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For example, why do all food truck employees have to wear an ID badge with a passport-quality photo on it? Restaurant employees don’t have to do that. That regulation seems insane, and at least some members of the board of aldermen appear to agree. As a Riverfront Times (RIP) reporter described it:

Committee members were shocked. When it was time for questions, Ward 8 Alderwoman Cara Spencer began with this: “My first question is, are you — and then there’s an expletive — kidding me.”

Show-Me Institute analysts have been writing about food regulation issues for years. In fact, we may have done more videos on food trucks than any other topic. It’s a great topic for us because it perfectly encapsulates how entrenched interests (in this case, restaurants) and their allies in government have worked together to stop a popular new way of doing business.

But back to the city. I think one of the reasons why the aldermen were so surprised by the level of red tape food trucks deal with is that they didn’t intend for it to be this difficult. But when you read the current legislation, one thing jumps out at you. The current ordinance governing food trucks gives the street director, the parks director, and the license collector authority to institute further rules they deem necessary. Here is one example from the ordinance (section 5.M):

The Director of Streets shall formulate any additional rules and regulations necessary for the proper administration of this chapter. Rules and regulations shall be maintained in the office of the Director of Streets and shall be available for public inspection during ordinary business hours.

This isn’t a hypothetical issue. The question of how legislators grant authority to regulators to set law is the subject of a major supreme court case right now. President Eisenhower stated that engineers went far beyond his original intentions with the Interstate Highway System by including intra-city highways without his knowledge, as just one example of this problem.

It may sometimes be necessary for elected officials to trust regulators to set rules under wide authority. However, there is serious risk to this approach. The idea that regulators are setting these rules fairly outside of their own system of pressure, bias or favoritism is hard to believe.

I hope the city will address the overregulation of food trucks with this excellent, newly proposed bill. After, all, it’s probably time for us to make another video . . .

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Often synonymous with Airbnb or Vrbo, STR properties are units intended to be rented out for less than a month. These properties provide a place to stay for people passing through and visiting St. Louis, encourage competition within the lodging industry, and bring revenue to their communities. Some owners, however, have been renting to unpredictable tenants, leading to out-of-control parties, violence, and even murder.

STR regulation has become common in major cities such as New York and London. Even some Missouri municipalities are adopting new rules. Citing similar frustrations to the City of St. Louis, St. Charles just placed a moratorium on new residential STRs in most of the city for a year.

The proposed regulations in St. Louis would, among other changes, create a permit and punishment system to hold STR operators accountable, require a Graduated Business License for owners renting out property they do not live in and a permit for individuals who rent out their primary residence, require a 24/7 available contact for the STR, and limit individuals to four permits for units they do not live in.

While some regulations on STRs are warranted due to the disturbances and dangers they can cause, parts of the proposal appear excessive.

The limit of four STR properties per owner seems like a solution in search of a problem. The city might have included a limit to prevent STR owners from operating many units (so many that someone could not realistically operate them alone) and ensuring that there is always some level of oversight for the STR properties. However, the requirements for each rental (24/7 contact, licenses, permits, punishments) should be more than enough to keep STR owners in check without more regulation. If someone can properly run several STRs without harming the community, why is the government trying to place further restrictions on them and create incentives to subvert the law?

More troubling is requiring permits for owner-occupied units. An STR is considered an owner-occupied unit when a property owner rents out a space where they live (such as a finished basement, or a garage converted into a studio). From the bill:

Applicants for a Short-Term Rental permit for an Owner-Occupied Dwelling Unit shall submit, on an annual basis, an application for a Short-Term Rental permit to the Building Division. The application shall be accompanied by a non-refundable application fee in the amount of $150.00. – Board Bill 33, Page 5, Line 19

Not only does this degrade a means by which countless people have been able to afford academic programs or help lodge friends and family, it might run afoul of state law. Missouri Statute 71.990 limits restrictions on “home-based businesses” and may conflict with the proposed bills. St. Charles’s legislation might not be legal either. It is likely that courts will have to sort out the interplay between Missouri statute and local ordinances.

Overall, these bills appear to do a good job of regulating non-owner-occupied properties. They would give communities more power in mitigating problems with STRs while not being restrictive on those who rent their property. The proposals for owner-occupied properties, however, could be improved.

My colleagues Avery Frank and David Stokes discuss their opinions on the proposed bills here.

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Most who fight to limit opportunities for food trucks are afraid that food trucks will compete with, and potentially harm, existing brick-and-mortar businesses. My family owns restaurants, so I’m supportive of brick-and-mortar restaurants and I’m sympathetic to this line of thinking. The reality is that food trucks will definitely increase competition, but that is not something that should be feared. Competition among businesses should be expected and encouraged. In the same way that brick-and-mortar businesses compete with one another, food trucks should compete with existing businesses—and may the best food and dining experience win!

Market competition encourages entrepreneurship and leads to the best options for consumers. Food trucks will only do “harm” if consumers overwhelmingly decide that they prefer the food trucks over the existing businesses. And harm is in quotation marks because creative destruction is how we make progress. If food trucks were to overtake brick-and-mortar restaurants in the market (which I think is unlikely), it would mean we are moving forward in a direction chosen by consumers.

Misplaced fear of this process often leads to unnecessary and burdensome regulations. For example, many cities have extremely strict regulations that hinder their operations—and some cities simply don’t allow them at all. (These are, of course, different from regulations that reasonably deal with traffic and public safety concerns.) In cases of overregulation, lawmakers are picking the winners (brick-and-mortar restaurants) and losers (food trucks) instead of allowing consumers to decide. We need to stop being afraid of food trucks (and competition) and give them the freedom to operate.

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I’ve previously written about the Mercatus Center’s State RegData project, which calculates how many times each state tells its citizens what they can and cannot do. Using a similar program, researchers examined the impact that federal regulations have on individual states using the federal regulation and state enterprise (FRASE) index. Though federal regulations apply to all states, each state’s economy is made of different industries, so regulations targeted at specific industries will affect states differently.

The authors find that “[the] impact of federal regulations from 1997 to 2015 on the Missouri economy is associated with the following regressive effects:

• 93,411 people living in poverty
• 2.7 percent higher income inequality
• 180 fewer businesses annually
• 2,406 lost jobs annually
• 7.35 percent higher prices”

I’ll admit that it’s difficult to quantify these things and find direct links between regulations and these effects; there’s no specific regulation that led to one of these specific consequences. However, this novel program counts phrases that usually translate to regulatory requirements (like “shall” and “must”) to track changes over time. The authors then use this data along with data for other economic indicators to find the regressive effects. Given what we know about regulations generally, these numbers make sense and are pretty staggering.

From 1997 to 2015, the effective federal regulatory burden on Missouri increased by 54 percent. Researchers have found that an increase in the effective federal regulatory burden on a state is associated with an increase in the poverty rate in that state. This helps to explain why federal regulations have led to more people living in poverty and higher income inequality. Regulations reduce entrepreneurship because they increase the red tape one must cut through to be successful, which impacts the number of businesses in a state. Regulations also increase the compliance costs for businesses, which they then transfer to consumers by increasing prices.

These regulations are not just affecting the industries or groups to which they are targeted. They can affect Missouri workers, small businesses, and consumers. As we continue through this legislative session in Missouri, we should remember the unintended consequences of legislation and regulations.

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• A Level Playing Field for Small Businesses
• Public Schools and COVID
• Preparing for Medicaid Expansion
• Regulation of Food-delivery Services
• Power-density: Implications for Green Energy

Click on the link below to read more.

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• Ordinance 200376 refers to the temporary expansion of sidewalk cafés, parklets and street cafés.
• Ordinance 200377 temporarily suspends parking requirements for restaurants and bars.
• Ordinance 200378 temporarily suspends the prohibition against delivering alcoholic beverages to or by vehicles.

Kansas City, like municipalities across the country, is going to take a significant hit to the bottom line as a result of efforts to curtail the spread of COVID-19. City leaders have an opportunity to demonstrate that they are willing—even eager—partners with the men and women whose entrepreneurship drives the city economy. The regulations being waived likely caused more heartache than they were worth even in good economic times.

The permitting process should not be used to show favor to certain businesses or parts of the city—but favoritism that has marked more than a decade of city spending and regulation. If sidewalk cafes are good for downtown, they are good for midtown and the northland. Treat everyone equally. And if these policies are good temporarily, they are likely good permanently.

The city’s 10-10-10 plan was a debacle, not least of which is because it demonstrated that regulators had not talked to the businesses they were regulating. These ordinances are more promising. The council should be congratulated for setting aside rules and regulations that hamper growth and drive up costs without improving public safety, and should be encouraged to do so permanently. There is much more to do along these lines, but this is a good start. Slainte!

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The Mercatus project to analyze state-level regulation is a continuation of the state-level analysis on regulations conducted in Missouri for the No Mo Red Tape campaign initiated under Gov. Greitens. Mercatus says of the effort,

Mercatus researchers Patrick McLaughlin and Oliver Sherouse created QuantGov, an open-source policy analytics platform designed to help create greater understanding and analysis of the breadth of government actions. The platform allows researchers to quickly and effectively examine bodies of text using some of the latest advances from data science, such as machine-learning and other artificial intelligence technology.

The top-regulated industries in Missouri are utilities followed by ambulatory health care and chemical manufacturing. Only three other states bordering Missouri have utility regulation in their top ten, and they are much further down on the list (Kentucky 7^th, Tennessee 7^th, Iowa 8^th). It would be interesting to learn why Missouri regulated utilities so much more than our neighbors and the degree to which that might be driving up utility rates in Missouri.

While this study does not explicitly make the link, it is generally understood that regulation drives up cost. The difficult work is to determine which regulations are necessary and what costs are reasonable. Researchers and policymakers looking for more efficient ways to regulate may find this data useful.

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Were there health-related complaints or reports of people getting sick from the food? No—they simply did not have a permit to be serving food. The group is not a nonprofit; it is just an informal network of people in the Kansas City metro area giving of their own time and resources, so getting permits for the weekly gatherings would not be so simple.

If the group had a track record of making people sick or there were other safety concerns, then it would make sense for the Health Department to step in and shut them down. But does the city really have a good reason to disrupt this community of individuals who want to feed and build relationships with the homeless and those in need? If the city does have health or safety concerns beyond the lack of a permit, it should make that clear. But with areas of need in the city, it seems that Kansas City could use more of these organic communities, not fewer of them.

In the discussion forum on the group’s Facebook page, several people noted that the police officers and some of the inspectors were not happy with having to shut down the gathering and throw away the food—so we’re not dealing with heartless city officials here. The problem is that there are regulations in place, and they have to be enforced.

Unless there are compelling health and safety reasons to keep them in place, shouldn’t Kansas City—along with other cities in Missouri—identify and amend these kinds of regulations that get in the way of people reaching out to those who are less fortunate?

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Award-winning legal scholar, teacher, and University of Missouri Law Professor Thomas Lambert recently brought this message to our state in a Show-Me Institute Policy Series.  His new book, How to Regulate: A Guide for Policy Makers, outlines the narrow circumstances in which markets fail and how regulators should approach the situation—like a doctor carefully considering the risks to the patient before prescribing surgery where a band-aid would suffice.

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Last year, Ameren filed for approval to install six charging stations between St. Louis and Jefferson City along 1-70 in order to alleviate the “range anxiety” EV drivers suffer with the current number of stations available.  Instead of approving or denying the request, the Missouri Public Service Commission (PSC) postponed its decision on the matter because it was unsure of whether it even had jurisdiction to regulate the emerging technology.

Some background: utilities such as electricity are often delivered to consumers through monopolies because of how expensive competing delivery infrastructure would be—it is rarely feasible for a startup to lay new pipes or string new wires.  To keep current monopolies in check, regulatory bodies (like the PSC) monitor and approve the prices utilities can charge to cover expenses while still protecting consumers from exorbitant prices.

Many private citizens and businesses already own and operate charging stations, so approving Ameren’s expansion into the market is controversial.  Daniel Hall, the PSC’s chairman, said “. . . it’s unclear whether or not it should be a regulated industry or whether it should be an open, unregulated, competitive market. . . . Where there is a competitive market, I’m not sure that that is a role for the commission.”

Hall’s uncertainty about the PSC’s role makes sense.  If the PSC were to approve Ameren’s project, it’s possible that all of Ameren customers (whether they own an electric vehicle of not) would have to chip in to cover the cost of construction for the new stations. 

Communities around the nation are debating whether the public-utility model would stifle competition, or if it is a necessary kick-start to EV adoption. Kansas’ regulatory body recently denied Kansas City Power & Light’s request to charge ratepayers for a $5.6 million charging station initiative, arguing the proposal was anti-competitive and that it would be unfair to require all ratepayers to subsidize a handful of EV drivers.   Meanwhile, Oregon has ruled (see p. 8) that utilities may own charging stations and cover costs through all ratepayers if they prove an area is in need and would not otherwise receive investment.

Ameren is proposing to construct stations in an area that is currently underserved, but electric cars are relatively new, and technological improvements could soon make them more prevalent than they are today. Missouri’s PSC has been confronted with a difficult decision, and they deserve credit for not blindly jumping into the unknown.  If a free-market model could improve customer choice and spur innovation, then we should be wary of expanding a monopoly where it may not be necessary.

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First, the city and TNCs got into a bit of a spat. (Listen to Mayor James’s thoughts here.) Then a compromise was reached, allowing TNCs to operate in the city. But now the terms of that compromise are coming up for review, and guess what? The city wants more control, and TNCs don’t want them to have it.

The major proposed changes to the City’s TNC ordinance include: (1) eliminating a 30-day orientation period and replacing it with a 30-day temporary permit; (2) forcing drivers to acquire additional insurance and increasing the company’s permitting fee from $45,000 to $70,000; and (3) handing all background-checking duties to the city.

1. The Star and regulators have cast a 30-day orientation period—during which TNC drivers can operate without a city permit—as a loophole for “dangerous” and “undocumented” drivers to “overcharge passengers or do something much worse.” While these worries are likely overblown, simply replacing the orientation period with an issued-on-the-spot permit is unlikely to threaten TNCs’ ability to operate in the city. In fact, if this measure were implemented, Kansas City would still be one of the easiest places to start driving for a TNC (compared to, say, Dallas). If this change assuages the concerns of regulators at little to no cost, so be it.
2. Requiring extra insurance and increasing the fees TNCs pay to the city are a different story. In short, the heavier insurance burden forces TNC drivers to carry the same insurance as taxi drivers. It requires insurance to cover incidents even when, for example. a TNC driver is involved in an accident while providing a ride but not working through the ridesharing app. This, in conjunction with higher city permitting fees, will place a significantly greater financial burden on drivers and will likely keep many from entering the market at all.
3. Lastly, and most controversially, handing background-checking duties to the city’s preferred vendor over those contracted by TNCs is complicated. This proposed change would keep driver information centralized and thereby prevent unqualified drivers from going from one TNC to another. But it isn’t clear that the vendors TNCs currently use for background checks are any less thorough than the city’s preferred vendor. If it came down to just this change, Kansas City regulators should ask themselves: is conducting their own background checks worth driving Uber and Lyft out of town for good? Although officials have public safety in mind, as my former colleague Joseph Miller has argued, they should let riders assess the level of “risk” they are willing to take.

So, overall, and unsurprisingly, city regulators are vying for greater control in a market averse to red tape. Not all of the proposed changes are onerous, but many would put additional barriers between consumers and service providers. Perhaps city leaders will learn how to get out of the way this time around.

To learn more about the proposed ordinance changes, and to leave your comments, click here. 

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In Missouri and elsewhere the sharing economy has faced strong resistance from the regulatory state and existing businesses. Hotels and for-hire vehicle operations are traditional revenue sources for local governments (who treat hotels especially as piggy banks for pet projects), and dominant companies are geared toward a highly regulated status quo. When residents demand access to the sharing economy, regulatory bodies downplay the extensive web of regulations and high tax rates they have created, and instead fall back on appeals to public safety. Background checks, inspections, and in Saint Louis, fingerprinting, have become the motte to which regulators have fled, no doubt hoping to retake the entire regulatory bailey once their attackers have run out of steam.

While the claims of protecting health and safety make sense on their face, on closer inspection everything seems very arbitrary. Why does a vehicle need an inspection by a taxi commission; wouldn’t any auto-body shop do? If the vehicles need to be inspected anyway, why require an additional inspection at all? Why should background checks need to go seven years? What’s wrong with five? And so on.

The core problem is that a group of regulators, not the individuals actually using the services, are deciding what is safe enough. So instead of companies differentiating themselves and letting people make their own decisions, cities give an arbitrary, one-size-fits-all solution. And it is usually a conservative solution.

It does not have to be this way. In an innovative approach, Austin’s mayor has proposed a plan called “Thumbs Up Austin” as a compromise on fingerprinting for Uber and Lyft drivers. Instead of forcing all drivers to get fingerprint checks, those who chose to do so would get a “Thumbs Up” badge. Uber users would be able to see this badge before choosing a driver, and could decide whether they required their driver to have the badge. The mayor believes this could also work for other sharing economy services, like Airbnb.

If the idea proves successful, it would open the possibility of allowing those who are providing a service and those who are using the service to decide their level of regulation. 

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