August 12, 2014

That Burns & McDonnell TIF And Vandalism

Earlier this year, the Kansas City Council voted to use tax dollars to subsidize a project for Burns & McDonnell, one of the nation’s largest engineering firms. The Tax Increment Financing (TIF) site — a property featuring a former synagogue and school but otherwise dominated by a large parking lot — is literally next to the company’s world headquarters. We wrote at the time the TIF was being considered that the subsidy would be a poor use of limited public resources, especially for a successful firm that could certainly afford to expand and build upon a vacant property adjacent to its own.

Of course, Burns & Mac got its taxpayer subsidy, in part because of the “vandalism” that had occurred inside the empty buildings. In a hearing before the Kansas City TIF Commission, Scott Belke, the consultant who prepared the blight study, said, “This is one of the most vandalized buildings I’ve seen in my 29 years of work.” Thus, TIF supporters argued, the site and buildings needed to be remediated … with taxpayer support.

Belke admitted in questioning that he has never failed to find a site blighted, and that’s no surprise; we at the Show-Me Institute have been unable to find any case in the entire state of Missouri where a consultant has not considered a proposed TIF site blighted.

So, how were the buildings remediated? They … were bulldozed.

B&Mdemolition

Why was vandalism even considered a reason for blight if the entire structure was going to be razed anyway? Burns & Mac was never going to inhabit the synagogue; the building’s condition was, in practice, irrelevant to what Burns and Mac’s plans were for it: destruction. The only reason the building’s condition was an issue was because it was a foothold for the company to steer taxpayer dollars to its project, through TIF. That’s a cynical and objectionable path to getting city taxpayer money, but that’s business as usual in Kansas City.

Some people believe in the power of TIF, and perhaps it has a role to play in some development projects. But in Kansas City and elsewhere in Missouri, TIF is so frequently used and abused — and not even in legitimately blighted urban areas for which TIF was intended — that the whole enterprise has become a farce: a farce, as in this case, that enriches wealthy developers at the cost of city taxpayers.

New Tech To Improve Parking In St. Louis City

Last week, officials with the City of Saint Louis announced their decision to install a new type of parking meter. This is the result of months of a competitive process and trials at specific locations in the city. The winners of the $5 million contract were Xerox and Parkmobile. The city’s plan to update street parking is a win-win situation, with opportunities to implement demand-based pricing as well as maximize the performance of the city’s meter system.

meter11

Above is one of the pilot units of Xerox’s solar-powered IPS single-space meters. The meters accept both coins and credit cards (although the minimum time for a credit card purchase is 1 hour). The Parkmobile app allows people to pay over their phone by space number. The app can warn costumers when only 15 minutes remain, and if the overall time limit is not expiring, users can renew their spot over the phone.

Upgrading the city meters can aid both the city’s bottom line and those people looking for parking. For the city, it reduces the cost of enforcement, as officers can know where expired meters are and focus their ticketing efforts. Moreover, the city can use the data from both the meters and the Parkmobile app to measure the performance of certain parking areas, allowing variable pricing to maximize city revenue.

From the perspective of those looking for parking, the city’s effort to properly price and enforce meter limits can mean more available parking. The new meters and Parkmobile app will make payment convenient and mark the end of having to feed the meter. Additionally, the mobile apps and parking meters may allow people to find available parking by providing information on available spaces, eliminating the hassle of cruising for parking, and decreasing urban congestion. Finally, the city is also conducting a study that might result in the removal of parking meters that do not generate enough revenue for their upkeep. That type of optimization, which saves the city and drivers, is long overdue.

For the City of Saint Louis to realize these benefits, officials must be prepared to coordinate data collection to create a more market-oriented street parking environment. If the city can manage that, and take advantage of rapidly improving software capability, these updates will improve the lives of city residents and the city’s bottom line.

July 16, 2014

The Report The Airport Advisory Group Doesn’t Want You To See

Granted, that is a cliché title, but we can defend it. Twice, Show-Me Institute staff reached out to the Kansas City Airport Terminal Advisory Group (ATAG) about incorrect claims they were making in their presentations. We know from an open records request that they received our offer, considered it, and then ignored it while trying not to seem like they were ignoring it.

Dave Fowler, co-chairman of ATAG and a former managing partner at KPMG in Kansas City — one of the world’s largest auditing firms, — shockingly wasn’t ever concerned with the cost details. And whenever people provided financial information that did not align with the city’s talking points, it was dismissed. The affordability of the whole scheme was never seriously considered.

Until now.

Joe Miller, a policy researcher at the Show-Me Institute, has compiled all the cost data and concluded that over 30 years, it would be cheaper to renovate the Kansas City International Airport (MCI) twice than to build a new $1.2 billion terminal. Add this analysis to the many other points we’ve raised about the environmental or competitive need for a new terminal and it becomes impossible to find any worthwhile reason to tear down one of the country’s finest airports.

July 8, 2014

The Math Does Not Add Up For Murky Kansas City Streetcar Deal

In a previous post, we commented on how officials from Kansas City and the Missouri Department of Transportation (MoDOT) are hammering out a deal to divert $144 million of the proceeds from the proposed statewide sales tax to the Kansas City streetcar. According to the Kansas City Business Journal and the Kansas City Star, the plan will cap the sales tax increase in downtown Kansas City at 1 percent (0.25 percent for the streetcar Transportation Development District, or TDD, and 0.75 percent for the proposed statewide sales tax).

Source: Kansas City Business Journal

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Speaking of bad math, the cost of the projects in MARC’s chart (above) adds up to $800.4 million, not $775.7 million. So what’s getting cut? Does anyone check these things? 

On the surface, that sounds great for residents of downtown Kansas City (if not elsewhere). Previously, they were asked to pay a 1 percent higher sales tax to get the streetcar expansion. Now, they still pay 1 percent more, but they get other road and transit projects that state taxpayers fund, in addition to the streetcar expansion.

Haven’t seen a deal like that since Billy Mays died. But wait, there’s more!

Actually, the math for that “swap” does not work. The TDD’s 1 percent sales tax was supposed to bring in approximately $30 million a year. If the city reduces that rate to 0.25 percent, it will create a funding gap of almost exactly $210 million. That’s the reason the city was originally asking for $210 million; it was not some random number (although the city is not beyond doing that).

Drop the amount that streetcar gets from the state to $144 million, and a $65 million funding gap opens up. And remember that the original plan already had a $31 million unresolved budget gap. That leaves almost $100 million up in the air, ready to come crashing down on Kansas City taxpayers. Unless there is some other very large source of funding for the streetcar, the TDD sales tax cannot be held to 0.25 percent. It would need to rise to about 0.50 percent to maintain adequate funding (but still not addressing the initial $31 million shortfall).

The underlying problem is the incredible expense of building a streetcar system. Even if the federal government and Missouri taxpayers cover massive portions of the streetcar’s cost, there’s still a significant burden for residents in downtown Kansas City. Residents in the proposed TDD, Kansas City, and state will have to decide whether the streetcar is worth it.

July 7, 2014

Kansas City’s Murky Streetcar Deal Goes Public

During the last couple of weeks, we have commented about the developing story of the closed-door dealings between Kansas City officials and the Missouri Department of Transportation (MoDOT) regarding the future of the streetcar and the proposed 0.75 percent statewide transportation sales tax. We also have pointed out how this process arbitrarily discards the regional priorities that a transparent public process created. Both of these terrible transportation policies are on the Aug. 5 ballot, so naturally Kansas City officials were worried that a whopping 1.75 percent increase in the sales tax for downtown Kansas City might end in mutual defeat.

Kansas City officials cooked up a plan that would make the tax increase a more palatable 1 percent in downtown Kansas City. They proposed a “swap” that would cap the streetcar’s Transportation Development District (TDD) sales tax at 0.25 percent on condition that the 0.75 percent sales tax passed (a total tax increase of 1 percent). In return, they called for $210 million to be diverted to the streetcar to make up for lost revenue. As we noted, that incredible amount of money could only result in virtually no money for other transit improvements or cuts to road funding. The media in Kansas City, despite ample evidence of a burgeoning deal, did not report on the story until the day before the long Fourth of July weekend.

The Kansas City Business Journal finally reported on July 3 that a deal was in the works, with $144 million going to the Kansas City streetcar, accompanied with sharp cuts to other transit and pedestrian improvement projects. That means about 18 percent of all regional transportation funds will be diverted to a questionable development scheme in downtown Kansas City, should the transportation sales tax pass.

FundsMARC2

Both the Business Journal and the Star reported that the plan to cap the downtown tax increase at 1 percent is part of the deal, even though simply arithmetic makes this simple “swap” impossible (as a future post will detail).

This murky deal is the worst type of policy making. The “swap” essentially makes the streetcar policy and the transportation sales tax more politically palatable to those living in downtown Kansas City by making state taxpayers unwittingly pay for a massive share of the streetcar. This is the type of bargain that is only necessary because the state and Kansas City plan to spend huge sums on wasteful “transportation” projects, and only possible because a sales tax means that who pays has nothing to do with who benefits.

June 30, 2014

Blame Canada Washington!

Austin Alonzo, of the Kansas City Business Journal, recently reported that Kansas City Mayor Sly James argued that a door-to-door public outreach effort that Burns & McDonnell will conduct is necessary to meet federal guidelines:

On Monday, Mayor Sly James said the work being performed by Kansas City’s Parson & Associates LLC and Scott Hall & Associates will help the city fulfill a federal requirement to incorporate an environmental assessment into the expansion routes so the city is eligible to receive federal funding.

“If this assessment is not completed, then the city will have no opportunity to receive federal funding,” James said in the statement.

The effort is the subject of an ethics complaint that opponents to the streetcar sales and property taxes have filed, claiming it is electioneering. Alonzo followed up with the federal agency awarding the grants and found there is no such requirement.

No federal mandate requires Kansas City or its contractors to hold door-to-door meetings before part of the city votes on a proposed extension of the streetcar project, according to the Federal Transit Administration.

This is not the first time the mayor and Kansas City officials have been caught trying to blame federal regulators for forcing the city to adopt questionable policies. Steve Vockrodt, at The Pitch, just penned a piece pointing out that the EPA has never cited the Kansas City airport for environmental shortcomings:

City officials distributed a fact sheet in April 2013 that said KCI couldn’t meet U.S. Environmental Protection Agency guidelines for capturing de-icing runoff.

“The current terminal infrastructure does not allow the airport to meet the EPA’s new standards for capturing deicing fluids, which require capturing about 30 percent of the run-off,” the fact sheet reads. “The new single terminal will capture nearly 100 percent of the runoff and resolve Environmental Protection Agency issues the airport is currently facing.”

But there is no such EPA guideline.

Two EPA officials contacted by The Pitch could not identify any published guidelines that call for the capture of 30 percent of de-icing fluids.

And let us not forget the recently ended bid for the GOP convention, in which Mayor James argued that it was necessary to spend hundreds of thousands of dollars, in secret, just to keep up.

The Show-Me State’s Harry Truman once famously quipped, “The buck stops here.” But in Kansas City, Mayor James and Kansas City government officials point the finger elsewhere and the bucks don’t stop at all.

June 27, 2014

Kansas City To Spend 27 Percent Of All Regional Transportation Funds On Streetcar

In a recent article, the Midtown KC Post reported that Kansas City officials reached an agreement with the Missouri Department of Transportation (MoDOT) to fund the proposed streetcar expansion with proceeds from a proposed 0.75-cent statewide sales tax. Under the agreement, the streetcar’s Transportation Development District (TDD) sales tax would be reduced to 0.25 percent. In return, MoDOT would provide $3 million a year in funding for the streetcar.

But anyone who has read the streetcar’s financial plan knows the math for that “swap” does not add up. The streetcar TDD’s sales tax is supposed to bring in almost $30 million a year. If it is reduced to 0.25 percent, the TDD would only raise $7.5 million per year. With an extra $3 million a year from the state, that leaves almost $20 million per year in lost revenue unaccounted for, or $200 million over 10 years. Because the streetcar needs every dime (and then some) of that sales tax money, where is the extra $200 million going to come from?

The answer to this conundrum lies in Resolution 140500, which Kansas City Mayor Sly James introduced on June 19. It proposes spending an incredible $210 million of the 0.75-cent statewide sales tax revenue to fund the streetcar expansion. To get just how incredible of a request that is, consider that the Kansas City region is only supposed to receive a total of $776 million for all of its road, bridge, transit, rail, port, aviation, and greenway projects. In the plan that the regional planning agency (MARC) released, that is almost every dollar the region planned to spend on transit. That original plan had $32 million for the streetcar, but millions more for improvements throughout the entire region.

MARCplanbargain

 

This money grab for what is essentially a development scheme for downtown Kansas City should enrage not only residents in the Kansas City region, but taxpayers throughout the state. For parts of the Kansas City region not called downtown Kansas City, it essentially means no new funds for more cost-effective transit solutions or other more pressing projects. For the state as a whole, it underlines the incredible waste of a transportation sales tax supposedly needed to fix MoDOT’s highway funding problems. That 4 percent of all sales tax revenue raised over 10 years would go to support an incredibly expensive want with dubious development potential makes the proponents of the sales tax, who constantly argue that our infrastructure is crumbling, look like chicken littles.

If reports are accurate, MoDOT may already have made an agreement with Kansas City to divert this vast sum of statewide sales tax revenue, completely upending the open process through which MARC developed its regional plan and entirely contradicting MoDOT’s preliminary list of projects (which Kansas Citians have been asked to fruitlessly comment on) for the Kansas City region. That should indicate to Missourians just what kind of policy the transportation sales tax would create: wasteful, opaque, and catered to special interests.

Lovely Rita’s New Meters

Yesterday, I attended a town hall meeting that the Saint Louis Treasurer’s office hosted regarding citizen feedback on the parking technology field tests in downtown Saint Louis and the Central West End. The city is running these tests in order to modernize parking operations in the city. The vendors included T2 Systems, Aparc Systems, Xerox, and Duncan Solutions. All of the vendors gave impressive demonstrations.

The city should go state-of-the-art with its technological upgrades, no half measures. People have told me, and I agree, that it is annoying to have to go to a centralized meter, pay, wait for a printout, and then go all the way back to the car to place the printout. It is an added pain to go refill the meter when there is heavy rain or snow outside. If the city upgrades its meters, it should either have a meter at each individual space and/or allow people to pay through a smartphone app. At the town hall, all of the vendors stated that they will allow people to pay through a smartphone.

There also should be some flexibility in regards to charging different prices based on the time of day. During busier times, the prices for parking should increase. During quieter times, prices should be lower. This would allow the city to properly react to the demand for parking and hopefully reduce congestion.

However, no matter the appeal of state-of-the-art technology, the city needs to balance that against the costs of the upgrades. Added parking convenience is one thing, but the city should not break the bank for it.

Overall, it is good to see the city looking to upgrade its parking systems. With all that we can do with digital technology, it is about time parking meters join the 21st century.

June 26, 2014

Tell Taxpayers Where Their Money Went

The Republican Party has eliminated Kansas City as a potential host city for the 2016 convention, and with it went any reason for keeping the details of the bid a secret. In April we wrote:

The mayor of Kansas City, Mo., disclosed that the city is ponying up another $65,000 to woo the 2016 Republican convention. Jackson Co., Mo., Wyandotte Co./Kansas City, Kan., and Johnson Co., Kan., also are chipping in an additional $65,000 each. This $260,000 total is in addition to the $100,000 that Kansas City, Mo., already spent. We participated in a KSHB TV story about the spending and asserted that taxpayers ought to be told what is being promised in their name.

At the time, the mayor and the convention committee refused to tell taxpayers how much money the city was spending, where it was going, or how much more was promised. According to the Kansas City Star:

The Star filed a Sunshine Law request with the city and the Kansas City Convention Visitors Association asking for information from the proposal on the potential public cost of the convention.

Both declined, citing state law — and a concern about revealing details of the bid to competing communities.

“We will not be addressing specific questions related to the Finance section of our response,” said an email from Julie Sally, a spokeswoman for the Kansas City convention task force.

City spokesman Chris Hernandez also declined to provide the requested information, as did Mike Burke, the attorney for the KCCVA.

Now that there is no risk of compromising the bid, the city and the KCCVA should reveal what commitments they made, where the money went, and to whom. Their economic impact projections for the convention were pretty wild, too. We would like to see who generated those, and how.

June 6, 2014

Lake Of The Ozarks To Waste Sales Tax Monies On Passenger Rail

As Missourians consider whether or not to vote for a transportation sales tax, localities and regions are writing up their wish lists for how the new money will be spent in their areas. The Lake of the Ozarks is no exception. Some of the projects that area counties have proposed have merit, including reasonable road and sidewalk improvements. Others do not, such as what is at the top of Camden County’s list: passenger rail from Jefferson City to Camden County.

While a detailed plan has yet to surface, it is certain that any passenger rail extension from Jefferson City to Camden County would be incredibly expensive. How expensive? The distance from Jefferson City to Camden County is more than 50 miles, and new rail construction can cost up to $25 million per mile, more if they need to acquire right-of-way or build new bridges. Even simple rehabilitation of existing track can be very expensive, as the Missouri Department of Transportation’s (MoDOT) recent $48 million expenditure to improve 10 miles of track demonstrates.

Railway Point

What would be the demand for this line? The Missouri River runner, which connects major Missouri population centers along the Missouri River, has had difficulty gaining passengers and runs a significant operating deficit ($8 million to $9 million per year). If a link between Saint Louis, Jefferson City, and Kansas City has insufficient demand to cover costs, what are the chances for a rail line that simply connects Jefferson City to Camden County?

To get a sense of the ridiculousness of the project, consider how one might go about using this rail line. If one were planning to go from Saint Louis to the Lake of the Ozarks via this route, there would be two options. First would be to drive to Jefferson City, get out of the car, and take the rail the last 50 miles. The second option would be to go to the St. Louis Civic Center, catch one of the two daily River Runner trains to Jefferson City, and then transfer to the rail line. With both options, given the spread out nature of the Lake of the Ozarks, it is likely that anyone taking the train would have to rent a car upon arrival. It is immediately obvious that no one would consider this a reasonable transportation solution; the only market would be rail enthusiasts.

This rail project demonstrates the folly of using a sales tax to pay for transportation in Missouri. When users of highways are the ones paying for highways, the amount available to spend on new construction and maintenance is controlled by underlying demand for those assets. When everyone pays a sales tax for anything that can be called transportation, the money gets spent on politically popular projects, regardless of feasibility or demand. So it goes that if the sales tax passes, shoppers in Saint Louis will fund an empty train to Camden County.

June 4, 2014

Sweetness And Power & Light

I want to follow up briefly on the pieces recently published in The American Spectator and here on the blog about entertainment district subsidies in the Show-Me State. Michael Rathbone’s review of Saint Louis’ Ballpark Village is worth your time if you haven’t read it yet. But I want to highlight again Kansas City’s own tax incentive sinkhole, the Power & Light District. The Wall Street Journal video below is an oldie but goodie that captures how expensive the city’s entertainment district gamble has been — and how expensive it will continue to be in the years ahead.

The cost of the city’s plan has actually gotten worse since the Journal published this video in 2012. Just a few months ago, the Kansas City Council actually voted to refinance the district’s debt to help pay for pensions, extending the term of the repayment period and adding tens of millions of dollars to the district’s cost.

The refinancing calls for adding seven years to the Power & Light entertainment district’s debt payments, from 2033 to 2040. It lowers the payments from 2015 through 2019 and frees up cash to help pay for pension reform, especially in the 2014-15 budget. But it bumps up the debt payments between 2020 and 2040, a net increase in overall debt of $36 million.

Who’s going to pay for all of these costs? Kansas Citians, of course, most likely through higher taxes, lower services, or a combination of the two. Businesses that have to compete with the newly subsidized competitors will also be paying for it not only in tax dollars but in customers, too, as their clientele are diverted to new taxpayer-funded developments. If these massive projects were going to work, they should be able to make it on their own, and as the Spectator observed:

The forbidding economics of these projects should be evident from the start, since their need for subsidies shows that they have inadequate market demand. Yet they continue to open, representing the fallout that occurs when officials speculate with public money.

That chronic speculatory impulse of Missouri’s public officials must stop. If our local and state governments can afford to massively cut taxes for some, they can afford to cut taxes for all. That’s the direction in which tax policy in this state must continue to move.

June 2, 2014

Kansas City’s War On The Future

With all the political rhetoric floating around Kansas City, one would think the city is embracing high technology and forward-looking, well, everything. A closer examination reveals just the opposite. The city is using 19th-century politics and policymaking, and hoping for 21st-century results. It is as anachronistic as those future-looking movies of the past.

width= What old-timey look at the past would be complete without a monorail light trail streetcar? Kansas City politicians are determined to employ 19th-century fixed rail transit, thinking wrongly that it will solve our problems. We’ve written extensively about why rail is bad for Kansas City. You can read about it here.

The most jaw-droppingly insipid claim is that such policies will draw the creative class. Never mind that there is no research to back up this claim — Kansas City already is rapidly becoming a fact-free city. In fact, a vocal proponent of streetcars who claimed to speak for millennials just announced that he is leaving Kansas City for the East Coast to seek greater opportunities. This supports the writings of my Show-Me Institute colleague: the so-called creative class goes where the jobs are, not to streetcars or airports.

Meanwhile, city officials view actual future-looking technologies such as those that Lyft and Uber provide with hostility because officials are mired in 19th-century protectionist cronyism. How are Kansas City officials going to react to the inevitable arrival of driver-less Google cars? Demand that cars undergo a background check? Require that each one contain a detailed street map? This is not forward-thinking; in fact, it’s not thinking.

Speaking of Google, Kansas City Mayor Sly James and others love to extol Google Fiber, as if Kansas City, Mo., won that national bidding war to bring them here a few years ago. We didn’t. We lost to Kansas City, Kan. We were just lucky enough to be next door. Kansas City, Kan., won because they demonstrated small and efficient government, not heavy-handed regulation and federal money.

In looking to create density downtown, city officials are falling over themselves to offer up any sort of taxpayer subsidy, handout, or corporate welfare package to bring density — sometimes just to move jobs two blocks. Yet they are unable or unwilling to deliver basic services to the rest of the city. This is not forward-thinking, it is urban cannibalism.

If Kansas City officials are serious about building a brighter future, they need to shed the city’s knee-jerk tax-and-regulate policies and start doing the few things a city can do well: maintain the streets and parks, fight crime, provide quality education, and do so while keeping taxes low. Then the city won’t need to pick winners — because the winners will come to the city on their own.

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