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.

In a couple of weeks’ time, incoming college freshmen will get their first taste of independence. But with independence comes responsibility, and right about now parents are giving familiar advice on how to handle life without a safety net: Study for class. Eat healthy. Spend smart (read: don’t spend your rent money on pizza and beer). Most freshmen will find their footing, eventually. Some never really do, especially when it comes to budgeting properly.

But unrepentant spendthrifts should not feel so bad, because many of Missouri’s top policy makers never figured out how to spend smart, either.

A handful of state and Saint Louis officials want to spend close to $400 million of public money on a new football stadium in downtown Saint Louis in an effort to keep the Rams from moving to Los Angeles. Not only is Saint Louis’s existing NFL stadium, the Edward Jones Dome, a mere 20 years old, but virtually every economist who has studied the issue has found that NFL stadiums are a bad place to invest public dollars. They do not generate economic growth, spur urban revitalization, or greatly increase tax revenue.

Unfortunately for Missouri residents, the way Saint Louis funds its football stadiums makes this much more than a local or regional issue. Statewide residents already covered half the cost of Saint Louis’s Edward Jones Dome. In fact, the state is still paying $12 million annually on that stadium’s debt. One could be forgiven for thinking that Missouri taxpayers deserve a break from funding entertainment venues in Saint Louis City, especially when tangible economic benefits are so unlikely. But that’s not the case. Quite to the contrary, state taxpayers will be expected to cover more of the stadium costs than they did last time, with total state support topping $300 million—about three quarters of the total subsidy. That money will come straight from Missouri’s general revenue.

However, even as Missouri and the City of Saint Louis prepare to spend lavishly, yet again, on pro sports, every level of government claims it is broke. We are told how courthouses are crumbling. How highways are deteriorating. How the schools are underfunded. How the state parks have a $400 million maintenance backlog. How Missouri’s Amtrak routes need $32 million in upgrades to continue running. Even Saint Louis City officials claim that core departments like fire protection and police are short of cash.

When it comes to basic government services, there’s never any money in the budget. Residents instead have to vote on tax increases, or else. But when Saint Louis’s NFL status is threatened, hundreds of millions of dollars are suddenly available. As for a vote, that’s restricted to those who will vote “yes.” At the state level, it’s likely that the decision of the governor alone will be sufficient to authorize spending more than $300 million, and he is spearheading the stadium effort.

Right now, Missouri’s leaders sound a lot like college students calling their parents because they can’t afford groceries. And they’re making that call from a noisy bar in Cancun. It’s true—some people never learn to spend responsibly, whether they are freshmen or officials. Then again, most of the time, that’s because no one ever makes them.

The post Missouri Needs to Learn to Prioritize Spending appeared first on Show-Me Institute.

In Kansas City’s case, justification for this expense is also built upon a fiction. When the effort to bring the GOP convention to Kansas City fell apart last year, the Kansas City Star reported a local consultant urging coworkers on the convention bid to stay on message:

“Nothing negative,” one public relations consultant wrote. “The reason given for the decision should be a lack of downtown hotels. Period. Please stick to this messaging. . . . Let’s all take care of one another. We’re still a team.”

Reporter Dave Helling revisited this argument recently. In the email exchange, another person responded:

I couldn’t agree more. Thanks for reminding us all to stick together. The only thing I would add is a lack of downtown hotels IN CLOSE PROXIMITY TO THE CONVENTION SITE.

It appears everyone fell in line. In Helling’s story about Kansas City’s elimination from hosting the GOP convention, written as soon as the decision was announced and before he received the internal documents mentioned above, he wrote that there were several reasons being offered:

Kansas City’s relative lack of enough high-quality hotel rooms close to the Sprint Center.

The city’s potential struggle to raise $60 million for the event.

Poor rail transit.

That same story goes on to detail the politics included in the GOP’s decision, including this telling part:

“The competition was tough,” said Brenda Tinnen, chairwoman of the Kansas City Convention and Visitors Association. “There are politics involved in these decisions. . . . I’m not sure that there was any one thing that said, ‘OK, this city is better than that city.’”

Tinnen is likely correct. There always are many reasons a convention does not come to a city. It is rarely the case, as some in Kansas City government want us to believe, that conventions are lost because of any one thing. But that is what we hear from the “team” of consultants, government officials, and public relations professionals.

Taxpayers should be wary. Such expensive decisions should be based on sound policy and economics, not a mere fiction promulgated by some on the convention “team” who write about the need to “take care” of one another—whatever that means.

The post Convention Hotel Justification Built on Fiction appeared first on Show-Me Institute.

Originally, the plan was for the state, the city, and the county to extend bonds meant for the Edward Jones Dome to raise about $350 million to fund a new stadium, with an additional $50 million in state tax credits making up the rest of the public support. This changed when Saint Louis County, which was threatening a public vote on the issue, was dropped from the funding plan. Peacock confirmed that with the county out it will be left to taxpayers statewide to pick up the $100 million bill—a bill unlikely to be offset by any economic activity generated by the team.

In a sense, the new funding plan is just rearranging deck chairs on the Titanic; large public subsidies for sports stadiums do not make economic sense regardless of the city/state/county funding ratio. The growing list of contingencies—none of which local governments control—that Peacock’s plan relies on for everything from stadium funding to economic development is getting more preposterous. These include:

1. Getting a team owner and the NFL to cover $450 million in costs for a new stadium. No team owner, especially the Rams’ owner, has expressed any inclination to do this.
2. As things stand, a plan to fund a new stadium needs to go to a public vote in the city. Residents might vote no.
3. Getting an MLS soccer team in Saint Louis.
4. After getting an MLS soccer team, getting (and funding) a soccer hall of fame.
5. Funding an entertainment center at the Union Electric Light and Power Company building.
6. And finally, because Peacock thinks the Rams owner is committed to relocating to L.A., getting Kroenke to sell the Rams to another owner who will keep the team in Saint Louis.

You got all that? If city residents and the state government agree, against the advice of economists, to publicly fund a new stadium, and the Regional Convention and Sports Complex Authority (RSA) uses eminent domain to bulldoze the North Riverfront, we can then hope the NFL will force/convince Kroenke to sell the Rams to an owner who, along with the NFL, may decide to fund half the costs of a new stadium, which in turn might just convince an MLS team to move to Saint Louis, which then might prompt the MLS (no doubt with some tax dollars) to locate their hall of fame at a new entertainment complex (funded by…someone) at the old power building. That’s some plan.

The post If the Riverfront Stadium Plan Had Two Wheels, It’d Be a Bicycle appeared first on Show-Me Institute.

The battle for the L.A. market is joined! According to NBCSanDiego, the Chargers are working with the Oakland Raiders. Their goal: a new stadium in the L.A. area (Carson, California, to be precise). Of course, their home cities can talk them out of it, for the right price.

It’s not shocking that teams other than the Rams might want to move to Los Angeles. L.A. is the country’s second largest media market, and with that comes a lot of TV money. However, still color me skeptical about the whole thing. I think (and I’m not alone) this is more of a ruse for the Chargers and the Raiders to extract sweetheart stadium deals from their home cities. The Chargers have been trying to get a workable proposal from San Diego for the past 14 years. They’ve even recently published some remarks to the San Diego stadium task force regarding what it wants in any new proposal. Needless to say, it’s quite a lot.

I think the Rams’ L.A. proposal is more serious. Why? Because of Stan Kroenke’s silence regarding the Rams’ latest proposal, or anything for that matter on what exactly he wants in order to stay in Saint Louis. The Chargers are giving San Diego an idea of what it is they’re looking for in a new stadium, Mr. Kroenke isn’t.

No matter the likelihood of the Chargers’ or the Rams’ proposals succeeding, I think that neither team should receive public subsidies. If billionaires want new stadiums, they should pay for them themselves. I don’t think taxpayers should get the bill, especially since there won’t be any economic return to them for doing so.

L.A. seems to be the place to go to for teams that can’t get a new stadium. Will policymakers be scared into throwing more money at teams in an attempt to prevent them from leaving? Maybe, but that doesn’t make it a good idea.

The post The Great L.A. Gambit appeared first on Show-Me Institute.

Yesterday, Gov. Nixon announced that Ameren and Terminal Railroad have agreed to make adjustments to their assets (moving power lines and rail lines) so that the proposed new stadium on the riverfront can be built. I guess he thinks that’s good news, and it would be if it was the only thing standing in the way of a private developer wanting to build a new stadium on the riverfront, but that’s not the only thing.

The key ingredient to this project moving forward is that we are going to have to cough up more of our money ($405 million to be exact) to help finance this thing. Now it’s possible that such an investment could be worth the price tag if it will lead to redevelopment of the surrounding area. That’s what the governor believes. What’s the evidence that there will be redevelopment? It didn’t happen when we financed construction of the Edward Jones Dome. Why is this time different?

Gov. Nixon also stressed that if we did nothing, the city and state would lose out on millions in income tax revenue. It’s true, players do pay earnings taxes, but how much more money will we have to spend in order to make sure we still get those income taxes? Overall, will taxpayers see more in added tax revenue than the amount they had to pay in subsidies? It’s possible, but it’s also equally (if not more) likely that taxpayers would lose money. That’s why this whole thing feels like gambling, but at least at the casino you know the odds before you play. That’s not the case here. How much will players’ salaries grow (which influence income tax revenue)? How many people from out of state will visit the region to watch the Rams (this affects how much new sales taxes we get)? These questions and many more will affect the amount of added revenue the region will receive. It’s an awfully big risk to be taking with public money, and honestly we shouldn’t be giving a billionaire (Rams owner Stan Kroenke) taxpayer money on the hope that we MIGHT see a positive return.

Yesterday’s press conference was supposed to be an encouraging sign for those who want to keep the Rams here in Saint Louis. For me, it looked like someone was putting down a big marker on the roulette table with our money on the line. No matter if the project lands in the red or the black, in the end Stan Kroenke is going to be getting green.

The post The Big Bad Bet appeared first on Show-Me Institute.

• Plans are for a new stadium located on the riverfront, north of Lumiere Casino and northeast of the Edward Jones Dome.

• The stadium also would be available for professional soccer.
• It would be a public asset owned by a public entity and leased to the team. Also, the new stadium would come with a new lease, 30 years or more.
• Cost estimate: $860-$985 million, at least half of which would be privately financed (minimum $200 million from Stan Kroenke and another $200 million from the NFL).
• No new tax burden, although there would be public money involved.
• Estimated completion date: 2020.

After listening to the press conference and going over some of the points raised here, I have my misgivings about this project. First, I would like to know specifically where the money is coming from to pay for this new stadium. During the press conference, Peacock said that the sources of public financing would not be ascertained until there was a commitment from the NFL and from the Rams on moving forward with this project. Second, the $860-$985 million price tag would only be for the new stadium. Additional money (it wasn’t said how much) would be needed to upgrade the current Dome so it will be a full-time convention center. How are we going to pay for that as well?

My biggest misgiving is the fact that we will be publicly subsidizing this thing at all. Kroenke’s proposal in Los Angeles would be completely privately financed. Why should the public put up money when Kroenke can afford to pay for the costs himself? The most recent trend in stadium construction is toward private investment. That’s what happened in San Francisco and New York, so why should Saint Louis be different?

I know it is easy to be wowed by beautiful pictures of sparkling developments like the one above. Yet, nice pictures aside, these kinds of plans do not produce the economic benefits that would make these developments worthwhile. I want Saint Louis to remain an NFL town, but I don’t want to spend taxpayer dollars to do it.

The post Thoughts on the Latest Rams Press Conference appeared first on Show-Me Institute.

In the essay we examined Tax Increment Financing (TIF) project data provided by Jackson County and census data on household income. We found that in Kansas City the majority of taxpayer subsidies go to parts of town that are relatively wealthy and economically vibrant, rather than to the poor and economically depressed areas for which TIF was ostensibly designed.

Mike Mahoney of KMBC filed a story on our report. In it he interviewed Councilwoman Cindy Circo, who offered:

But it is the private development that drives the actual project itself. The city doesn’t go through the TIF process itself and be the developer.

This is an odd statement because Burns & McDonnell, and every other company that seeks a TIF subsidy, argues that the project could not go forward without public investment. So while Circo may be correct that the city does not choose the individual projects that apply for TIF, the TIF Commission and the city have demonstrated time and again that they aren’t really vetting applications, which has created an “anything goes” environment. One need only study the Citadel project to know that this is true.

If the city’s appointees on the TIF Commission were better at approving only legitimately blighted properties—those that truly require public investment—public subsidies might more often be used in the parts of town that really needed it. Instead, the subsidies flow to well-connected business leaders and their development lawyers, and public dollars unnecessarily go to projects such as Country Club Plaza and River Market.

The post Urban Neglect: Kansas City and TIF appeared first on Show-Me Institute.

The study estimates that the cost to implement bike sharing in Saint Louis would range from $12.4 million to $14.7 million over five years. However, they also want to be able to use federal and local taxes to fund the system. That is both unnecessary and unfair.

It is unnecessary because many bike share programs across the United States are funded almost entirely by users and private sponsors, including the Kansas City B-Cycle. Far from being controlled by the city in a top-down fashion, Kansas City residents have taken to crowdfunding bike share stands they want to use. That kind of bottom-up, voluntary approach not only is innovative but it means no one pays for the bike share who does not choose to.

Supporters of public subsidies for bike share make arguments very similar to those made for public transportation, such as reducing congestion and helping people without cars. But while transit’s main beneficiaries are commuters and the economically disadvantaged, bike share’s benefits mostly accrue to the well-off engaged in recreation. As we wrote previously:

A survey of riders using Capital Bikeshare in Washington, D.C., found that 95 percent of users held a college degree (56 percent had a masters or doctorate). As for income, 80 percent made more than $50,000 per year and 45 percent earned more than $100,000 per year. For perspective, per capita personal income in the district is about $45,000 and less than half of all residents have college degrees. . . . Furthermore, from data collected in Kansas City, we know that most riders use the bikes on the weekends in the downtown core. In short, a city-supported bike share uses public dollars to support the weekend excursions of highly educated, upper-middle-class residents.

Bike share programs are a great way for cities to provide residents and tourists with a fun and healthy way to see parts of town. However, residents should remember that spending public resources on bike shares is a subsidy to the wealthy and, thankfully, unnecessary.

The post Public Dollars Going to Bike Sharing in Saint Louis? appeared first on Show-Me Institute.

Details on any proposal are light, but Gov. Nixon did say that Saint Louis will remain an NFL city and that “we’re going to be partners here” in regards to upgrading the stadium. He mentioned that current funding streams will be available once payments on the original dome expire. Presently, the city, county, and state spend a combined $24 million annually on paying off the debt accrued in building the Edward Jones Dome. Gov. Nixon also was quick to point out economic benefits that having a sports team would bring.

I agree with Gov. Nixon’s desire to keep the Rams in Saint Louis. I too hope they stay, but if taxpayers are going to approve further public subsidies to the Rams, they should do so with their eyes wide open. It’s one thing if people want to pay to keep the Rams in Saint Louis because of a desire for increased civic pride or prestige. It’s another thing to claim that subsidizing construction will lead to economic growth for the area. In fact, public financing of a new stadium will not lead to increased economic growth. A study conducted by Robert A. Baade and Victor A. Matheson found that “Researchers who have gone back and looked at economic data for localities that have hosted mega-events, attracted new franchises, or built new sports facilities have almost invariably found little or no economic benefits from spectator sports.”

Again, I want the Rams to stay in Saint Louis, but I don’t want my tax dollars to be used to keep them here. New stadiums in New York and San Francisco are both 100 percent privately financed. Why should the Rams be treated any better?

The post Thoughts on Gov. Nixon’s Rams Press Conference appeared first on Show-Me Institute.

“‘I can think of no better place to host the Super Bowl than Kansas City, the best football town in America,’ [State Senator Paul] LeVota said in a statement. ‘We’ve got incredible fans and a city more than capable of handling such a huge event.’

“Not only would the fans love it, but the economic impact would be enormous, he said.”

Ah, there is that elusive term, “economic impact.” It is thrown about to justify all sorts of government spending, but it is little examined by media and little understood by the taxpayers whose money will be used. We recently reviewed similar claims about Kansas City’s effort to attract the GOP convention. In that piece, we cited a Daily Beast story about the recent Super Bowl in New Jersey:

“So, there’s no economically sound way to predict a Super Bowl’s impact before the event and those that try have been proven wrong again and again. But don’t expect that to stop the cheering from the few with the most to gain. When asked for a more detailed analysis of Super Bowl XLVIII, the host committee demurred, but assured in a statement, ‘Super Bowl XLVIII is expected to be an economic boom [sic] for the region.'”

A 2006 study conducted by the College of the Holy Cross, “Mega-Events: The effect of the world’s biggest sporting events on local, regional, and national economies,” analyzes past Super Bowl impacts. The report concludes with a sobering warning to those who would embark on such expenses:

“The most important piece of advice that a local government can take regarding mega-events, however, is simply to view with caution any economic impact estimates provided by entities with an incentive to provide inflated benefit figures. While most sports boosters claim that mega-events provide host cities with large economic returns, these same boosters present these figures as justification for receiving substantial public subsidies for hosting the games. The vast majority of independent academic studies of mega-events show the benefits to be a fraction of those claimed by event organizers.”

Hosting a Super Bowl in Kansas City would be a great opportunity to show off our city to the rest of the world. Afterall, the term “Super Bowl” was coined by Chiefs owner and American Football League founder Lamar Hunt. But regional boosters need not wear blinders. At what cost does such an event cease to be worthwhile, especially when so many basic services in Kansas City already seem to be falling by the wayside? If we’re going to bring people to the City of Fountains, let’s at least make sure we can afford to operate the fountains.

The post Of Super Bowls and Economics appeared first on Show-Me Institute.

The Kansas City B-Cycle program launched in 2012 as a non-profit bike share service. Sponsors include the city and county as well as banks, insurance companies, and other private businesses. Bike rentals cost $7 for a day pass or $65 for a year pass. B-Cycle is also using Kickstarter campaigns, which draw micro-donations from interested individuals, to fund new stations throughout the city. This type of voluntary funding supports downtown transportation without forcing those who do not use the system to pay.

However, all is not well for bike sharing programs. Public Bike System Co., which operates many bike share systems in the U.S., recently went bankrupt. The problem for many bike share programs is that rental fees from users do not cover operating costs, meaning sponsors need to cover part of the operating expenses and all the capital investment of the services. Sponsor support can be transient, and as bike shares expand to include less profitable stations, bike share services quickly lose solvency. Enter the urban transit boosters (such as the National League of Cities), who claim dubiously large congestion and livability benefits from bike share programs. They support city and state funding for, and capital investment in, bike share programs.

However, like many transportation projects, subsidizing a bike share program most likely benefits the wealthy and educated. A survey of riders using Capital Bikeshare in Washington D.C., found that 95 percent of users held a college degree (56 percent had a masters or doctorate). As for income, 80 percent made more than $50,000 per year and 45 percent earned more than $100,000 per year. For perspective, per capita personal income in the district is about $45,000 and less than half of all residents have college degrees. Clearly, bike share users do not need city-subsidized bike rentals. Furthermore, from data collected in Kansas City, we know that most riders use the bikes on the weekends in the downtown core. In short, a city-supported bike share uses public dollars to support the weekend excursions of highly educated, upper-middle class residents.

The Kansas City bike share service has achieved its initial success primarily as a user- and sponsor-supported venture. But Kansas City residents should be wary, lest the city begin subsidizing the recreation of the wealthy at the expense of everyone else.

The post Keep Bike Shares Self-Supporting appeared first on Show-Me Institute.

Read the full testimony:

The post The Use Of Tax Increment Financing In The City Of Saint Louis (Downtown) appeared first on Show-Me Institute.

Schoemehl is perhaps the best person to educate Columbia residents about the pitfalls of TIF. In the early 1990s, he supported the first TIF in Saint Louis, which city-backed bonds partially financed. The project was (and is) a failure, and resulted in Saint Louis taxpayers having to help foot the bill.

Schoemehl has also been on the receiving end of TIF. He is the president and CEO of Grand Center Inc. In 2002, Saint Louis agreed to provide TIF to Grand Center, and gave the nonprofit, in the words of St. Louis Post-Dispatch reporter Jake Wagman, “broad and almost unilateral powers.” Wagman wrote that Grand Center had the power to “approve or reject building designs, dispense up to $80 million in tax incentives and acquire land by eminent domain.”

Columbia residents should also be aware of Saint Louis’ more recent adventures with TIF. Saint Louis City politicians approve massive public subsidies for large, unwieldy development projects with alarming regularity (search for “tax increment financing”). Discussions about Ballpark Village, the perpetually changing development that has yet to happen, have entailed large amounts of TIF.

Saint Louis is also home to the NorthSide TIF, one of the biggest TIFs in the country. That development would involve $390 million in TIF, if only a court would rule that the TIF agreement between the developer and the city was legitimate. Today, NorthSide property remains largely vacant.

And, do not forget the East-West Gateway Council of Governments study of the use of development subsidies in the Saint Louis region. That study found that retail jobs subsidized with TIF (and some Transportation Development District subsidies) came at a cost of more than $370,000 in public dollars per job.

As my colleague David Stokes would say, I wish someone had written a book about the decades of development subsidy failures of Saint Louis. Oh wait, historian Coin Gordon did. As Gordon wrote:

In practice, blight is less an objective definition than it is a legal pretext for various forms of commercial tax abatement . . . Redevelopment policies originally intended to address unsafe or insufficient urban housing are now more routinely employed to subsidize the building of suburban shopping malls.

For more on the revisionist TIF history that has been spouted in Columbia, click here.

The post Please, Columbia, Learn From Saint Louis’ TIF Mistakes appeared first on Show-Me Institute.

The city has issued an average of $35.4 million in permits per month since the tornado. Before the tornado, the city averaged just over $2.1 million a month in building permits.

Despite this evidence of a robust private market, the Missouri Housing Development Commission has:

. . . committed about $100 million in tax credits and loans over the coming decade to spark the construction of low-to-moderate income rental units and single-family, owner-occupied homes in the Joplin area.

[A] Sept. 30 revision of the federal wage rules significantly increased those amounts. For example, the federal prevailing wage for a carpenter in the Joplin area rose from $7.98 an hour to $21.47 an hour plus $12.65 in benefits. The federal prevailing wage for a roofer in the Joplin area rose from $7.25 an hour, which matches the general federal minimum wage, to $21.30 an hour plus $8.08 in benefits.

The post Special Interests Inhibiting Joplin’s Recovery? appeared first on Show-Me Institute.

The Eagles couldn’t have written a more succinct fiscal description of the $300 million hotel that Kansas City officials want to build downtown, a project likely to be backed in some way by the city’s taxpayers. But Kansas Citians shouldn’t let themselves be captive to another “big idea” pet project promoted by its political class, and should press city officials to drop the plan.

Consider where the hotel would be built: between the recently expanded Bartle Hall Convention Center and the recently constructed Power & Light District (P&LD). City leaders, including Kansas City Convention and Visitors Association President Rick Hughes, hoped Bartle’s 2004 expansion would double the number of conventions the city hosted each year.

Yet conventions haven’t doubled.

The P&LD now has the city on the hook for $10 million in public subsidies each year until 2033, because the district’s present revenues aren’t sufficient to fund its existence.

Even Bill Lucas, president of the city’s hotel steering committee, can’t guarantee that the project wouldn’t be a financial sinkhole. “We’d about have to double our convention bookings” to make the hotel feasible, Lucas recently said.

Let’s recap: 1) The Bartle expansion was supposed to double the number of conventions the city booked, but didn’t. 2) The P&LD was supposed to revitalize downtown, but is now draining millions each year from the budget. 3) As Mayor Sly James put it in February, a hotel is now being proposed to “offset some of the problems” in the P&LD. 4) But, in order to save the P&LD, the hotel needs Bartle … to double its convention bookings.

And around we go.

The project doesn’t make sense on an economic level, either. The fact that private actors haven’t built this hotel suggests that there isn’t a market for one. Moreover, if subsidies from city officials distort Kansas City’s hotel market by giving preferential treatment to the project, existing hotels will see business siphoned away. That isn’t economic growth; that’s economic suffocation.

The project is simply a bad idea. If taxpayers want to avoid getting trapped in their own freshly built Hotel California, they should instead force their political class to book them at the Hotel Free Market. I hear it’s a lovely place. Much less expensive, too.

Patrick Ishmael is a policy analyst at the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

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The report found that local incentives haven’t encouraged job creation, consumer spending, or economic growth in the Saint Louis region, and concluded that the reporting requirements are “seriously deficient.”

The report also found that tax-increment financing (TIF) hurts neighboring municipalities. As I have discussed before, economic development is not a zero-sum game, and municipalities in Missouri can grow faster if they didn’t view their neighbors as competitors.

The editorial board at the St. Louis Post-Dispatch provides a great commentary on the report. The following is my favorite passage:

The money has moved around within the region, however, as vampire-like new developments suck the life out of existing ones. So publicly subsidized retail developments in Chesterfield and Fenton bleed business out of existing centers in, say, Ballwin. New big-box developments in Manchester drain the vitality out of older shopping centers in Crestwood, and so on. Net gain for the region: virtually zero.

If these local incentives don’t result in overall gain, why provide them at all?

Missourians would be better off if they were allowed to keep their earnings and spend them as they desire in the private sector. If the government were serious about encouraging job creation and productive economic growth, it would eliminate such market incentives entirely.

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St. Louis is hosting the Midwest regional finals in this year’s men’s basketball tournament […] But St. Louis was left off the list when the NCAA awarded sites for the 2012-2016 Final Four. Those tournaments instead went to New Orleans, Atlanta, Dallas, Indianapolis and Houston.

“Among those communities that were named Final Four hosts during that cycle, all of them had a public support component that significantly facilitated the staging of the event,” [Greg Shaheen, who oversees the NCAA’s Division I men’s basketball tournament,] said in an interview with The Associated Press.

God forbid, what a travesty it would be if St. Louis failed to continue to be America’s no. 1 sports city. On another note, isn’t it time we stop calling ourselves that, given that about 10 cities have won that award since we did?

Again from the Star:

Missouri currently is “a first tier sports destination,” said Frank Viverito, president of the St. Louis Sports Commission. But he added: “Without a public component to our efforts, then we will fall significantly behind other states.”

Oh well, tough break. I guess we’ll just have to keep more of our tax dollars in order to provide the services that governments are supposed to provide, rather than giving them away to sports promoters.

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