Susan Pendergrass speaks with Judge Glock, director of research and senior fellow at the Manhattan Institute and contributing editor at City Journal, about the growing debate over data centers in Missouri and across the country. They discuss why some communities are banning data centers while others are welcoming them, how Loudoun County, Virginia became the global epicenter of data center development and what it has meant for local tax revenue, whether concerns about noise, aesthetics, and energy use are valid, and more.

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Episode Transcript

Susan Pendergrass (00:00): Thank you for coming on the podcast again, Judge Glock. We’re going to talk about something that is certainly in the news and certainly good and bad for Missouri in the past week. We’ve had stories about both new data centers being announced and more communities banning them. What’s your take on that? You live in Virginia. In Missouri, we are certainly at odds with each other between one area that is going to have both a massive Amazon and a massive Google data center and then very close to that a large county that just banned them. Where do you think this is going?

Judge Glock (00:36): In some sense, it’s going the way of a lot of American projects in that there’s going to be a diversity of local responses to them, which I think is actually quite OK. One of the things I gather when I talk to some of my friends across the pond in the UK or in Europe is that they basically have to have this grand national debate about data centers, whether to allow them and where to allow them. That’s obviously an important and worthwhile debate, but in America what we’re going to have, and what we’ve already had, is a near infinitude of local debates about data centers. I think that’s the right path. When you nationalize or centralize these issues, you create more veto points for people who want to refuse any sort of growth. You also force certain kinds of growth on people in areas that aren’t necessarily favorable to them or most likely to benefit from them. The American system of fairly decentralized governance, combined with a fiscal horse-trading side where the main benefit of local data centers is the fiscal bump local communities can get, I think is going to lead to a more positive outcome than a more centralized system that tries to create a single answer for a whole country or state.

Susan Pendergrass (02:07): But we have at least one county in Missouri that within the last few days said, regardless of the money, we’re a community and these things ruin towns and communities. I wonder if it isn’t going to be like driving across some states like West Virginia where the biggest, ugliest, most pollution-spewing plants are there. I wonder if it’s because Virginia was willing to have them. Now you have these communities in Missouri that are like, we’ve got acres and acres of land and we don’t care what it looks like, versus these other communities that are saying we don’t want big white buildings everywhere. That to me is a very interesting dynamic, because I feel like they’re going to end up in places where nobody wants to build anything else.

Judge Glock (03:02): Yeah, and that might not be the worst outcome. Can I give a quick segue into the history of something called environmental racism? This was a movement started to some extent in the South in the 1970s and 1980s to meld general anti-industrial, pro-environmental sentiment with the burgeoning civil rights movement. The argument at that time was that evil polluters were forcing their factories into places that were poor and largely Black or minority-majority areas, and that this was a travesty because it was burdening people with increased environmental harm, pollution, and factory soot. The problem with that analysis, which has been carried out by the federal government for decades, is that a lot of times poor and minority communities really, really wanted these factories. They were willing to accept the trade-offs of the environmental harms for the fiscal and monetary benefits in a way that wealthier communities were not. Precisely because they were poor, they usually put a lower value on the environmental concerns that exercised a lot of high-income people and put a much higher value on getting good jobs and all the rest. There’s a famous case from the 1990s where I believe the Clinton administration sued a Louisiana parish and a company that was trying to place a factory in a majority-minority district, claiming it was an example of environmental racism. It actually turned out that the largely Black politicians in the local area were saying this was insane, that they were being sued by the federal government for being racist against themselves when they wanted the factory. That’s a long segue into environmental racism, but I think it’s the sort of analysis we should apply to data centers. There are going to be some areas that put a higher value on the fiscal benefits of data centers than others. On the whole, I imagine those will be poorer areas that care a bit more about reducing property taxes and perhaps the fairly small but not insignificant job benefits of data centers. Estimates suggest a finished data center will create around 50 or so permanent jobs, though certainly hundreds during construction. Some of those communities will be more likely to accept them than maybe wealthy suburbs or other areas that don’t want them for various reasons. Now there are exceptions to that general framework, and I’ve written a bit about Loudoun County, which is a very strange case study.

Susan Pendergrass (06:02): Tell me about that, because I’m surprised that it’s the data center capital of the world given what I’ve seen in Loudoun County.

Judge Glock (06:08): I happen to live in Fairfax, Virginia, in part of the suburbs, and grew up in the general area. So it surprised me to learn not too long ago that Loudoun County, just a little further west from Fairfax, a county generally considered ex-urban and rural, and by one measure, median income, the richest county in America, with a median household income of around $170,000 a year. And yet despite this reputation as a wealthy Northern Virginia ex-urban community, what Loudoun has actually become is the global epicenter of data centers. By some measure, the amount of gigawatts used by data centers, the only place close is Beijing, and they’re not even close, at about half the level of what Loudoun and Northern Virginia have. As I showed in an article I wrote for City Journal that got some attention, that came from a particular confluence of events, a history of Defense Department buildup that left a lot of what’s called dark fiber in the area, which created what’s known as low latency, meaning data centers there could communicate with each other very quickly. That made it a good place to locate internet and communication-focused data centers, and today data centers focused on inference for AI, that is the answering of AI queries. That history made it a particular location. But the other side of the Loudoun story is that for decades, and especially in the last decade, the county just recognized the fiscal benefits. Right now data centers are paying for 45% of all taxes in the county, which is pretty remarkable.

Susan Pendergrass (08:12): How much are they taking in from data centers in person?

Judge Glock (08:15): For the next fiscal year, the estimate is that data centers will bring in $1.3 billion in county revenue. That’s about 45% of all local tax revenue. But maybe an even more startling way to frame it is that all local government uses and projects outside of schools are a little less than what Loudoun raises from data centers alone. So the local residents of Loudoun County effectively get free police, free firefighters, free animal control, free roads, and so on.

Susan Pendergrass (09:00): Have they lowered their property taxes?

Judge Glock (09:02): Yes. Thanks to this absolute boom in data center revenue, Loudoun not only has very well-appointed and well-funded schools, roads, and police departments, but they’ve also lowered their property tax rate pretty continuously for over a decade. It’s about 40% lower than it was in the early 2010s. Now that’s offset to some extent by increases in assessments and other rates, but it is much lower than what I pay over here in Fairfax, about a third lower. So data centers for Loudoun, which can kind of be seen as the first area to really embrace them, and home to one of the first significant data centers in America built by a now large firm called Equinox in the late 1990s, has worked really, really well for that county. I don’t think it’s necessarily going to work as well for every possible county that doesn’t have the same advantages Loudoun does, but it does show that for those that embrace them, there can be real benefits. It clearly hasn’t hampered the ability to attract high-income, well-funded residents with good jobs and a nice community. On the whole it seems to have been beneficial, even if you’ve seen growing opposition there as you’ve seen elsewhere.

Susan Pendergrass (10:46): Virginia horse country. But now it feels like the word is out and people are hearing that there could be health risks, that the buildings buzz, that they use all the water. I’ve seen some recently that have like some blue stripes and stuff on them, but the originals were pretty plain. The latest vote in Missouri was in St. Charles, and people cheered and wrote all these emails saying we don’t want them in our backyard because of health risks and noise. How valid are those concerns?

Judge Glock (11:22): Before I was celebrating the local diversity of responses to data centers relative to the alternative, but I don’t want to slight the classic concerns with local NIMBYism, the not-in-my-backyard movement, or the idea that local governments often try very hard to restrict new development of housing or other projects in their area, which can be a substantial burden for people looking for housing or hoping for jobs and fiscal revenue. On the whole, I think the competitiveness of local governments will help wash that out. If St. Charles or another county refuses to build a data center, it’s often not too difficult to find another county willing to accept one. But I do think a lot of this anti-data center hysteria is driven by people with not just local concerns, which can be legitimate though to my mind often vastly overblown, but with a general anger at technological civilization and AI writ large. A lot of that has been strangely channeled into specific local opposition to data centers. That old leftist slogan of think globally and act locally presents a problem here: a lot of local issues don’t really map well to global concerns about climate change or AI. If someone has an issue with AI and they ban a local data center, that is in no way going to stop AI. Stopping a data center nearby is not going to stop the revolution. It will barely even slow it down. There is a lot of generalized opposition to modernity and technology that gets channeled into opposition to local data center construction, which is totally irrelevant to that debate. As for the actual local concerns, when I was reporting on the story for Loudoun, I spent some time driving around and checking out these data centers. For those who have not seen one, or frankly a park of them, it’s a pretty amazing sight. These things can be huge, nearly approaching a hundred feet tall, very solid concrete boxes, not often the most beautiful structures you’ve ever seen. The trend now is placing blind windows in them randomly to make them look better, though depending on your preference that may or may not help. I think a lot could be done to address the aesthetic concerns. Those are real. If you look at some parts of Loudoun and elsewhere, there are data centers built right next to housing subdivisions, and it can feel uncomfortable to have a looming concrete block right next door. The other local concern I think is somewhat legitimate but again overblown is the noise. Data centers, mainly because of their cooling systems, emit a fairly regular hum. It’s a low frequency, low decibel hum, but at a low frequency it can go through walls and subtly shake things. It can be irritating. I personally would not like a low frequency hum right next door. But the solution, as with the visual impact, is simply to push them back a bit. This is not like a local school that needs to be right next to a subdivision. If you’re talking a few hundred yards down the road, you’ve pretty much solved most of the hum and visual impact issues, especially if you surround it with some trees or berms or other methods to both hide the structure and limit the noise. Those two issues, the noise and the visual impact, are real. I understand why people are concerned, but they can be and have been easily addressed. In most of the debates you see, that’s not really the issue. It’s these generalized concerns about AI or false concerns about water.

Susan Pendergrass (16:03): What about the use of energy?

Judge Glock (16:19): Again, to some extent this is another local versus global problem where the local energy use of a data center is not really going to change the price people pay on their local residential energy bill. Most energy here in Virginia and elsewhere is part of a big interconnection, which is a market where different energy producers and power plants share electricity across large transmission lines. The price for electricity, besides state-level mandates, laws, or environmental regulations, is usually determined in that general market. Yes, a data center will drive up electricity costs somewhat in that general market, but it’s not necessarily a substantial driver of that. One new data center will have a very minimal impact on anybody’s bills across the whole region and will have no real effective impact on somebody’s local energy bills. To some extent, data center builders have also been doing a lot more work to construct what’s called off-the-grid or behind-the-grid energy production attached to the data centers. That can be problematic because of increased noise, even in Loudoun and elsewhere where a lot of places just have backup diesel generators that can produce a loud crack when the backup energy turns on, since data centers want to be running constantly. But in general, as before, you have very localized concerns about noise that you want to address with very localized attempts to limit those impacts, either through distancing the data center or finding ways to cover it and limit the noise it emits. The electricity issue is real in the sense that demand for electricity is going up because of data centers, and as economists like to say, supply is inelastic, meaning supply of energy is not going to ramp up as quickly as demand. That means prices are going to go up a little bit nationally because of that. But as long as the value of these data centers is there and people are going to build them, they’re not really going to have a meaningful impact on local electricity prices, and the data center builders are going to find other ways to get electricity and make sure that generation capacity comes online.

Susan Pendergrass (19:28): Missouri is building these two massive data centers not far from our one nuclear plant, and I know that’s something that has been discussed. When I hear that Loudoun County was the first to do this in such a massive way that they could bring in half of their income from data centers, it feels to me like when Colorado legalized cannabis and was the only state to do so. They took in so much money that residents got money back on their income taxes, and every other state said they were going to be just like Colorado. But Colorado was the one that did it first. Maybe Loudoun is the one that did it first with data centers. So now when a community brings in a data center, it’s not going to have the same impact it had in that first wild test case that was Loudoun County, right?

Judge Glock (20:18): I think that’s correct. I would note though that for some smaller communities, especially small rural communities with relatively small populations, such as some of these Texas counties, a single data center can become a third or more of the city’s or county’s budget overnight. So they can have a huge impact on smaller and poorer areas. But do most data centers as they’re built today have the huge fiscal impact that Loudoun got? Absolutely not. The other side of the fiscal story, though, and one that will apply more universally, is that data centers require very little in the way of services. When a city allows a new subdivision or apartment building, it gets more property taxes but also has to pay for schooling for the kids, roads, fire departments, and all the rest. When a city allows a new office park, there are similar property tax benefits but fewer service costs than residential development. According to one estimate I saw, for every dollar a typical office building or commercial retail project generates, a city spends about 25 cents on actual services to it. For data centers, because there’s basically no one in them, that number drops to about four or five cents. They basically need nothing. As I talked to some of the local officials in Loudoun, they said these things don’t send kids to school, they don’t even put cars on the road. There’s basically no impact on anything else. Once it’s built, it just sits there and throws off property tax revenues. No trash pickup, no breaking up fights at a local bar. It’s just money that keeps flowing in. So even if the property taxes aren’t as massive as they are in Loudoun, local communities still aren’t going to have to worry much about services, and they’re still likely going to see a big net benefit. Some people point out that data centers don’t offer many jobs over the long run, and a lot of industrial projects get approved because of job creation. But the flip side is that very few jobs also means low services and low impact. A big concern with local communities approving projects is traffic, and data centers just don’t create much of it for their size. So yes, other counties are not going to get the kind of deal Loudoun got and still is getting, because it remains the epicenter and data center builders want to build next to other data centers. But they are going to get a project that really doesn’t cost much of anything, still throws off at least some money, and doesn’t really burden local communities as long as it’s placed ever so slightly out of the way.

Susan Pendergrass (24:16): That brings me to another point. I’ve read that there are a lot of very smart engineers working on the problem of AI inference and how much energy and space it requires, and how to make it more productive. Eventually I think they’re going to solve this. We used to have server rooms that every business kept cool, and then everyone ended up with a laptop or even a phone. Eventually I think people are going to address this problem of requiring so much physical space to do what we need to do. I wonder if in a decade we’re just going to have empty white blocks sitting around because it’ll be too expensive to demo. What do you think?

Judge Glock (25:08): It could happen. You mean the data centers will be depopulated of their servers because they’ll be so miniaturized. That’s true, and it could be. To some extent, counties like Loudoun that have benefited massively from these data centers can and have set up rainy day funds, similar to counties that get a sudden oil influx, to say that if this ever starts to peter out, they’ll still have a long-term benefit they can continue placing into their budget and at the service of their residents. Right now I think we’re so far away from a potential data center bust that it really shouldn’t be a concern. As I’ve also pointed out, right now about one and a half percent of our whole economy is spent building data centers. This is just from basically zero just a few years back. This is a wild building boom, absolutely wild. We’re talking hundreds of billions of dollars a year. We need, if anything, to make sure that people can build out those data centers to do the other things that the AI revolution is going to require and demand, no matter what local opposition one county or another expresses. When you talk to people in the industry, the consensus is that we just can’t even build them fast enough. If very smart companies and very smart people are willing to invest hundreds of billions of dollars a year in data centers, and when I say data centers I mean mainly the servers and computers in them, I think they know it’s going to be a good return.

Susan Pendergrass (27:09): Well, it’s going to be interesting to see it play out in Missouri, because there’s definitely been backlash coming through the local town councils and the voters have been pretty loud in some areas. Have any Virginia counties banned them that you know of?

Judge Glock (27:29): Virginia has not only been the epicenter of the growth of data centers, it has been the epicenter of the opposition to data center movement as well. There is a group, something like Data Center Reform Watch, that has been monitoring local opposition. You’ve seen a bunch of counties take pretty strong steps against new data center construction. I forget if they’ve gone all the way to a formal and complete ban, but you definitely have votes in major counties either to block individual sites or to ban them from large swaths of the county. My take is that some other county is going to want and find ways to get those data centers, and when some of these counties realize they may have gone a little too far, they’re going to look at ways to pare it back and focus more on where to place the data centers rather than banning them outright and everywhere. I really struggle to find the logic in a local community banning a data center that’s going to be two and a half miles from anybody else. Frankly, as weird and big as they are, are they that different from, say, a local warehouse? A warehouse has trucks coming in and out all day, spewing pollution. One of these fulfillment centers is a big concrete box just like a data center, but with all that traffic on top of it. Data centers just seem much less problematic in that regard. In some sense they’re like a warehouse without all the trucks. If not for this huge generalized concern with AI, which is a separate debate, there doesn’t seem to be a lot of logic to just banning them completely.

Susan Pendergrass (29:42): Well, it is early days. I would love to have you come back again to talk to us when the dust settles a little bit, especially in Missouri. One of the first places I remember reading about a ban was Festus, Missouri, and now there are more. I’m also hearing about some of the biggest data centers going in there. So we’d love to have you back.

Judge Glock (30:02): That’d be great. I look forward to it.

Produced by Show-Me Opportunity

The post Are Data Centers Good for Communities? with Judge Glock appeared first on Show-Me Institute.

Missouri’s property tax system works best when the assessments are accurate, the tax base is wide, and the rates are low. That combination will help grow Missouri’s economy for everyone while properly funding the necessary functions of local government. However, a radical change in the system is being put before voters in Webster, Christian, Lawrence, and Dade counties in April. These four counties will vote on whether to prohibit any property tax increases due to reassessments. Current law requires local governments to roll back tax rates as assessments increase, but we all know that taxes still go up, sometimes substantially.

At the Show-Me Institute, we support low taxes, and I am well-aware of how tempting this will be to voters. But using market valuations in reassessment to set tax levels is a good system. While our property tax system needs reforms, eliminating any and all tax increases from reassessments will make Missouri more dependent on other taxes that hurt our economy far more than property taxes do. Hate them as much as you wish, but property taxes indisputably harm economic growth less than other taxes do.

These property tax limitations would reduce the ability of school districts to fund themselves and would make them more dependent on state aid. Consider the following: school districts in St. Louis County regularly receive at least 80% of their funding from local sources, primarily property taxes, and some are over 90%. It is nowhere near that level in Southwest Missouri. Nixa school district in Christian County is only 54% locally funded, while Marshfield school district in Webster is only 46% locally funded. Even Springfield school district, the largest school district in Greene County, where no property taxes changes are proposed, is only 58% locally funded. These changes would make school districts in these counties more dependent on state aid, not less. Again, I’m aware that many voters may view that as a benefit, but it is anything but.

Numerous other harmful effects would come from diluting the market forces (in the form of assessments based on market values) that form the basis of property taxation. California provides us with an example of the harms of these types of property tax caps with its famous Proposition 13, passed in 1978, which dramatically limited increases in property assessments and taxes. Proposition 13 certainly had its intended effect of lowering property taxes for California homeowners. However, it also reduced mobility, significantly increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties receiving similar services. These negative consequences are exactly what these four counties would experience over the long run.

There are also significant constitutional concerns with this legislation. Missouri Constitution Chapter X, Section 3 states that “taxes . . . shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” So, consider the issue of the Logan-Rogersville R-VIII school district. This school district serves families in three counties. If voters approve these tax changes, the property tax system in one of those three counties would remain unchanged (Greene), while in the other two (Webster and Christian) it would be illegal to have a tax increase from reassessment. It would certainly seem unconstitutional for property owners within the same taxing district who own the same type of property (single-family homes) to face different tax and assessment systems for the same services.

We need property tax reform in Missouri, but this total limitation is too severe. If enacted, the property tax proposals before the voters in these four fast-growing counties would make the region’s overall tax system worse, not better. I hope voters will look past the easy appeal of a tax limit to think about the long-term harms.

The post The Wrong Way to Fix Property Taxes appeared first on Show-Me Institute.

A version of this commentary appeared in the St. Louis Business Journal.

Missouri’s property tax system works best when the assessments are accurate, the tax base is wide, and the rates are low. That combination will help grow Missouri’s economy for everyone while properly funding the necessary functions of local government. However, a radical change in the system is being put before voters in St. Charles, Jefferson, and Franklin counties in April. These three counties will vote on whether to prohibit any property tax increases due to reassessments. Current law requires local governments to roll back tax rates as assessments increase, but we all know that taxes still go up, sometimes substantially.

This change would also reduce the ability of school districts to fund themselves and would make them more dependent on state aid. Consider the following: Parkway school district in St. Louis County is 89% funded by local taxes. However, Fox school district in Jefferson County is only 51% locally funded, while Wentzville school district in St. Charles is only 64% locally funded, and St. Clair school district in Franklin is just 45% locally funded. These changes would make school districts in these three counties more dependent on state aid, not less. Again, I’m aware that many voters may view that as a benefit, but it is anything but.

At the Show-Me Institute, we support low taxes, and I am well-aware of how tempting this will be to voters. But using market valuations in reassessment to set tax levels is a good system. While our property tax system needs reforms, eliminating any and all tax increases from reassessments will make Missouri more dependent on other taxes that hurt our economy far more than property taxes do. Hate them as much as you wish, but property taxes indisputably harm economic growth less than other taxes do.

Numerous other harmful effects would come from diluting the market forces (in the form of assessments based on market values) that form the basis of property taxation. California provides us with an example of the harms of these types of property tax caps with its famous Proposition 13, passed in 1978, which dramatically limited increases in property assessments and taxes. Proposition 13 certainly had its intended effect of lowering property taxes for California homeowners. However, it also reduced mobility, significantly increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities for similar properties receiving similar services. These negative consequences are exactly what St. Charles, Jefferson, and Franklin counties would experience over the long run.

There are also significant constitutional concerns with this legislation. Missouri Constitution Chapter X, Section 3 states that “taxes . . . shall be uniform upon the same class or subclass of subjects within the territorial limits of the authority levying the tax.” So, consider the issue of the Meramec Valley R-III school district. This school district serves families in three counties. If voters approve these tax changes, the property tax system in one of those three counties would remain unchanged (St. Louis), while in the other two (Jefferson and Franklin) it would be illegal to have a tax increase from reassessment. It would certainly seem unconstitutional for property owners within the same taxing district who own the same type of property (single-family homes) to face different tax and assessment systems for the same services.

We need property tax reform in Missouri, but this total limitation is too severe. If enacted, the property tax proposals before the voters in these three fast-growing counties would make the region’s overall tax system worse, not better. I hope voters will look past the easy appeal of a tax limit to think about the long-term harms.

The post The Wrong Way to Fix Property Taxes appeared first on Show-Me Institute.

On November 4, Jefferson City voters will decide on a proposal to renew the city’s seven percent hotel tax. The proceeds from the tax will help fund a new conference center for the city. Supporters of the new conference center have claimed it will create 370 new jobs and generate over $100 million in economic growth. Exaggerated estimates such as this one have been made on behalf of convention and conference center projects all around the country for decades, and the historic evidence is clear that Jefferson City voters should be dubious of such claims.

Between now and November, Jefferson City residents who visit St. Louis should drive by the largely empty dome attached to St. Louis’s downtown conference center to see how these conference center promises often play out. That dome was a part of a large convention center expansion in the 1990s. The same promises of growth, revenue, and utopia were all made when St. Louis voters approved a hotel tax increase back then. Now the dome is mostly empty, and the regional body that manages it is struggling to pay for its upkeep. You can also visit the site of the taxpayer-subsidized convention center hotel that went along with the project. You can only visit the site of the hotel, not the hotel itself, because the hotel failed and was foreclosed on long ago.

Like a Cold War general in a Kubrick movie or a carpenter with a box full of nails, local tourism agencies have the same solution for every problem. Economic recession? Expand the convention center. Economic growth? Enlarge the convention center. Global nuclear war? Definitely gonna need a bigger convention center to commiserate in.

The renewed hotel tax isn’t the only public money being used as part of this plan. State tax dollars are being pursued in the legislature, and the conference center may receive local tax subsidies.

Supporters of the conference center plan in Jefferson City would likely say their plan is not as grandiose as a major convention center and dome project in St. Louis, and they are correct in that regard. However, there are plenty of examples of more comparable projects that have failed to reach the level of activity anywhere near was promised. Haywood Sanders is a researcher and writer with the University of Texas–San Antonio who has studied convention center expansions for decades. He has documented how cities and tourism agencies systematically inflate projections to get these projects approved. Sanders has cited the actual and underwhelming numbers of very comparable projects in Overland Park, Kansas, and St. Charles, Missouri. Overland Park opened its convention center and hotel in 2002. Project supporters had projected $36 million in annual hotel revenue by 2012, but the reality was much lower, coming in at under $20 million.

Sanders explains that the convention and conference-center industry peaked in the early 2000s and shows no signs of returning to the success it had back then. With a major convention area nearby in Lake of the Ozarks, a new center in Jefferson City will face intense competition for these limited conference opportunities.

Taxpayers should not be on the hook for conference centers whose overstated benefits, small as they will be, will largely go to private entities. Jefferson City is the capital of the Show-Me State, and the claims being made by convention-center supporters should be met with a healthy dose of skepticism by voters.

The post Jefferson City Residents Should Be Skeptical of Conference Center Project appeared first on Show-Me Institute.

On November 4, Springfield voters will decide on a proposal to increase the city’s hotel tax by three percent. The proceeds from the new tax will help fund a new convention center for the city. A recent report paid for by the Visit Springfield tourism bureau said exactly what Visit Springfield wanted it to say: that a new convention center will generate enormous revenue for the Springfield area. The report claims a new convention center will drive $1.3 billion in new spending over the next 30 years. Exaggerated estimates like this one have been made on behalf of convention centers all around the country for decades, and the historic evidence is clear that Springfield voters should be dubious of such claims.

Between now and November, Springfield residents who visit St. Louis should drive by the largely empty dome attached to St. Louis’s downtown convention center to see how these convention center promises often play out. That dome was a part of a large convention center expansion in the 1990s. The same promises of growth, revenue, and utopia were all made when St. Louis voters approved a similar hotel tax increase back then. Now the dome is mostly empty, and the regional body that manages it is struggling to pay for its upkeep. St. Louis’s local tourism agency thinks the solution is the same thing it always is: further expansion of the convention center. Like a Cold War general in a Kubrick movie or a carpenter with a box full of nails, tourism agencies have the same solution for every problem. Economic recession? Expand the convention center. Economic growth? Enlarge the convention center. Global nuclear war? Definitely gonna need a bigger convention center to commiserate in.

The increased hotel tax isn’t the only public money being used as part of this plan. Other local sales taxes are slated to be used for funding, and state tax dollars are being considered. Tourists, Springfield residents, and possibly all of Missouri will get to pay for this new event space, whether it is actually needed or not.

Haywood Sanders is a researcher and writer with the University of Texas–San Antonio who has studied convention center expansions for decades. He has documented how cities and tourism agencies systematically inflate projections to get these projects approved. Sanders has reviewed the Springfield convention report and noted in an interview with a Springfield News-Leader reporter earlier this year that the report didn’t state how it calculated its room occupancy estimates and ignored underwhelming numbers of comparable convention centers in Overland Park, Kansas, and St. Charles, Missouri. Sanders states that the convention-center industry peaked in the early 2000s and shows no signs of returning to the success it enjoyed back then. With two major convention areas so close by in Branson and Lake of the Ozarks, a new center in Springfield will face intense competition. But I have no doubt that local Springfield convention-center boosters will ignore reality in their quest for tax revenue and city spending.

Visit Springfield wanted a report that claims a convention center will be an economic boon for the city. They got it. As Springfield residents prepare to decide on the hotel tax increase proposal, they should study the work of Heywood Sanders and others to learn about how these claims have been made about many other convention centers in many other cities, and how they usually fail. Springfield voters can also go to St. Louis to see the failures of these promises with their own eyes. Taxpayers should not be on the hook for convention centers whose overstated benefits, such as they are, will largely go to private entities. This is the Show-Me State, and the claims being made by supporters of the convention center for Springfield should be met with a healthy dose of skepticism by voters.

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The request to amend the zoning map was approved by the Planning and Zoning Commission in May. The request was submitted in order to accommodate the development of a new subdivision, the Highlands at Busch Wildlife. The bill is revised from an earlier proposal called Tall Tree. The Tall Tree zoning amendment request, which was denied by the Planning and Zoning Commission in June 2023, was a 556-lot proposal on about 355 acres. The new development is for only 120 lots, cutting down the number of homes in the development by over 75% while reducing acreage by around 60% compared to the original proposal.

The St. Charles County Council chambers were filled with disapproval from St. Charles residents and nearby O’Fallon neighbors. Residents expressed concerns about negative environmental impacts (see the Missouri Department of Conservation’s comments on p. 42–43 of the amendment request) and increased traffic along state highway DD. Nonetheless, the bill passed by a vote of 5–2. Interestingly, the councilman of District 3—the district where the Highlands at Busch Wildlife will be built—voted in favor of the bill. Following the bill’s passage, a portion of the dissenting public in attendance left the room, and some even shouted their displeasure at the council while doing so. It is not uncommon for current residents of a community to be opposed to new development in their area. However, is this new development really something the citizens of St. Charles and the surrounding communities should be so upset about?

A 2018 paper titled Supply Skepticism: Housing Supply and Affordability from NYU’s Furman Center addresses many of the concerns commonly expressed by residents about new development. The paper discusses how development­—at any price point—can help improve overall housing affordability. Furthermore, development can also increase productivity and signal that the given community is a place where people want to live. This does not necessarily suggest that development should always happen anytime or anyplace. However, restricting housing supply is associated with numerous problems including increased racial segregation, decreased mobility, and slower economic growth.

While some St. Charles citizens may be dismayed by the passage of Bill No. 5300, hopefully the benefits of increased housing supply will become more evident over time. Who knows—maybe other communities around the state will even look to St. Charles as an example of how allowing the market supply of housing to move more freely can help meet the needs of their community.

The post St. Charles County Council Approves Zoning Change for New Housing Development appeared first on Show-Me Institute.

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But I think this raises a broader concern. Rockwell (not Lew) was right. The surveillance state has arrived quietly in Missouri, which I guess is appropriate when you think about it. After all, nobody expects the Spanish Inquisition. The surveillance state appears to be here in various forms, including license plate readers on public roads and intricate video systems on private property.

Numerous facts and beliefs can all be true at once:

• I am highly troubled by a government surveillance system tracking our movements.
• I am well aware that there is no inherent right to privacy on public roadways or in other public places.
• There is clearly no right to privacy on other people’s property, except for certain spaces, e.g. a bathroom.
• Private surveillance systems vary from simple ones that most people, including me, are fine with, to much more complex systems that I find highly troubling (even if they are legal).
• The creation of a comprehensive surveillance system by government has harmful effects on the community even if you trust that the government is only using the system for certain purposes that strike many as legitimate, such as apprehending suspected criminals.
• Finally, if you do trust the government to only use surveillance systems in appropriate ways, I have a camera system on Pluto to sell you for an unbeatable price. Act now!

Citizens have a right to be free of unwarranted government intrusion and, yes, I count continual surveillance by technology as an intrusion. I would hope that local officials would think twice (or more) about installing these systems in their communities. I also think that the state legislature should consider limits on their usage. I may not have a right to privacy when out in public, but the government also should have no right to track my movements as I go about my life. I am surprised many local officials don’t seem to agree with that.

The post The Surveillance State Comes to Missouri appeared first on Show-Me Institute.

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.

The post On Short-Term Rentals appeared first on Show-Me Institute.

On May 9, 2023, Jay Nordlinger delivered a talk titled “Adventures in Journalism” at Lindenwood University in St. Charles, Missouri.

During the talk, Nordlinger surveys today’s media landscape with what has become frequent dismay.

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“We’ve never had so much journalism and so many outlets, which is great,” the National Review senior editor says. “But politics and journalism have merged, and … I’ve seen a lot of journalists begin to act like politicians with political calculations. That’s crippling to a writer.”
“You’ve got to be free at the keyboard,” he says, “to pursue the truth as you find it.”

Nordlinger, who lives in New York, writes the column “Impromptus” for NationalReview.com and is a book fellow of the National Review Institute. He’s the author of two books: Peace, They Say: A History of the Nobel Peace Prize, the Most Famous and Controversial Prize in the World and Children of Monsters: An Inquiry into the Sons and Daughters of Dictators. Selections of his work have been republished in two anthologies.

He also is a music critic for The New Criterion and the host of two podcasts, Q&A and Music for a While.

The event was co-presented by the Show-Me Institute, National Review Institute, the John W. Hammond Institute for Free Enterprise, and Show-Me Opportunity

The post Watch or Listen: Jay Nordlinger – Adventures in Journalism appeared first on Show-Me Institute.

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About the Program and Speaker

Jay Nordlinger surveys today’s media landscape with what has become frequent dismay.

The post Jay Nordlinger: Live in St. Louis and Kansas City on May 9 and May 10 appeared first on Show-Me Institute.

According to information I have received, personal property tax revenues are expected to increase by more than 20 percent in the following counties: St Louis, Jackson, Warren, Lincoln, Cape Girardeau, St. Charles, and St. Louis City. St. Charles County is taking the lead here; the county council passed a resolution declaring its intention to reduce the personal property tax rate this fall (after final numbers are in) to a revenue-neutral level to offset the large increase in assessed valuations. Good for them. Many local governments in Missouri need to follow this example, especially school districts, which receive the bulk of your property tax payments. Increased used car valuations should not be a revenue windfall for local governments.

I commend the St. Charles County Council and the county executive for this move. Hopefully others will follow the example of St. Charles County. I would love to see Hancock Amendment rollback provisions extended to personal property in the future. (Now they only apply to land and buildings.)

On the other side of the state, Clay County is moving forward with the first commercial surcharge property tax reduction in Missouri history. The county commission approved placing it before the voters on the November ballot. Clay County has one of the highest commercial surcharges in the state, and this proposal for a modest reduction to match Jackson County’s level is a smart, reasonable one. (For the reasons why the rate can only be lowered by voters, why Clay County’s rate is so high, and more history of this special tax, please read this.)

I also commend the Clay County Commission and the rest of the Clay County leadership team for putting this proposal before the voters of their community. There are a few other counties that I think need to strongly consider reducing their commercial surcharge taxes—I’m looking at you, Perry County.

The post Good News on Property Taxes in St. Charles and Clay Counties appeared first on Show-Me Institute.

According to the new estimates, the city of St. Louis is getting close to dropping below 300,000 residents. The city’s 2019 population estimate is 300,576, down by over 2,800 from 2018. This isn’t a new occurrence, but rather a continuing trend—the city’s population has fallen by nearly 6% since 2010, shown in the graph below.  St. Louis County also lost population, dropping by 1,014 from 2018 to 2019.

Other areas of Missouri are not experiencing this same trend. Right outside of the St. Louis area, St. Charles passed the 400,000 mark, adding 3,242 people in 2019. Many other areas also experienced growth, including Clay, Greene, and Jackson counties.

Though we can’t know for certain why people are moving out of St. Louis, Show-Me Institute researchers have written on population trends before, and much of what has been said still holds true. Policies that promote success and freedom for people and businesses can attract residents while those that place onerous burdens can deter.

Things like an earnings tax on residents and workers, high sales taxes, and stringent business regulations can create an unwelcoming environment. Additionally, poor school performance, high crime rates, and failed public projects can make St. Louis an unattractive option.  If we want to reverse the trend, policymakers will need to address these issues. The sooner, the better.

The post Census Estimates Show St. Louis Population Falling . . . Again appeared first on Show-Me Institute.

We weren’t the only ones present to speak though. A development official from the City of St. Charles also came prepared to present his viewpoint, and he was generally in favor of CIDs. But the arguments he marshaled were so unpersuasive I didn’t know if he took the whole hearing thing seriously or not.

Here, in outline, is what he said in support of allowing CIDs to collect sales taxes without notification to taxpayers.

“CIDs have been used to subsidize projects that many felt were important.”

The basic idea is that CIDs can make certain developments feasible, so they’re good, and we shouldn’t require merchants to post placards notifying shoppers that they’ll be subject to an extra sales tax.

But, of course, whether or not CIDs are powerful development tools has no clear logical connection to whether taxpayers should be given information on their existence. Grand theft auto is a powerful method for obtaining vehicles, and has been used to obtain vehicles that many couldn’t afford to purchase on their own. But this doesn’t mean grand theft auto is permissible or prudent, and it doesn’t bear on whether or not would-be victims of grand theft auto should know about the chances of losing their cars. The bottom line is that the efficacy of a development tool isn’t germane to the question of whether or not taxpayers should know about it.

“If merchants are required to notify shoppers of additional CID taxes, it will make it too hard for developers to find tenants.”

If I apply for a CID in order to build a shopping center, the ordinance being considered would require that I tell would-be tenants of my property that they must post a sign that says something to the effect of “You’re paying extra taxes here.” The concern is that this would dissuade shoppers from patronizing a business, and so would cripple developers’ ability to land tenants for their properties. And if there are no tenants to sign leases, then there just won’t be any new development.

Here is what such an argument boils down to: Letting taxpayers know what tax rate they’re subject to is (allegedly) bad for business, and since we want business to do well, we shouldn’t let taxpayers know what tax rate they’re subject to.

But it just isn’t the job of taxpayers to make life easy for businesses. And it certainly is government’s job to make sure taxpayers are being treated fairly and not being taken advantage of. The importance of honesty isn’t diminished by the profit one can make through deceit. Moreover, developers using another type of special taxing district known as a transportation development district are already required to post additional sales tax notices (though they often fail to do so), and they don’t seem to have any trouble getting tenants. What’s different about CIDs that would make such notices overly burdensome?

It takes some chutzpah to argue that it’s better for everyone if you are allowed to tax people without their knowledge.  Instead of being upfront and simply charging tenants an amount that makes the investment in a property worthwhile, developers are going through the rigmarole of forming a district and collecting a tax. It’s easy to see why a developer would want to have the government collect a tax from consumers and pass it along to the developer as profit. What’s harder to understand is why the government would want to play along.

The post How Not to Argue for Special Taxing Districts appeared first on Show-Me Institute.

Before we can decide if there is too much or too little testing, we should lay out some facts:

·         Missouri spends roughly $30 million a year on standardized tests

·         On average, students spend 20–25 hours per school year taking standardized tests. Over the course of grades 3–12, that totals out to be 180–225 hours of testing.

·         Grades 3–8 are required to take the yearly MAP (Missouri Assessment Program) test which assesses students understanding of concepts in language arts and math. Grades 5 and 8 are also tested in science.

·         Grades 4, 8, and 12 are administered the NAEP (National Assessment of Education Progress) which tests all students in the areas of math, science, reading, and writing.

·         High school juniors are required by the State Board of Education to take the ACT (at no charge)

·         High school students must pass a personal finance assessment in order to graduate. This assessment can be taken by students who are enrolled in a personal finance course or students who wish to test out of the course and still receive the half credit.

·         End of Course (EOC) evaluations are administered to students enrolled in Algebra I and II, Biology, English I and II, Geometry, Biology, American History, Physical Science, and Government courses.

Rep. Kurt Bahr of St. Charles is sponsoring a bill that would allow students to opt out of Missouri standardized testing if they or their parents request it. What would this accomplish, though? Students will simply have to wait for school to resume while other students take the tests they opted out of. And if the tests are administered only to the students who want to take them, they wouldn’t be a representative sample of the student body.

Is there a better way we can retrieve this information and not overwhelm students and teachers? Knowing how well our students and schools are doing, and what should be improved on, is important. However, we need to remember that the only “right” amount of testing is that which gives us the information we need in the most efficient way possible, so that teachers can spend more time teaching and students can spend more time learning. Determining the purpose and use of each test might be the key. 

The post How Much Testing Is Too Much? appeared first on Show-Me Institute.

As part of the campaign, the Department of Education has proposed a new regulation that would require all copyrightable intellectual property created with Department grant funds to have an open license. If the federal government pays for it, citizens (who actually paid for it) must be able to access it for free.

What would happen if public schools no longer had to purchase new textbooks every five to seven years? How much would schools save?

Though textbooks only make up 1 percent of overall education spending, over time, these costs add up. Between 2012 and 2014, Francis Howell School District in Saint Charles spent nearly $3.5 million on textbook purchases. Using open-source textbooks could cut expenses in half or more.

For example, a 2008 edition of a high school Biology textbook can be purchased for about $100 dollars. An Amazon Fire tablet with Wi-Fi goes for $49.99, and with that tablet the Kindle edition of CK-12 Biology can be accessed for free. CK-12 Biology is just one of hundreds of textbooks available to students at no cost.

In addition to reducing costs, digital textbooks provide differentiation opportunities for teachers. One study looked at the science performance of 1,651 high school students from three states. The researchers found that reading ability was just as important to a student’s state test score as the amount of science knowledge the student had.

With a digital textbook, the text can be manipulated to provide the same subject matter at multiple reading levels. Just as easily, the textbook can be updated throughout the year in response to new discoveries—how many students in Missouri would you think are using a textbook that says Pluto is a regular old planet?

I’m excited to see where innovation in the textbook industry takes learning in Missouri. I hope when it’s time for other school districts to enter the digital age, as Affton has, they are ready.  

The post Open-Source Alternatives May Disrupt Billion-Dollar Textbook Industry appeared first on Show-Me Institute.

When I speak about tax credit scholarships, I get a lot of questions: What is a tax credit scholarship? How would that work? What are the chances of that passing in Missouri?

If you want to find out the answer to these and other questions, join us on April 25 at Lindenwood University in St. Charles, Mo. We are partnering with the Hammond Institute for Free Enterprise at Lindenwood University to present a dynamite event, “Expanded Opportunities: A Discussion About Tax Credit Scholarships.”

Jason Bedrick, of the Cato Institute, and Jonathan Butcher, of the Goldwater Institute, will present information about how these programs are working in other states. You can download their recent case studies for the Show-Me Institute about the New Hampshire and Arizona programs directly from our website.

Attendees also will be able to take part in a panel discussion with Missouri Sen. John Lamping (R-Dist. 24), Sen. Maria Chappelle-Nadal (D-Dist. 14), Missouri Speaker of the House Tim Jones (R-Dist. 110), and Rep. Michael Butler (D-Dist. 79).

RSVP online, mark your calendars, tell your friends, and join us on April 25.

The post Mark Your Calendars For Our April 25 Tax Credit Scholarship Event appeared first on Show-Me Institute.

Cynics may suggest that I wrote this blog post as an excuse to share video of a really cool explosion, and to them I say, “kinda sorta.” But the other reason I am writing about the Blanchette Bridge is to reiterate a point I have made before: that not all old structures are “historic” or should be preserved. Missouri accounts for nearly one-in-seven historic preservation projects nationally. It preserves golf courses and taco stands with taxpayer dollars. Preservationists block redevelopment plans for buildings younger than the Blanchette Bridge, notably the AAA building in Saint Louis City, which was built in 1976. Yet the Blanchette Bridge was almost certainly a more unique structure than the AAA building.

Playing devil’s advocate, I ask: Why wasn’t the Blanchette Bridge protected as well?

The post Why Wasn’t the Blanchette Bridge Preserved? . . . Asks the Devil’s Advocate appeared first on Show-Me Institute.

The above items are worthy goals. Patrick Ishmael and I have pointed out the benefits of business tax reform. It would be great if the state capped and/or eliminated certain tax credit programs such as the Quality Jobs program and used the extra revenue to eliminate the state’s corporate income tax. We have also pointed out the strategic necessity of following other states’ leads and eliminating the tax on pass-through entities such as LLCs.

I hope that the Senate can follow through on these stated objectives and help enact some meaningful changes in the tax code. Legislating is not easy, but the opportunity is present for legislators to accomplish a lot.

The post An Agenda That Makes Sense appeared first on Show-Me Institute.