February 18, 2014

Kansas City Streetcar: Tax Now, Answer Questions Later

Kansas City Mayor Sly James told a meeting of streetcar opponents a couple of weeks ago that the effort to save the trolley trail — a band of green space running through the city once dedicated to a streetcar but now used for walking and bicycling — is misinformed because:

There’s multiple options, three or four of which have nothing to do with the trolley trail; won’t touch it, won’t run on it, won’t use the lines on it.

The problem for residents and businesses is that no one will tell them what those “multiple options” are, so they are left guessing. The Kansas City Business Journal has published a map of where the rail lines will be laid, approximately, but this is just a broad route. The “multiple options” the mayor speaks of seem to be only a series of cross-section cartoons of what a rail might look like on the road, or on the trail, or in a mixed setting. For all the reality it represents, it might as well include subway tunnels or Clay Chastain’s gondolas. It is not a route and it is not binding on the city. (Note that in the bottom image they just extended the graphic out into the left margin to insert a third turning lane, in effect increasing the land available to them. You can’t do this in the real world.)

Kansas City voters are being told to vote to increase their sales and property taxes now and discuss what it is going to pay for later. And what comes later could easily include eminent domain, dead-end neighborhood streets, bulldozed neighborhood parking lots, railroad crossing gates placed over every street that the route crosses, and the destruction of green space all along the route. No one knows.

Amid such little transparency, it is understandable that voters do not want to give City Hall broad power. If transportation planners want support for their plans, they should come to voters with a complete proposal, not non-binding — and physically impossible — ”options.”

February 6, 2014

Super Bowl Lessons For Kansas City Transit

With Clay Chastain’s partial victory in the Missouri Supreme Court this week, his plan for a 24-mile light-rail system for Kansas City may come back under consideration. We have written many times that Kansas City would be better off without light rail. It is prohibitively expensive, carries few commuters in cities with low-population densities, and is inflexible to changing demand. For an example of this inflexibility, look no further than the aftermath of the Super Bowl.

While most Missouri residents are aware that the Seahawks defeated the Broncos in the big game, they might not know that transportation enthusiasts had dubbed this year’s game the first “mass transit Super Bowl.” The New York metropolitan area is the nation’s densest, with extensive rail and bus networks. Organizers encouraged almost 100,000 fans to take public transportation, either rail or bus, to reach the game. Indeed, this is the type of event where mass transit systems should be most effective: moving a large crowd of predictable size to and from a centralized location.

However, things did not go as planned. As fans left the game, thousands packed into the Secaucus train station, where people waited up to 45 minutes for hot, crowded train cars. Some passengers reportedly required medical attention. It took hours, and scrambling 50 buses to the site, to clear out the jam.

What went wrong? Despite actively promoting the use of mass transit to get to the Super Bowl, organizers underestimated the number who would use the trains by a factor of three. Trains are a relatively inflexible form of transit; it takes a long while to bring extra capacity to an area with a sudden, unexpected spike in demand.

There are lessons Kansas City should take from the Super Bowl in planning the city’s future transit priorities:

First, planning for transit is fraught with pitfalls. Organizers of the Super Bowl had a set population and pre-sold tickets, only to massively underestimate those who would take rail transit. In the same way, no one can be sure of the future traveling habits of Kansas City residents or the city’s growth pattern.

Second, buses are flexible, trains are not. To alleviate the jam after the Super Bowl, New Jersey brought on 50 extra buses. New Jersey could not suddenly bring a whole set of trains to the Super Bowl when a problem arose. They could not build a new station to spread out the crowd. If Kansas City builds light rail and the population shifts or there is economic growth in an area where there is no rail service, there is little the city can do but eat its losses and build a new line. But if the city focuses on Bus Rapid Transit, it could shift resources to meet new demand.

February 4, 2014

Kansas City’s Charter Change

Last week, the Kansas City City Council decided against two charter changes that the mayor had proposed and political groups had backed. The proposed changes that will not go to the voters would have given the mayor the ability to fire the city manager and would have changed the structure of the City Council so that there would be 12 in-district seats.

The Show-Me Institute testified before the Charter Commission last year stating that calling Kansas City’s mayor a weak mayor is a misnomer. While the mayor of Kansas City is more a member of the City Council than his own executive branch, mayors can veto legislation. According to Reza Baqir in his 2002 study in the Journal of Political Economy:

The only indicator of mayor powers that was consistent with statistically significant results was the overall mayor veto indicator.

Kansas City City Councilmember Ed Ford made the correct argument that the power to fire is the power to hire, as any mayor could simply threaten to fire a candidate for city manager while they are under consideration by the City Council. While the Show-Me Institute does not advocate for or against a strong mayoral system of government — in fact, there are benefits of a strong mayoral system — it would be best to build a new governing system from the ground up rather than tinker with one item at a time.

Regarding in-district seats versus at-large City Council seats, our position was more concrete. Research indicates that at-large seats serve as a break on government spending. Lawrence Southwick surveyed 2,000 cities across the country for his 1997 study in Economics and Politics and found that at-large municipal officials:

. . . act so as to reduce both spending and taxes as compared to what ward representatives do. The ward representatives act in a more “pork barrel” framework which results in more spending.

Some on the Charter Commission seemed bewildered about the conclusion that in-district seats can increase per-capita spending, but we find that taxpayers understand the matter clearly. In general, at-large City Council members are more likely to mind the whole store, while in-district City Council members more likely are concerned about earning votes from a small local community.

January 31, 2014

Keep Bike Shares Self-Supporting

With more than 2,000 users in its first few months of operation, the Kansas City bike share program has had a lot of success getting people to ride bikes in downtown Kansas City. A bike share is a service that allows people to rent bikes for short periods. These bikes are rented from and must be returned to “stations” dispersed throughout the city. However, many bike share programs are having a difficult time finding the money to stay in business. Kansas City and other Missouri cities should resist those urging the use of public money to support bike shares. The evidence shows that bike shares serve highly educated elites who can pay their own way.

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

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

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

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

January 30, 2014

Streetcars Are Not Economic Development

Over the weekend, KCPT’s current events program Rukus (starts at 4:33) quoted a Show-Me Institute blog post (Streetcars Will Waste Your Money and Your Time) which points out that there is no evidence that fixed rail removes cars from the road or drives development. It read:

We know from previous studies that rail transit does not remove cars from the road. And we know that it is not the rail lines themselves that drive economic development but rather the additional tax incentives that governments hand out along rail lines.

Kansas City Star editorial board member Yael Abouhalkah interrupted Woody Cozad’s comments on the quote to ask, “Proved by what?” For that, we refer him to the links above. Abouhalkah went on to say, “They just had two downtown without incentives.” He never explained what he was referring to, but we suspect it refers to two hotels that Abouhalkah wrote about in August:

Yes, it can be done: Someone can build a hotel in the Kansas City area without a taxpayer subsidy.

Hallelujah.

…It puts new development along the planned two-mile streetcar line, near the Kauffman Center for the Performing Arts, and near the Power Light District and Sprint Center.

First, we at the Show-Me Institute share Abouhalkah’s enthusiasm for anything built in Kansas City without taxpayer subsidies and we are pleased he is highlighting the matter. The problem in the piece is that this development has nothing to do with the streetcar, aside from possibly diverting it from another location in Kansas City. According to Abouhalkah’s own newspaper, the developers’ interest predated the streetcar (emphasis added):

Rob Schaedle said the firm’s first interest in Kansas City was in 2009 when it considered redeveloping the old 21-story Federal Reserve Bank of Kansas City building at 925 Grand Blvd. Though it admired the historic structure, the firm decided to pass on converting it into a hotel.

But we liked the market,” Schaedle noted and in August of this year bought the property of its new project for $4.5 million.

Abouhalkah and other streetcar boosters are simply claiming credit for any development that occurs after plans to build a streetcar. This is the most basic of logical fallacies: post hoc ergo propter hoc. But this is not uncommon. In a study of economic development programs across Missouri, my colleague, David Stokes, quoted researchers who wrote:

“The best case is that incentives work about 10 percent of the time and are simply a waste of money the other 90 percent.” The authors then relate that, in their experience, “it is not unusual for public officials to attribute all new employment to incentive programs.”

Streetcars will not improve the economy of Kansas City. The economic development handouts, amounting to corporate welfare, will be the engine that drives any development, and even nine times out of 10, that is  “simply a waste.” As time goes on, it will be increasingly difficult to determine exactly what prompted development, but rest assured that everything will be credited to the streetcar.

January 29, 2014

Brentwood Should Join Consolidated 9-1-1 System

The heavily fragmented government system in Saint Louis County leads to higher costs on taxpayers, but NOT quite as high as one might assume. That is because the many cities and other governments within Saint Louis County do a better job of cooperating than people may realize. To give one example, almost every municipality contracts with Saint Louis County for some types of public works inspections. Here is the matrix of city governments that contract with the county for various things.

Another long-time example of shared services is emergency dispatch. We wrote a number of blog posts about the issue several years ago. Few cities have operated their own emergency call centers, which is a good thing. There are obvious economies of scale in sharing resources here, which is why so many cities have done it.

Brentwood is a particularly wealthy city due to the high level of shopping within the city, the high assessed valuation combined with limited government-service needs of Brentwood Forest, and more. So, it has been able to do something on its own that other cities have not been able to afford, such as operating its own emergency dispatch. There is nothing automatically wrong with that, but now officials are thinking about trying to save money by participating in the East Central Dispatch Service 9-1-1 center, which serves many other cities in mid-Saint Louis County.

I think this is a no-brainer “yes” decision for Brentwood. Even if the short-term savings are small, the long-term benefits of being in the larger system would be noticeable, primarily, greater access to a larger pool of resources (technology, employees, back-up systems, etc). Phone calls do not take longer to get to Olivette than they take to get to Brentwood. There are certain things cities do NOT have to do themselves, and emergency dispatch is at the top of the list.

Let’s be honest here. Opposition to this is about protecting public sector jobs in Brentwood, not about public safety. Brentwood should participate in the East Central Dispatch Service.

January 20, 2014

Streetcars Will Waste Your Money And Your Time

Paul Jacob writes in his blog This is Common Sense:

Transportation scholar Randal O’Toole regales us with the fix that California’s overlords have put themselves in. Merely assuming that dense city living decreases commuting, California’s legislators cooked up a law requiring local governments to increase population density.

But it turns out “transportation models reveal that increased densities actually increase congestion, as measured by ‘level of service,’ which,” O’Toole informs us, “measures traffic as a percent of a roadway’s capacity and which in turn can be used to estimate the hours of delay people suffer.”

This should be no surprise to Kansas Citians, who are familiar with official calls for increased urban density and the streetcar system that they believe will bring it. An effort to raise private money for the streetcar (so far, $3,775 of their $10 million goal) says that streetcars:

. . . provide high-quality transit service that promotes compact, walkable, higher-density development.

A firm hired to help build the streetcar system offers as a potential benefit, “Increase[d] population and economic density to the urban core.” Streetcar booster and former Kansas City Mayor Mark Funkhouser claimed that a rail system “produces density, which is key to efficient land and resource use.”

We know from previous studies that rail transit does not remove cars from the road. And we know that it is not the rail lines themselves that drive economic development but rather the additional tax incentives that governments hand out along rail lines. We know that the people of Kansas City have voted down streetcars every time a legitimate election has been held. And judging by the effort to raise private funds yielding only three-ten-thousandths of 1 percent of their goal, Kansas Citians still don’t support it.

But just as in Kansas City, California politicians continue undaunted. O’Toole writes:

The gist of the new standards of “regulation”? “[T]hey ignore the impact on people’s time and lives: if densification reduces per capita vehicle miles traveled by 1 percent, planners will regard it as a victory even if the other 99 percent of travel is slowed by millions of hours per year.”

If you doubt that city leaders care more about spending taxpayer money than respecting taxpayer time and convenience, consider the plans to build a $1.2 billion airport terminal.

January 19, 2014

Spending Money Kansas City Doesn’t Have On Streetcars It Doesn’t Need

Optimistically anticipating that their initial 2.2-mile downtown streetcar line will be a resounding success, Kansas City planners are proposing a Transportation Development District (TDD) to fund a $500 million streetcar system. This move is a blatant bid to get federal dollars to pay for an expensive and outmoded transportation device.

The Show-Me Institute policy staff has argued numerous times that streetcars do not improve mobility or connectivity. Development along streetcar lines is likely due more to tax incentives and other government investment that diverts development to the favored corridor. Even researchers who do not oppose streetcars point out that there is a lack of proper research on a streetcar line’s effect on regional development.

However, backers of the streetcar in Kansas City are not content to wait for real, rigorous studies on the success or failure of the streetcar fad before charging ahead. That is because streetcars are too expensive to build without matching federal dollars, at more than $50 million per mile, and federal policy can change quickly.

For instance, during the Bush administration, streetcars received little federal dollars. The department at the time focused on transit projects that were cost-effective and promoted congestion relief. But those guidelines changed under the Obama administration to favor “livability.” This change in policy, coupled with the stimulus, made billions of dollars available for streetcars in Kansas City and across the country, mostly in the form of TIGER and MAP-21 grants. However, the federal favor shown streetcars may not outlive the Obama administration, which would effectively kill any attempt to expand the streetcar in Kansas City. There is little wonder that there seems to be a race to lock up federal dollars.

Funding expensive and inefficient transportation options with money that falls from the sky is a short-cited policy for Kansas City. Federal grants may fund new transit infrastructure or increased capacity, but grants for repair and maintenance are rare. This means that the costs of the proposed $500 million streetcar system will continuously rise for Kansas City, likely beyond what the initial TDD will support.

And as the experience of Portland has shown, streetcar users will not be willing to pay anything like the full cost of their ride. After years of “free zones” (free streetcar rides in many areas of the city), tax breaks, corridor improvements, and high-density zoning, passengers using the existing streetcar lines declined following the imposition of a $1 fare. That fare, enough to deter ridership, only generates an insignificant percentage of the Portland streetcar’s $251 million capital or $8.2 operating budget, all for 7.3 miles of track.

If Kansas City cannot afford to build the streetcar without federal aid, it cannot afford a streetcar with federal aid either. If Kansas City residents approve the TDD and the proposed system is built, it virtually guarantees that, like Portland, everyone in the city, region, state, and country will pay for a mode of transportation whose sole purpose is to divert development to favored sections of downtown Kansas City.

January 8, 2014

What It Takes To Get Rid Of An Airport

The City of St. Clair, located in Franklin County, has an airport problem. Namely, the city is losing money on its small, general aviation airport. As the St. Clair Missourian reported last week, the airport has only four remaining tenants and use of the airport is at an all-time low.

So why not simply put up the “for sale” sign? For the last five years, the city government has been trying to do just that. But due to stringent federal regulations, the sale of even a miniscule airport can be an odyssey for local governments.

In theory, when a municipality builds and maintains an airport, whether that be Lambert-St. Louis International Airport or St. Clair Regional Airport, that government is free to do what it pleases with its property, including selling it. However, if a city has accepted federal money to upgrade its airport, as St. Clair has many times, federal regulations, known as the FAA’s grant assurances, tightly restrict that freedom.

Two of the more cumbersome assurances for a city like St. Clair are Nos. 5 and 25. Assurance No. 5 obligates St. Clair to maintain it as a public airport and not dispose or sell any part of the airport without FAA approval. The FAA will only give approval if St. Clair can show that closing the airport improves aviation in the area. In addition, the dispensation to sell the airport does not free St. Clair from reimbursing the federal government all recent federal grants. This will cost the city more than $750,000.

Assurance No. 25 prevents any revenue from the airport from being used for non-aviation purposes. According to the assurance, money from the sale of an airport is airport revenue. So to sell, St. Clair will have to submit a report on fair market value of its airport to the FAA, and put all sale proceeds from the sale into an escrow account for other regional airports to use on aviation-related purposes. The FAA has already rejected a number of St. Clair’s valuations as too low, further delaying any possible sale.

St. Clair’s experience trying to sell its own money-losing airport should act as a reminder to Missouri municipalities on the complications of having a public airport and accepting federal dollars. It is better to support the development of private airports or lease existing airports to private owners than to spend money and time begging the federal government to let them get rid of a bad investment.

January 7, 2014

Kirkwood Says ‘Yes!’ To Actual Capitalism

Tax Increment Financing (TIF) usage in Missouri is so out of control that we have actually witnessed cities reject proposals precisely because they did not ask for subsidies. You read that correctly. Developments have been killed due to their lack of a subsidy request, as cities want the subsidy because it gives them more control over the project.

So it has been with great interest that I have followed the debate in Kirkwood over the intersection of Kirkwood and Manchester Roads. Kirkwood asked for redevelopment proposals, and received two proposals without a TIF (one does have a smaller Community Improvement District), and one major development proposal using a large TIF package. In a normal world, it would be assumed the city would take the projects asking for either no subsidies or greatly reduced subsidies instead of the huge TIF, but Saint Louis does not operate under normal standards of free markets.

But, in excellent news, Kirkwood is going with the two proposals that did not ask for a TIF: a CVS pharmacy and a farmer’s market. Good for Kirkwood to say “yes” to free markets, competition, and actual capitalism.

The only good thing that would have come from the TIF is that I would have enjoyed the city having to declare “blighted” an intersection two-tenths of a mile from the richest city in America. That would have been fun to watch…

January 6, 2014

It’s Official: Boeing To Keep 777X Construction In Washington State

The story speaks for itself. (Emphasis mine.)

The 51-to-49 [%] ratification of the contract [by Washington's machinist union] ends a nationwide search by Boeing for a new manufacturing home for the planned 777X, a 350- to 400-seat jetliner scheduled for delivery in 2020, and its carbon fiber composite wings. Twenty-two states had offered 54 sites for Boeing to evaluate, each hoping to win potentially thousands of high-value aerospace jobs.

With the approval of the union, the chief executive of Boeing’s commercial unit, Ray Conner, confirmed that the 777X and its wings would be built in Washington state.

“The future of Boeing in the Puget Sound region has never looked brighter,” Conner said. “This will put our workforce on the cutting edge of composite technology, while sustaining thousands of local jobs for years to come.”

The Missouri Legislature opened a very special session just for Boeing to lure production of the 777X to the Show-Me State, and the state and Saint Louis County together offered more than $3 billion in tax incentives to the aviation giant. Although the Left was largely silent on the matter, the Show-Me Institute repeatedly criticized the cronyism of the proposal — a proposal that followed hot on the heels of a failure to pass broad-based tax cuts only months before.

If the state has billions just lying around for economic development, then the case for cutting taxes in 2014 is even stronger than it was in 2013. And thanks to the special session, practically every policymaker in Jefferson City is now on the record as endorsing tax cuts for businesses to spur economic growth. If big tax cuts are good enough for Boeing, big tax cuts are good enough for the rest of Missouri’s job creators.

December 24, 2013

It’s Not A Celebration When You Engage In Poor Tax Policy

Kansas City leaders held a news conference to claim credit for cutting taxes, which is great except that they didn’t actually cut taxes. Yes, they eliminated some taxes, but the total tax effect was more than offset by increases in other taxes.

Here’s the kicker, though. What voters eliminated, strongly urged on by city officials who proposed it, were good taxes. What is a good tax? It is a tax that raises necessary money, is easy to collect and enforce, and does this without affecting normal economic behavior (”sin” taxes are an obvious exception to the last part.) Economists of all stripes are nearly unanimous that taxes based on land values are the premier way to fund government (especially local governments). So, what did Kansas City do as the only city in Missouri authorized to impose a land tax?

They got rid of it.

Here is the silliest part of the press conference statement:

[...] said elimination of the three small property taxes also makes the city treasurer’s tax collections easier and more efficient to administer because the city doesn’t have to calculate the small levies and each owner’s boulevard front footage.

But calculating the “small levy” is no more complicated than adding a column onto a spreadsheet. Nothing more. And the front footage totals were calculated years ago and rarely change. (Although this post is more about lamenting the loss of the land tax than the frontage tax.)

Missouri requires a reassessment system every two years for a number of tax purposes. Doing a land tax as part of that is, in fact, extremely simple.

For complicated reasons I don’t need to explain here (and don’t even fully know because we have never been able to find the court file that upheld the land tax decades ago), Kansas City is unlikely to be able to reimpose the land tax now. That is unfortunate. Raising the land tax instead of adding a new sales tax would have been the better move for long-term growth in Kansas City.

Read more here: http://www.kansascity.com/2013/12/19/4702761/kc-residents-get-stocking-stuffer.html#storylink=cpy
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