Chiefs President Mark Donovan committed such a gaffe when he spoke at a press conference to unveil planned renovations at Arrowhead Stadium. He was asked why the Chiefs aren’t planning to build any retail developments if the Royals leave the complex to move their stadium downtown. He responded: “Right now in this market, this is not a location that is worthy of developing. As harsh as that sounds, it’s just the reality from a business standpoint.”

At the very least, this was an impolitic thing to say about the region. Located between Kansas City and Independence on Interstate 70, the location would seem to have a lot of potential. More importantly, Donovan concedes what many economists conclude and what Show-Me Institute researchers have been pointing out for years: stadiums do not generate economic growth.

Rest assured, I will be adding Donovan’s comment to my PowerPoint deck on the many false claims of economic development impact statements.

The post Chiefs Team President Accidentally Speaks Truth appeared first on Show-Me Institute.

I believe in my gut that the timing is right for the Royals to become residents of the Crossroads and neighbors to Power & Light, 18th & Vine and Hospital Hill, helping to further connect the cultural center for our great city.

What’s important to note is that Sherman plans to include an entertainment district in the construction. Mike Hendricks of The Kansas City Star adds: “The imagined $1 billion-plus ballpark would be bordered on the east by office, retail and residential development, which would be a potential source of revenue for the team.”

No one should doubt that this publicly funded stadium with all the additional accouterments would be good for John Sherman. But will it be good for his neighbors?

Remember that all sorts of research and many economists make it clear that sports stadiums “are really poor public investments.” Part of the reason that the economic impact studies released by proponents of such efforts are flawed is that they count only the new spending at the new location—not the reduction of spending elsewhere. In a 2017 report, the Federal Reserve Bank of St. Louis concluded: “economists generally oppose such subsidies. They often stress that estimations of the economic impact of sports stadiums are exaggerated because they fail to recognize opportunity costs.”

Consider the Power & Light District. According to the Regulated Industries Division of Kansas City, Missouri, the number of liquor licenses (a gauge of how many restaurants and bars are operating) and employee health cards (a proxy for the number of people employed at bars and in food service) remained flat citywide for a decade after subsidies were awarded.

The Power & Light District didn’t create new jobs or businesses. It merely moved them from elsewhere in the city to downtown. And it moved them from places where the city, county, and school districts were collecting property, sales, and income tax revenue to a place where those taxes are diverted back to the developer to offset the cost of construction.

Even if you consider the Power & Light District on its own merits, it has failed to be successful. Thomas Friestad reported last year in the Kansas City Business Journal that Kansas City has had to meet multimillion-dollar debt-service obligations because the district does not generate enough revenue to pay its own debts. Those payments have ranged from $6 million to $17 million, amounting to over $160 million since 2006.

Just as with the Power & Light District, John Sherman’s entertainment district will not create new economic activity. It will only move it from elsewhere in the city. On game day, fans who now stop at grocery and liquor stores on their way to tailgate may instead go to bars at the stadium. That is not new activity—just different activity. Fans who might have gone to Power & Light, or to other places in the Crossroads District, may now go to the bars that Sherman owns. That is not new spending—just different spending. This is exactly what happened when Ballpark Village opened in St. Louis; it cannibalized other existing businesses.

The economic impact studies that will inevitably be produced to tout this new entertainment district will likely only count the new spending in the new location—not the loss of spending elsewhere.

To the degree that the Royals’ new entertainment district leeches spending away from Power & Light—which seems like it may be the intent of Sherman’s gambit—Kansas City taxpayers will face even higher annual debt obligations than now.

A publicly funded downtown stadium and entertainment district will be good for John Sherman. It won’t be good for anyone else.

The post John Sherman’s Proposed Entertainment District Is Bad for Everyone Else appeared first on Show-Me Institute.

In an attempt to increase the supply of affordable housing in Kansas City, the Mayor and council have passed, with various amendments over time, requirements that developers seeking city tax incentives set aside some units for lower-income residents. There have been arguments over the exact details of the law, but overall the requirement is valid because it is, to a large extent, voluntary. Developers don’t have to seek tax subsidies. However, if they choose to seek them, they have to play by certain rules. So far, so good.

The latest proposal to support affordable housing in Kansas City, however, is the opposite of voluntary. The city council is considering a requirement called a “source of income” rule. This rule would prohibit landlords from refusing to rent to tenants who pay with housing vouchers or other types of government assistance. The most familiar of these programs is called Section 8. This proposal is a violation of the individual rights of landlords and a dangerous expansion of city government’s role in the economy and housing market. Beyond that, it is simply infuriating that local officials think they have the right to do this.

The Section 8 housing voucher program, along with the other programs run by the Department of Housing and Urban Development (HUD), is a federal government program. It has always been voluntary for landlords to participate. That voluntary nature is one of the program’s strengths, and there is no shortage of landlords who choose to take part in it. The most recent estimate we know of stated there were around 695,000 landlords nationwide who participated as of 2016. Many of those are large, property-management businesses with numerous units.

There are many examples of government social programs in which participation is voluntary. Doctors are not forced to accept Medicaid payments, yet many do. Grocery stores are not required to accept food stamps, yet many, if not most, do. That is how the Section 8 housing voucher program has successfully worked for many years. Imposing a local mandate in Kansas City will force landlords either to join the program against their will, creatively find other reasons to deny high-risk renters, or sell their properties to larger landlords. Each of these results is bad.

Denying high-risk renters is made more difficult by other aspects of the bill, which take the proposal beyond tragedy to farce. The bill states landlords cannot reject applicants based on things like poor credit scores, past eviction history, or criminal record. It is essentially forcing landlords to rent to anyone who applies, no matter their financial state or criminal history. Are laws requiring school bus companies to hire drunk drivers and pre-schools to hire sex offenders coming next?

It is fair to question the presumption that something needs to be done about Kansas City’s supply of affordable housing in the first place. The Kansas City metropolitan area was ranked the 13th most affordable housing market in the country in one survey. Another very recent survey ranked Kansas City 27th out of the 100 largest metro areas in total affordability, where housing was an important part of the calculations. Among the many other worthy objections to this source-of-income rule is the fact that it’s a solution in search of a problem.

If Kansas City wants to do something that might actually help lower-income people find more affordable housing, it could rezone parts of the city, especially those near transit stops, to allow for more multi-family housing units. Increasing the supply of housing of all types is the best way to lower the cost of housing. Minneapolis dramatically reduced its zoning requirements in 2018 to allow more apartments and condominium developments. Since that time, median rental rates in Minneapolis have increased by just one percent—the lowest in the nation—due to increased housing supply. The law of supply and demand remains undefeated, no matter how much members of the Kansas City Council may prefer addressing this issue by ordering people around.

Landlords and developers can meet this demand for housing if they are allowed to—authoritarian mandates are not required. This council can let the free-market work for housing in Kansas City, as it has done very effectively for decades.

The post Kansas City’s “Source of Income” Housing Rule Is an Abuse of Government Power appeared first on Show-Me Institute.

Well, I have some bad news. On Friday, word broke that the Royals have been talking with North Kansas City and Clay County officials for a ballpark development, and those talks have gotten fairly serious. According to two county commissioners and the mayor of North Kansas City:

Over the past few months leaders from Clay County and the City of North Kansas City have had conversations with the Kansas City Royals about the possibility of developing a new baseball stadium and adjacent ballpark district in North Kansas City. This plan would include commercial, residential development and entertainment experiences adjacent to the stadium, complementing the amazing businesses and entertainment options that already exist in downtown North Kansas City today. We look forward to continuing our work with the Royals and have additional meetings scheduled with them.

The Royals confirmed in a recent media report that they are considering a location in North Kansas City. We think it is important that we communicate our efforts with the community, and the reason we plan to work with the Royals on behalf of our respective jurisdictions to select a North Kansas City site for the planned new stadium. Although no agreement has been reached by either Clay County or North Kansas City to take action on, we are striving to lay the groundwork necessary for a plan that is positive for the city, the county and our entire community.

A vote on a countywide tax for the stadium could come as early as this November, a quick turnaround for such a seemingly late-breaking project. Apart from the expected taxpayer subsidy, the potential North Kansas City sites have a few advantages, including no Kansas City earnings tax (and so instant raises for Royals employees) and a more stable crime situation than Kansas City, which just had its 88th murder of 2023, including seven murders in just the last four days as of this writing.

I expected both the Chiefs and Royals would remain in the region but thought that the Chiefs were the most likely to head to Kansas or some other non-Kansas City, Missouri jurisdiction. Friday’s news upends that assumption, with both teams leaving Kansas City’s boundaries now a legitimate possibility. No taxpayers should subsidize the Chiefs or Royals, but if Kansas City lucks out and gets to enjoy the teams without having to line their pockets, all the better.

And to North Kansas City and Clay County, I’ll just say this: Really? C’mon now.

Really?

The post “The Kansas City Royals of North Kansas City”? appeared first on Show-Me Institute.

The post Board Bill 94: The Lighthouse St. Louis Transportation Development District appeared first on Show-Me Institute.

As earlier posts in this series have explained, defining an affordable housing problem is complicated. So too, is solving one. Because the issue is so complex, the definitions and data used to characterize the issue are incredibly important. Over the next two posts, I’ll walk through an analysis that sheds light on the affordable housing situation in Kansas City, which can then serve as a jumping-off point for a discussion of potential solutions for the region.

Even though the U.S. Department of Housing and Urban Development (HUD) defines “affordable housing” as a household spending no more than 30% of their income on housing, it is important to distinguish between situations where households exceed that threshold out of necessity because of a lack of sufficient options versus situations where they actively choose to spend more than 30% of their income on housing even when more affordable and still viable options are available.

Every household is free to choose where they want to live and pay what they feel they can afford to pay regardless of whether the government would view their choice as “affordable.” Conversely, there is nothing wrong with choosing to spend as little on housing as possible. The point is that while an aggregate story tells a tale, the personal stories of individual Kansas Citians shouldn’t be lost in our discussion.

For these reasons, this post focuses on estimating the potential demand for affordable housing–namely, the number of units needed at different cost points to accommodate Kansas City households if they were to spend no more than 30% of their income on housing. This analysis is primarily about households making less than the area’s median income (AMI), as the term is defined and published by HUD. In Kansas City, the AMI for a family of three is $78,000 per year.

To determine the potential demand for affordable housing, we need an estimate for the number of households in different income ranges, and then we can multiply each income range by 30% and divide by 12 to arrive at the monthly housing cost range that would be affordable to those households. The definition of income we use comes from the U.S. Census Bureau’s American Community Survey (ACS) and encompasses labor market earnings, self-employment income, interest and dividends, retirement income, and “any public assistance or welfare payments from the state or local welfare office” but not other sources of government assistance such as Medicaid.

In principle, one could consider augmenting this measure to include non-cash benefits like Medicare for retirees, Medicaid, employer-provided health insurance and other such fringe benefits in the income measure for purposes of calculating the 30% affordability thresholds. But obtaining data on each of these items is quite difficult, and deviating from the widely used ACS definition would entail making judgment calls about the cash value that households attach to them.

For example, if a household receives $20,000 of income a year according to the ACS income definition, the 30% of income affordability threshold for the household would be $500 (= $20,000 x 30% x 1/12) in rent or mortgage payments. If the household also receives Medicaid benefits that cost the government $6,000 to provide—and if the household would have otherwise chosen to spend that same $6,000 itself absent Medicaid—then the household’s income effectively rises to $26,000, and one could argue that the affordability threshold should increase to $650 (= $26,000 x 30% x 1/12). However, if the household would not have spent a full $6,000 to obtain alternative health insurance in the absence of Medicaid, the cash equivalent value is less, and the affordability threshold would be between $500 and $650. Thus, you cannot assume that various government benefits are the equivalent of income.

You can see in the table below based on data from the ACS and compiled by HUD that there are approximately 820,000 households in the Kansas City metropolitan area. Additionally, the majority of those making less than the AMI are renters (which should make some intuitive sense).

The table below gives an idea of how much a family of three with various incomes below the AMI can pay for housing that is considered affordable using the 30% rule of thumb from HUD.

Taken together, we have an idea of how much housing could be needed in Kansas City, and at what price points. The next question is how those figures compare to the reported supply of housing in Kansas City, which will be the topic of the next post.

The post Part 6: Does Kansas City Have and Affordable Housing Problem? appeared first on Show-Me Institute.

In the previous blog post in this series, I posited that (generally speaking) able-bodied individuals should be expected to pay for their housing, and that for housing to be “affordable” to an individual, it should take up no more than about 30% of their salary, both as a rule of thumb and by the federal government’s own definition. But that’s not the end of the story when it comes to establishing what affordable housing is.

Another major question is this: How far away from one’s employment can housing be to still be functionally affordable for that worker? If I work a minimum wage job on the moon, renting a house on Earth and paying to commute daily to outer space won’t cut it.

For a more grounded example, if a worker’s job is in Overland Park, Kansas, but their housing is 25 minutes away east of downtown Kansas City, would that housing—meeting all criteria before considering location—qualify as “affordable housing”, given the added cost of transportation? If the same job were in Independence—nearly 40 minutes away from Overland Park—would we expect that worker to change jobs to something closer to home, or move to housing closer to their job? How do our expectations change if instead of gas being $2 per gallon, it jumps to $5 per gallon?

This question of affordable housing in the context of geography is a nuanced question that doesn’t necessarily have an intuitive or universal answer. But that doesn’t mean answers aren’t being proposed.

For example, the Housing and Transportation Affordability Index, or H+T Index, attempts to simulate what residents of a given census tract might expect to pay in housing and transportation combined as a percentage of their income. Keep in mind that “transportation” here includes all transportation, including trips to the grocery store, for entertainment, etc., so the H+T Index isn’t an apples-to-apples comparison to the HUD definition or other housing-only definitions of affordability. But the H+T index is helpful for understanding that affordable housing that isn’t close to gainful employment is, for all intents and purposes, not affordable.

Other factors can also play into the definition of affordable housing, including whether affordable housing includes homes for purchase as well as homes for rent; whether affordability considers the mitigating costs of roommates where appropriate; and the extent to which affordable housing could still be inadequate housing in some other qualitative way.

That said, a reasonable baseline definition of affordable housing includes the following: it should generally be paid for by the individual, should not exceed 30% of their salary, and should be available in rough proximity to their place of employment. Now, we can turn to the question we’re exploring in this series: Does Kansas City have an affordable housing problem? Stay tuned.

The post Part Four: Does Kansas City Have an Affordable Housing Problem? appeared first on Show-Me Institute.

One of the primary problems in the affordable housing debate is that the phrase “affordable housing” means different things to different people—and, more to the point, that different people don’t know what they might be agreeing to by accepting the premise that housing is “unaffordable.”

What is meant when someone says that we don’t have affordable housing? What if my underlying definition of “unaffordable housing” is “housing that isn’t free”? To have a useful conversation about affordable housing, we must establish some consensus around what our expectations are for both “affordability” and for “housing.”

From my perspective, the first necessary point of consensus has to be that able-bodied Americans are expected to pay at least something for their housing. While that might seem like a superfluous thing to stipulate, it isn’t. If housing is in fact a “human right” as some activists assert, then assigning any dollar figure or percentage of anyone’s income is inherently a violation of that right. What sort of “human right” could be denied on the basis of cost?

If there is an expectation that people (in general) should be paying for their own housing, how much should people be expected to pay?

As the federal Department of Housing and Urban Development, or HUD, notes, there are many ways in which “affordability” can be defined by researchers and policymakers. Researchers and policymakers could look at average incomes in a metropolitan statistical area (MSA). They could use median incomes in a county and establish an absolute floor for affordable housing costs. They could create ratios, they could bundle together utilities with housing costs or not consider utilities at all, and they could transform data in myriad ways to come to reasonable, but radically different, conclusions.

You can see the issue.

But despite the plethora of possible (and possibly contradictory) affordable housing definitions, HUD has generally settled on a set definition of what is “affordable” that it applies to many of its programs. As the department explains on its website:

In the 1940s, the maximum affordable rent for federally subsidized housing was set at 20 percent of income, which rose to 25 percent of income in 1969 and 30 percent of income in 1981. Over time, the 30 percent [gross income] threshold also became the standard for owner-occupied housing, and it remains the indicator of affordability for housing in the United States. Keeping housing costs below 30 percent of income is intended to ensure that households have enough money to pay for other nondiscretionary costs; therefore, policymakers consider households who spend more than 30 percent of income on housing costs to be housing cost burdened.

Defining affordability can be like listening to good music—you recognize it when you hear it, and others may still disagree with you. But the HUD definition would seem to be a reasonable one, and that it has been adopted beyond the bureaucracy as a general rule makes it more compelling as a starting point for this discussion. While this “general rule” is a good starting point, the details for defining “affordable housing” matter, too. More on that in the next blog.

The post Part Three: Does Kansas City Have an Affordable Housing Problem? appeared first on Show-Me Institute.

State and local government

Missouri has received roughly $2.096 billion for state and local government relief. $521 million of that must be distributed to counties and cities with populations under 500,000 within ten days of Jefferson City receiving the funds. St. Louis County has also received roughly $173.5 million and Jackson County $122 million. The money is to be used for non-budgeted coronavirus-related expenses.

Community health centers

Twenty-nine community health centers have received a total of $29.8 million for testing, treatment, and continuing primary care.

Education

Missouri’s Department of Elementary and Secondary Education has filed the appropriate paperwork to receive $208.4 million from the Elementary and Secondary School Emergency Relief Fund. Further, the governor has announced that $54.6 million from the Governor’s Emergency Education Relief Fund will also arrive to assist with K-12 and higher education, as well as $117 million from the U.S. Department of Agriculture to help provide school lunches. Senator Roy Blunt has announced that Missouri will receive $206 million for colleges and universities, half of which will be immediately available for institutional and student use, as well as $66.5 million through the Child Care and Development Block Grant for early childhood education needs.

Transportation

The Missouri Department of Transportation has received $61.7 million from the CARES Act to be used for operating expenses and capital assistance for 30 rural agencies. Additionally, Missouri has received $152.4 million to be used for revenue assistance at 75 airports across the state.

Housing

$57.7 million in Community Development Block Grants are reported as being available to a combination of 16 Missouri cities, counties, and state government by the federal Department of Housing and Urban Development. This money is supposed to be used as block grants, emergency solution grants, and housing opportunities for persons with AIDS. The Missouri Department of Economic Development has announced that it will receive $13.6 million of that total.

Unemployment

The Missouri Division of Employment Security has used more than $66 million in federal funds to provide additional unemployment compensation, although more compensation will be distributed once the state determines how to process workers in the “gig” economy.

Emergency management

Missouri can apply for roughly $1.86 million to assist with emergency management procedures ranging from data collection and sharing to response plan development. A 50 percent match in state funding for the program is needed to receive funding.

Public safety

The cities of Joplin and St. Joseph have received funds to assist with public safety expenses for a combined total of $170,000. Overall, $5.5 million is available for 28 Missouri county and city agencies and $11.6 million for state agencies, should they choose to apply for these funds.

Small business loans

Over 46,000 Missouri businesses have received loans from the Paycheck Protection Program, totaling slightly more than $7.5 billion.

Summary

Received: $10.201 billion

Expected: $710.2 million

Available through application: $18.79 million

If you add these sums together you get $10.918 billion. This is what we know so far. More dollars may arrive in the future, boosting the totals for many—if not all—categories.

The post Federal Stimulus Money in Missouri: What We Know So Far appeared first on Show-Me Institute.

You might think so, but some city officials don’t see it that way. The Saint Louis City Tax-Increment Financing Commission, a public body that awards tax subsidies, recently granted $19.4 million to the developers of a mixed-use project in midtown St. Louis. The development, dubbed the “City Foundry”, would include office and retail space, residential buildings, and a food court. The Foundry would be a welcome addition to the area, but why should tax dollars go to fund it over, say, schools and basic infrastructure?

Officials haven’t addressed that question. And what’s worse is that even without the TIF subsidy, over 41% of the costs of the $134 million project will be shouldered by taxpayers. The chart below depicts the proposed funding sources for the project. Is the $19.4 million in tax increment financing, which represents forgone tax revenue, really necessary when so many other subsides are funding the project? Especially when the developers are also seeking tax abatement on top of all these other handouts!

Source: City Foundry Application for Tax Increment Financing, assembled by author.

When our communities have so many needs but limited resources, leaders have an obligation to make every dollar count. Before the City signs off on this incentive package, they should think hard about whether this plan constitutes the most prudent use of public funds.

The post Funding the Foundry: Why Are Taxpayers Continually on the Hook? appeared first on Show-Me Institute.

The post Tax Dollars for Centene . . . Why? appeared first on Show-Me Institute.

Proponents of a new $311 million hotel claim that the project will create construction jobs. At a recent hearing before the City Council, developer Mike Burke said [begins at 46:35], 

Let me talk a little bit about jobs. During the course of construction, which is about 27 months, there are about 1,300 jobs on the site.

Let's be clear about this: there won't be 1,300 jobs for 27 months. If someone were to ask Mr. Burke about this directly, he would probably walk it back immediately. Some jobs, such as heavy digging and foundation, may exist for a few months at the start. Those will transition to other, different jobs once the structure is being raised, and then finally there will be the finishing jobs once the hotel is ready for its final touches. 

Moreover, even the time spent building the hotel won't result in new jobs. The hotel will be just be a new project for those workers who already have jobs. This is why the economic impact statistics for projects such as hotels, stadiums, and airports are so suspect. Proponents want to pretend that without the project in question, people wouldnt be working or traveling or staying in hotels. As my colleague Joe Miller wrote last month regarding a proposed riverfront stadium in St. Louis:

In fact, a paper from an economist at the University of Missouri studied the impact of the Edwards Jones Dome and the Kiel Center (now the Scottrade Center) in Saint Louis specifically. The author found:

By econometrically modeling construction employment during the 1970’s, 1980’s and 1990’s, it was found that there was no more nor no less construction employment within the St. Louis MSA during the time the Kiel Center and the Trans World Dome [Edward Jones Dome] were being constructed…

…instead of creating new construction jobs, jobs were shifted from projects that would otherwise have been undertaken, resulting in no net new job creation in the construction industry.

The author concluded:

These results, coupled with the more extensive analysis given in the article on construction employment, suggest that the net impact of stadium construction on construction employment and worker incomes is zero.

The post Will Building the Convention Hotel Create Jobs? appeared first on Show-Me Institute.

While we wait for hotel cost estimates and earnings projections, it is worth reflecting on previous convention hotel efforts in and around downtown. Hotel consultants have provided inflated estimates in the past.

Overland Park: Projections for their convention hotel were off by about 40 percent. A June 2010 issue of The Pitch published:

Original projections called for Overland Park’s convention hotel to earn more than $110 per available room. Actual number: $67.50.

Kansas City, MO: In 2009, when Kansas City was considering a convention hotel, the hired consultant, HVS, estimated that the average daily rate (ADR) for hotels in Kansas City in 2016 was going to be $162.72. Today it is $121.37, far short of the projection.

Kansas City, KS: The Pitch also reported on the money pit that is the Hilton Garden Inn:

The [Unified Government] hired a consultant to project how much money the hotel would make when it applied for the HUD loan in 1999. The consultant predicted that by 2005 the Hilton Garden Inn would hit $3 million from room revenues alone. Actual financial records show that the hotel has stooped below that $3 million figure. In 2006, the hotel reported only $2.2 million in room revenues. The hotel itself has always operated at a loss, and every independent audit of the hotel project since 2006 has sounded the same warning: The Hilton Garden Inn is a money loser and can’t stay afloat without subsidies from its owners.

It appears earnings projections run about 25-40 percent higher than reality. That is quite a margin of error. As we consider a downtown convention hotel, we must keep in mind that projections are rarely met.

The post KC Convention Hotel Estimates Are Notoriously Wrong appeared first on Show-Me Institute.

Creating special zones to channel development is not a new concept in Saint Louis. Much of the city is part of a federal “Empowerment Zone,” which gives distressed areas tax incentives and federal grants. East Saint Louis is already part of an Empowerment Zone and an “Enterprise Community.” Saint Charles became a federal “Renewal Community” following flooding in the 1993. In addition, areas of North County have Foreign Trade Zone (FTZ) status (the entirety of the city and county are FTZ eligible), which qualify some businesses for customs-free imports. Much of the city and parts of the county are in “HUBZones,” which are designed to give federal procurement preference to small businesses in distressed areas.

Even at the state level, the Saint Louis area has special development zones. Much of Saint Louis City is an “Enhanced Enterprise Zone,” which provides state tax credits to certain types of businesses setting up in certain areas. Nearly 100 census tracts in the Saint Louis area are designated as distressed communities, making businesses eligible for large tax credits through the state’s Rebuilding Communities program.

Aside from special zones, the Saint Louis area has been the recipient of just about every type of development aid that HUD has available. In the 1990s, the state received $15 million in Section 108 grants to spend on housing. In the late 1990s, the city received $20 million in Community Development loans and $2 million in Community Development grants. The city spent that money on the Renaissance Center hotel, which turned out to be a financial disaster. More recently, HUD gave a grant for the planning of the Lemay Community Center. The only major HUD programs the Saint Louis region has not benefited from are those targeted at rural areas and arson/terrorism.

When we consider that Saint Louis City, North Saint Louis County, and East Saint Louis have, since the early 1990s, benefited from exactly the kind of federal attention the “Promise Zone” would bring, it is difficult to conclude that adding yet another zone is part of the answer. Given the continued “disinvestment” in these targeted areas over the last 20 years and the growing evidence that such zones do not generate progress, it may be time to consider other policy solutions to combat economic decline.

The post Promise Zone Just the Latest of Many Development Zones for Saint Louis appeared first on Show-Me Institute.

That’s right, this story is not about the Rams; it’s about the St. Louis Football Cardinals circa 1988. But the stories are so similar that, if the Post-Dispatch were to change the date, a few proper nouns, and replace “dome” with “open-air stadium,” they could easily republish articles written decades ago.

If Saint Louis’ position is analogous to the one it experienced in 1988, there is much reason for caution. Back then the conventional wisdom was that domed stadiums were the future and open-air venues were a thing of the past. As one Post-Dispatch writer put it, “A domed multi-purpose building, involving an enlarged convention center, would not be the white elephant of an isolated, open-air athletic stadium.”* Despite the last-ditch stadium proposal, the Cardinals moved anyway.

But that did not stop plans for a dome. Then, as today, regional leaders claimed that having an NFL team was a boon for the local economy and city pride. Thus, building a new stadium was the “progressive” action, and it was needed to “compete for sports, convention and political bucks.”* In the area of urban development, the Post-Dispatch published articles about how the RCA Dome transformed downtown Indianapolis, hinting at similar results for Saint Louis. In a demonstration of an uncritical, keeping up with the Joneses mindset that too often guides municipal governance, one prominent stadium plan supporter commented, “You know, the other cities that have built domes are not totally stupid.”* When state and local residents voted to go forward with a publically financed dome, one Post-Dispatch columnist claimed that it “all sounds like a dream.”*

Now the dream is over. While Saint Louis eventually lured the Rams in 1995, it did so with a sweetheart deal that has been described as the “worst lease ever,” part of which frees the Rams to leave the city after only 20 years. The dome, which was described as “cutting-edge” and even “intimate”* in 1995, is regularly maligned. In fact, talk of the dome being out of date began as early as 2007, just 12 years after it was completed. As for urban regeneration, other than the heavily subsidized developments on Washington Avenue, progress has been limited and certainly not centered on the dome.

The history of the Edward Jones Dome demonstrates the pitfalls of using public dollars to chase the NFL. Perhaps that will cause Missourians and public officials to be more skeptical of the new stadium proposal. But then again, you know, the other cities that have built open-air stadiums are not totally stupid.

The post It’s Groundhog Day for Saint Louis and NFL Stadiums appeared first on Show-Me Institute.

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

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

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

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

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

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

If you are reading this, the streetcar is not for you. In a Feb. 13 interview on KCUR radio, James said the following:

We need people to understand, a lot of the folks who are against this [streetcar expansion] are people who have been vested here, they’re already here. They’ve lived most of their lives if not close to all of it [here]. We’re not building this city for them. We’re building this city for the next 75 years.

Not only is the streetcar not for people in Kansas City; voters ought to discount the views of Kansas Citians exactly because they are from Kansas City. In the same interview, James said:

And despite people’s objections, despite their willingness to look at it in some instances, when we’re out looking for talent to come to this city, they’re not looking for some place where they can drive all around town, they are demanding public transportation.

Got that, Kansas City taxpayers? The streetcar is not for you, it is for others, either in the future or those who live somewhere else. You’ll just be paying for it. Planning ahead for city growth and seeking to attract new citizens are noble goals. The problem is that nothing in the research about streetcars indicates that it accomplishes either.

The post Ask Not For Whom The Bell Clangs appeared first on Show-Me Institute.

At the conclusion of the 2013 legislative session, Missouri senators shut down the tax credit that would have opened up millions more to Saint Louis NorthSide developer Paul McKee.

I would like to take credit for this. But unfortunately, there is no one who can really take credit for this happening. Making a bill become a law can often be a confusing and messy process. In this case, the Distressed Area Land Assemblage Tax Credit (DALATC) was set to expire this year, and there were bills proposed to extend the credit. At the last minute, however, the DALATC extension was tacked on to a different bill, House Bill 698. HB 698 was a hodgepodge type of bill including various tax credit provisions.  Eventually, a senator filibustered the bill so it did not pass. (Show-Me Institute Policy Analyst Patrick Ishmael has more detail about the legislature’s failure on this bill here.)

Is this going to stop or hinder in any way NorthSide development? Of course not. McKee’s project has already received more than $40 million in state tax credits, and the City of Saint Louis has promised close to $400 million more in local incentives. Plus, the project still has potential to tap up to $20 million in credits from the state before the DALATC expires later this year.

There is no doubt that McKee wanted access to the $45 million more that extending this tax credit would have opened up. But the project will just have to “make do” with the $440 million in government assistance it will receive.

The post Army Of Lobbyists Fails To Deliver appeared first on Show-Me Institute.

However, this ease of regulation comes just a little late. The housing market crisis began years ago. Part of the federal government’s response was to throw hundreds of millions of dollars in taxpayer money at the problem. In February 2010, the U.S. Department of Housing and Urban Development (HUD) awarded more than $223 million to help establish land banks in Michigan. More than $40 million went to a land bank in Ohio. The Saint Louis land bank, the Land Reutilization Authority (LRA), has used federal money to acquire property.

It would have been nice if the federal government had eased this regulation earlier, and before so much money was dumped into a program that has not been proven successful. After all, the Saint Louis land bank, which is the oldest standing land bank in the U.S., has not succeeded in getting vacant property back into private, productive use. Since its creation, the land bank’s holdings have quintupled, and Show-Me Institute research found that the land bank had a habit of rejecting nearly half of all formal offers to purchase its property.

There is a real risk that land banks set up in Michigan, Ohio, Indiana, New York, and other states will end up where the Saint Louis land bank has: Holding many properties indefinitely, and plagued by processes that favor political insiders. Much of the blame for this expensive and unproven expansion of land banking rests squarely with the federal programs and funding that encouraged it.

Reducing regulations associated with renting vacant, foreclosed homes is a good first step to dealing with the glut of foreclosed property. A next good step would be for the federal government to cease funding land banks.

The post Too Little, Too Late? appeared first on Show-Me Institute.

I pose this question to the residents of the city of Saint Louis: Did you know that when your neighbors fill up the outside children’s swimming pool, wash their fleet of cars, or water their lawn until the grass is greener than the gardens of Shangri-La, you are paying just as much for their water as they are? Unlike many other large cities, suburbs, small towns, and hamlets, the city of Saint Louis has never adopted water meters as part of its water distribution system. Other cities are already moving from meters read manually by workers to meters read electronically, but Saint Louis still bills for its water through a flat-rate system that encourages overuse and inefficiency.

Saint Louis may have an abundance of water, but that is no reason to facilitate its overuse. Pricing is the most accurate way to limit resource usage to necessary levels. If city leaders wish the residents of Saint Louis to think of themselves as the zealots at Masada — wallowing in water while the Roman legions below suffered in the desert — then, by all means, flat-rate billing would accomplish that goal. If, on the other hand, city leaders want to facilitate conservation, choice, and a basic sense of paying for what you use, they should implement the very simple solution of water meters.

Numerous studies document the decrease in water usage that follows a conversion to meters. Denver saw a 28-percent decline in water usage after it switched to meters in 1995. A 1994 comparison in New York City between apartment buildings with metered billing and those without saw 36 percent less water usage in buildings with meters. Finally, a 1984 study for the Department of Housing and Urban Development compared multiple water conservation methods. It observed that meters were the most effective, and generally resulted in a 20-percent decline in water use.

Not surprisingly, many of the usage differences cited above are greatest during the summer months. With flat-rate billing, the cost of sprinkling your yard is shared by everyone. The one homeowner on the block that sprinkles for five hours every day still pays the same flat, quarterly fee for water as everyone else. I love a nice lawn, but I fail to see why the owner of the lawn should not pay for the water that maintains it. Meters are a simple and effective way to realize that goal. Furthermore, technology has reduced the annual costs of monitoring meters, giving the city even less reason to maintain flat-rate billing.

Water in Saint Louis — or, more exactly, the infrastructure to treat it and transport it directly to your house — is inexpensive by any measure. Even though the switch to metering would entail new costs, the long-term savings for many customers from reduced usage and conservation would offset those costs. Poor families in Saint Louis would still be able to afford their water bills if the city were to switch to meters, and could even save money by choosing to limit water usage. The low price means that lawns would still be green and pools would still be full, but a switch to meters would mean that you are no longer required to pay for the wasteful habits of your neighbors, and they would not pay for yours.

David Stokes is a policy analyst at the Show-Me Institute, a Missouri-based think tank.

Related Links

Privatization of the Saint Louis Water Utility (Case Study)

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