The development has been awarded more than $30 million in TIF over the years for the construction of high-end shopping, office, and luxury residential spaces in one of the most economically successful areas in the region. Just read this developer overview, which claims this part of Richmond Heights “forms the metropolitan area’s most successful and dynamic commercial and residential district.” The area hardly looks like the “urban blight” TIF was originally designed to remedy.  

But there’s a recent development, beyond the (ahem) questionable use of subsidies in this area, worth touching on.

The most recent phase of the development was originally estimated to cost just shy of $80 million. Back then, developers claimed the project was financially infeasible without TIF and other subsidies. But now the project’s costs are up $20 million and it’s still moving forward. But how can this be? How can a project that was infeasible at $80 million be moving ahead when it is now $100 million?

Here are three theories:

1. The magnanimous developers decided they could part with an additional $20 million of their own funds even though they claimed the original cost of their project was too high to burden privately.
2. The initial request for public assistance was far more than was actually required to move ahead, and so, the $20 million setback can be easily absorbed. (Though I doubt any public assistance could be considered reasonable for this project.)
3. The developers were going to build their project with or without public assistance, but helped themselves to taxpayer cash because it was being offered.

This list may not be exhaustive; there may be other ways to explain the project going ahead. Nevertheless, if I were a betting man, I’d put my money on #2 or #3. Why? Because much of the academic research on TIF suggests developments will happen regardless of whether or not subsidies are awarded. The Boulevard development is consistent with this theory, and suggests that perhaps taxpayer handouts aren’t as essential to economic growth as many public officials seem to think they are.

The post Is TIF Failing the “But-For” Test? appeared first on Show-Me Institute.

Maryland Heights-based Schnuck Markets, which operates 100 stores in five states, on Monday will begin testing its first Tally at its store at 6600 Clayton Road in Richmond Heights. The pilot test is expected to last six weeks. A second Tally will appear in coming weeks at Schnucks stores at 1060 Woods Mill Road in Town and Country and at 10233 Manchester Road in Kirkwood.

The race between man and machine is a fixture of popular culture, from John Henry to Yoshimi Battles the Pink Robots. In most stories, robots represent the movement of technology replacing man: of cheaper, stronger, more efficient labor. It’s not surprising then that in most folklore, the machines are depicted as sinister. But that isn’t the case for consumers.

All of this is an effort by producers to provide better, faster and cheaper service, and to that end it is a good thing because it drives down prices for everyone. It should be a wake-up call to activists who think they can affect positive social change merely by increasing the minimum wage—in which only a few benefit at the cost of many. Making labor more expensive not only makes technology more attractive, but it puts smaller businesses who cannot afford the investment in technology at a competitive disadvantage.

The post Man versus Machine in Saint Louis appeared first on Show-Me Institute.

This development, Phase II of The Boulevard development, was set to take place years ago, but plans were put on hold due in part to the recession. Now the land is being sold to another investor, and tax increment financing (TIF) is on the table. The Boulevard’s prime location—across the street from the Galleria and at the intersection of I-170 and I-64—is one reason for the developer’s high expectations. Another reason is the average household income of $92,581 within three miles of its location. Residents of Richmond Heights might well ask why a project with a prime location in an affluent area needs to be subsidized by taxpayers.

TIF was designed to reduce the costs of private developers investing in blighted or economically unattractive areas, but the Boulevard development is far from the first instance in which TIF has gone toward a project in an area that would hardly be considered “blighted.” A recent study on incentive use in St. Louis City found that roughly two-thirds of all property tax abatement and TIF has gone toward areas with strong housing markets.

The Boulevard development is representative of the misguided use of incentives in St. Louis during recent years. When well-off neighborhoods are asking taxpayers to subsidize their investments and truly blighted regions are being ignored, it may be time to reevaluate our spending priorities.  

The post TIF Requests in Affluent Areas: The Beat Goes On appeared first on Show-Me Institute.

Funds raised from the tax increase will be directed toward priorities such as hiring 16 new certified teachers to help struggling students and restoring technology and student club funding. Proponents of Proposition R say that without additional funds, home values will decrease due to declining academic performance. Opponents believe the additional funds won’t be used wisely, in which case the increased tax rate will lower the value of their homes.

Analysts at the Show-Me Institute have looked at how school quality and tax rates affect home prices. In Real Estate Assessment and Property Taxation, analysts demonstrated that the quality of schools and their related tax rates are capitalized into the value of property. As the video below explains, homeowners in the Clayton and Ladue school districts in Richmond Heights pay substantially more for comparable homes with better performing schools and lower tax rates.  

In short, homeowners and voters want to get the most bang for their tax bucks. The following data on school performance and school funding may shed some light on what’s going on in the district.

First, the graph below shows how Mehlville and the districts around it performed on the MAP test in 2015 in both math and science.

Mehlville doesn’t look great. In fact, the district has the second lowest math scores in the area.

But, if we look at a second data set—college readiness indicators like average ACT scores, college remediation rates (the percentage of students who enroll in courses they should have completed in high school), and the number of AP courses the district is offering—Melville is performing better than other districts in the area (see table below). 

Even with reports of losing teachers to neighboring districts, Mehlville is able to offer a large number of AP courses and prepare students for college at about the same rate as neighboring districts with more teachers and administrators (as our next graph displays).

The graph below presents teacher/student and administrator/student ratios. Mehlville has more students per teacher than Kirkwood, but fewer students per teacher than Lindbergh, even though both are better-performing districts. Mehlville also has the highest student-to-administrator ratio in the area.

Finally, relative to other school district property tax rates in the area, Melville has the lowest rate:

So what should we make of all of this? Frankly, it’s tough to say. In some ways, it appears that Mehlville is operating efficiently. With fewer teachers and administrators and a lower tax burden, the district is achieving about as well on several key indicators as other districts. In other ways, it appears that the district is lagging behind.

The real question is whether new dollars will do anything to move the needle on student performance. Simply hiring more teachers and investing in technology and student clubs doesn’t seem particularly compelling. What’s more, will raising taxes hurt Mehlville’s competitive edge in recruiting new homeowners? Without strong answers to these questions, it is hard to determine if taxpayers should get behind any effort to increase tax rates in the district.

The post Melville School District Wants to Raise Property Tax Rates appeared first on Show-Me Institute.

Solutions like requiring developers to include affordable housing units in new projects and developing metropolitan-wide transportation are politically unpopular. But they are a necessary part of any effort to restore economic mobility and the American Dream.

While everyone supports economic mobility and the American Dream, there is not adequate evidence to back the authors’ call for more regulation and transportation subsidies.

According to the report, “Mobility and the Metropolis: How Communities Factor Into Economic Mobility,” income segregation in a city leads to low economic mobility. This is important for Missouri cities such as Saint Louis, where income segregation is high and income mobility is low. The authors of the study would have Saint Louis expand transit and entice developers to build mixed-income housing. However, the track record of Saint Louis-area transit-oriented development has been less than ideal, as exemplified by a subsidized apartment complex near the Richmond Heights Metrolink station. A closer look at statistical models of the report calls their entire conclusion into question.

Without getting into too much detail, the problem with the report is that their model only finds an effect from income segregation when they don’t include other relevant explanatory factors. For instance, analyze New York City, which has among the highest income segregation (A) and lowest economic mobility (B) ratings. The report would have you believe that A contributes to/causes B, so improving A improves B. But what if (C), the dominance of financial services or legal professions, causes both A and B in New York City? Then fixing A will have no practical impact on B. In the complicated areas of income segregation, we must account for many possible factors like C.

However, the report promotes a simplified model that only shows a relationship between income segregation and economic mobility without including enough alternative variables. The report did not even mention that their model demographic variables did not show that income segregation was associated with economic immobility. Despite this shortcoming, both the report and media coverage have used the report to make irresponsibly expansive policy recommendations.

This over-hyping of statistical data can be all too common in the social sciences, so Missouri policymakers and citizens have to be vigilant. It is easy to twist data to justify government intervention if no one challenges the strength of the result.

The post Using Questionable Data To Back City Planning appeared first on Show-Me Institute.

The post All This for 20 People? And You Paid for It! appeared first on Show-Me Institute.

TIFs keep surfacing because city officials often blindly focus on sales taxes. After all, that’s how cities are primarily funded. Desperate not to be one-upped by border cities and their own giveaways, cities gladly sacrifice property taxes for more sales tax dollars.

The problem is that property taxes pay for schools and many other critical services.

Disturbingly, the quest for precious sales tax dollars often encourages cities to abuse eminent domain as a part of TIF. St. Louis County residents and business owners in Rock Hill, Sunset Hills, Richmond Heights, Manchester, and elsewhere have suffered the pain of having their property taken so that taxpayers can subsidize new developments. Joanne and Arthur Bailey fought for years to be able to keep their home in Hadley Township (in Richmond Heights) against threats of eminent domain. Thankfully, the Baileys won their battle. Many others have not been so lucky.

Even when some officials understand the dangers and try to stop them, TIFs aren’t easy to defeat. County TIF commissions in Saint Louis and Saint Charles County have recently rejected TIF proposals only to see city councils override their decision. That is what happened in Ellisville, and will likely happen in Shrewsbury, because the law allows it.

It is hard to believe that a city of a few thousand can make tax decisions that harm an entire region, but that is exactly what happens. Shrewsbury has 6,600 people, but it will make tax decisions that affect the Saint Louis Community College district, which serves 1.3 million residents. Why continue to allow small cities to impose policies that hurt our larger region, with no way to stop it? It is ludicrous.

Happily, some citizens are finally starting to recognize the harm done by TIF and local government economic planning. The Ellisville City Council passed the TIF despite substantial opposition from the residents. Anti-TIF candidates in the most recent Ellisville mayoral election received more than 70 percent of the vote last year, but the TIF still went through. It remains to be seen whether the opposition in Shrewsbury will be able to mount a major attempt to defeat the latest Kenrick Plaza TIF proposal.

Major TIF changes are sorely needed at the state level. Countywide TIF commissions should have the final say, not city councils, and Missouri needs far stricter limits on what can be taken by eminent domain. Until then, the municipal TIF sprint to the bottom will continue. Next stop: your town.

The post Stokes on KWMU – TIF Hurts Communities appeared first on Show-Me Institute.

Related Links

Video: Who is Hurt by Eminent Domain Abuse and TIF in Richmond Heights?
Testimony: ‘Sometimes Nothing Can Be A Real Cool Hand’ Saint Louis County TIF Policy, Punting, And Cool Hand Luke
Op-Ed: TIF Is A Bad Idea That Refuses To Die
Op-Ed: TIF Gives Cities An Unfair Advantage Over Other Governments

The post Tax Subsidies For The Wealthy appeared first on Show-Me Institute.

The post McGraw Milhaven – David Stokes on KTRS appeared first on Show-Me Institute.

What I AM happy about, to say the least, is that Pace will not be exercising eminent domain to take the property of people who did not want to sell. They could have done so. They had the legal authority to use eminent domain. They chose not to. Pace Properties officials deserve praise for their restraint.

I am holding off on praising Richmond Heights officials until we see how the Menard’s project next door (also within Hadley Township) goes through.

Private property rights are more important than another commercial development. Forcing people out of their homes would have been immoral. I am very happy for the Bailey, Parker, Tompkins, and Abrams families, who will be able to stay in their homes. Please check out the video of the Show-Me Institute’s interviews with these families here.

However, let’s not deny the great damage done to the neighborhood through the entire process because of previous potential developers and the city. Government involvement caused the recent history of deteriorating property, vacant homes, and more. Residents of Hadley Township are now in a difficult situation that the government caused because it involved itself in real estate development. It was completely avoidable if the city had not become involved.

The post Good News For Hadley Township And Property Rights appeared first on Show-Me Institute.

The post McGraw Milhaven – David Stokes on KTRS appeared first on Show-Me Institute.

More background on Hadley Township

More videos in this series
Part 1
Part 2
Part 3

The post Who is Hurt by Eminent Domain Abuse and TIF in Richmond Heights? – Part 4 appeared first on Show-Me Institute.

More background on Hadley Township

More videos in this series
Part 1
Part 2
Part 4

The post Who is Hurt by Eminent Domain Abuse and TIF in Richmond Heights? – Part 3 appeared first on Show-Me Institute.

More background on Hadley Township

More videos in this series
Part 1
Part 3
Part 4

The post Who is Hurt by Eminent Domain Abuse and TIF in Richmond Heights? – Part 2 appeared first on Show-Me Institute.

More background on Hadley Township

More videos in this series
Part 2
Part 3
Part 4

The post Who is Hurt by Eminent Domain Abuse and TIF in Richmond Heights? – Part 1 appeared first on Show-Me Institute.

Usually when we write to warn cities about the dangers of TIF, we urge them to consider the failures in other cities or other developments. Officials in the city of Richmond Heights need not look past the city’s own history and, in fact, the history of this particular development. Developers have had their eye on the area since the late 1990s, and two of the proposals (from Michelson Commercial Realty in 2006 and United Plaza in 2010) seemed like they might actually get off the ground before collapsing, mostly due to the state of the economy following the 2008 crash. Now, Richmond Heights is at it again, enticing Pace Properties and Menards with promises of substantial amounts of TIF ($27 million and $24 million, respectfully).

The interesting thing about Hadley Township is that it is not an example of TIF having a negative impact on an area because it cost taxpayers millions and showed less-than-impressive returns — though that is exactly what could happen if the current plans move forward. Instead, this is a case of a city dangling TIF like a carrot in front of developers but failing to complete any of the proposals brought forth. This has left homeowners in limbo; many have moved on or let their homes fall into disrepair because of rumors that they will soon be bought and torn down. It seems like a dismal outlook for the area — either taxpayers are on the hook for more than $50 million of the developments or the neighborhood is left in the blighted state it has reached because of the failures of the past decade. There is, however, a third option: Ditch the TIF and encourage private developers to take advantage of the fact that many of the residents are willing to sell. Private developers, not TIF, could provide the solution that the residents of Hadley Township have been seeking for so long.

The post Richmond Heights Continues To Ignore A History Of TIF Failures appeared first on Show-Me Institute.

I do not recall ever seeing such a brazen example of an elected body ignoring the will of the people. Combined with the terrible economic policy they are now instituting, the choice of the Ellisville City Council to enact this TIF is one of the worst decisions I have ever seen a government make.

Now more than ever, we need the state legislature to pass major TIF reform for Saint Louis County and all of Missouri. The ability of cities to override a county TIF commission must be removed. Furthermore, TIF districts should be required to make other taxing districts whole through alternate tax dollar arrangements. In other words, cities should share the sales tax dollars placed into the PILOT (Payments In Lieu Of Taxes) fund.

We still have many more TIFs to fight in Shrewsbury, Saint Ann, and Richmond Heights; and that is just Saint Louis County. Add in the Enhanced Enterprise Zone (EEZ) in Columbia, the Transportation Development District (TDD)/Community Improvement District (CID)  in Chesterfield, the incessant use of subsidies for every project in Kansas City and Saint Louis, and I can assure you we will be very busy. When it comes to pointing out the economic flaws in the terrible arguments for local development subsidies, the Show-Me Institute has only just begun to fight.

Now I am going to get some lunch. (Go to the 2:04 mark.)

The post Depressing News From Ellisville appeared first on Show-Me Institute.

According to the St. Louis Post-Dispatch, Richmond Heights has been entertaining proposals since 2003. Things looked great back in 2006, when the Richmond Heights City Council found a serious suitor in Michelson Commercial Realty and Development. But three years later, Michelson still could not get the financing together even with Richmond Heights officials pledging $46.2 million in TIF. The project was scrapped and Michelson pulled out of the 86 contracts it had signed to purchase all the homes and businesses in the affected area. All told, four separate development plan proposals just like Michelson’s failed.

The (eternally) pending developments have sent the neighborhood into a state of disrepair. Richmond Heights City Manager Amy Hamilton told the Post-Dispatch prior to the City Council’s latest vote that more than 35 properties are in “poor or severely deteriorated condition, and the majority of these properties are owned by land speculators.” Hamilton blames speculators and absentee landlords for the degradation, but more likely, Hadley Township property owners are responding to the incentives the city has offered. Who would really invest significant time and money in home improvements while the city unsuccessfully plots deal after deal to snatch up their properties?

And what do Richmond Heights taxpayers get for all their trouble? With Menards, they get yet another big-box home improvement store on South Hanley Road. If the market really drives Menards, Lowe’s, and Home Depot to locate within a half mile of each other, that is great. But it should not be government’s role to plan the local economy. More importantly, however, taxpayers get to finance $19 million of Menards’ $56.1 million development and $26.6 million of Pace’s $125 million development. (Bonus!)

This really is TIF at its worst.

The post Richmond Heights: TIF Gone Bad appeared first on Show-Me Institute.

The post Property Taxes in Missouri: Can School Quality and Tax Rates Affect Home Prices? appeared first on Show-Me Institute.

Just in time for this process, the Show-Me Institute has released a series of pieces on property taxation. We have a new policy study that details exactly how property taxes are implemented in Missouri, including a literature review considering the economics of property taxation and the ideas of Charles Tiebout.

There is a case study that details the manner in which public services and property taxes are capitalized into housing prices in Richmond Heights, Mo. We have two videos: one describing the myriad of tax districts that implement property taxes in Missouri, from the common to the little-known, and one which also focuses on Richmond Heights.

The policy and case studies share the briefing paper, and there is an op-ed that has already run in the Saint Louis Beacon on this topic. These pieces were all written by Christine Harbin and myself. Josh Smith helped out with the research and the videos. A number of interns helped out as well, and proud we are of all of them. If you are interested in the questions and debates that involve property taxation, we hope you find these studies and videos interesting.

The post Property Tax Rates Being Set Across Missouri appeared first on Show-Me Institute.