The St. Louis Land Reutilization Authority (LRA) met today to consider offers to purchase vacant property. The LRA, part of Saint Louis City government, is the largest owner of vacant property in the city.

Our research showed in 2011 that the LRA had a track record of frequently rejecting offers to buy city property, often for no discernible reason. The agency would cite “lack of aldermanic input” when rejecting offers, or plans for “future development” that would fail to materialize.

I have written here about improvements to the LRA’s practices that were made in the wake of the publication of our research and the resulting media attention.

This month’s meeting went pretty well – most offers to purchase property were accepted or countered (meaning the LRA asked for a higher purchase price or change in contingencies). However, I still cannot help but think that Saint Louis City aldermen still have outsize influence over whether the agency accepts or rejects offers to purchase property.

An offer from Transformation Christian Church and World Outreach Center to purchase four properties illustrates this well.  LRA staff members recommended that the church’s offer be rejected. However, former Alderwoman Irene Smith (ward 1) spoke on behalf of the church during the meeting and managed to sway the commission. It seemed that the decision of whether to sell the property hinged on whether the area alderman was supportive of the sale.

Smith, speaking to the commission, noted that the church had spoken with Alderman Sam Moore, saying that after “swapping” some property with him, he had agreed to provide a letter supporting the sale of LRA property to the church.

But LRA Chairman Mark Wells initially would not recommend moving to sell the property, saying that “Based on the information we got from Alderman Moore, I think more discussion is needed.”

Smith responded: “We’re taken aback by that. We sat down with Alderman Moore.”

Ultimately, the commission moved to counter the church’s offer instead of rejecting it. And I am glad — the church has a history of purchasing, maintaining, and rebuilding LRA property.

But, I wonder: If the church has a track record of being a strong community resource and has the funds to buy the vacant city property, why does it matter what the alderman thinks? The LRA does not have to consider the input of an area alderman. The agency’s authority was established under state law, and the LRA law does not suggest that the agency consider the input of any political officials. Saint Louis government has implemented this practice by choice.

You can download the LRA’s meeting agenda (with a few of my notes) here.

Jackson County is considering forcing new pawnbrokers and short-term loan shops in unincorporated areas to locate at least 2,500 feet from each other. That is almost half a mile, and is rather considerable. Just imagine if gas stations were forced to locate half a mile from each other. Can anyone say “higher prices at the pump”? Who knows what will happen to these businesses and their customers if the legislation passes.

And why 2,500 feet? Who came up with that number? This article sites the possibility of crime and lower property values around clusters of these businesses, but half a mile seems a little excessive. I would hardly call it a cluster if the businesses located just one block from each other, but even one block is an arbitrary number.

As you may recall from the mantra “location, location, location,” the location of a business can drastically affect profitability. The proposed legislation may make it impossible for more than one loan shop to take advantage of a good location. Since when is that reasonable? Businesses locate in a particular area for a reason – and unfortunately for the affected businesses, the reason they locate to a particular area may be the county’s legislation dictating the available options.

Additionally, why is the government singling out pawnbrokers and short-term loan shops? What next? The proximity of ATMs? When will the regulations stop?

For more Show-Me Institute payday loan material, check out this and this, as well as this awesome video.

Ticket scalping was one of the first issues this blog tackled when we started in 2007. This story in today’s St. Louis Post-Dispatch gives an update on how the situation has unfolded in St. Louis for the 2011 World Series baseball playoffs. Just as predicted, using basic economics, legalization of ticket scalping has resulted in lower prices and greater consumer choice (StubHub!, etc.). One scalper doesn’t bother with political spin:

“You made more money when it was illegal — it wasn’t even remotely close,” said Tony Green, a ticket broker for 20 years. “We knew all the cops, so they wouldn’t bust us.”

So, how did my 2007 prediction on ticket scalping work out? There may be no way of knowing if more people are paying above face value for their tickets to these playoffs, but I still think that is a reasonable belief. However, my predicted overall price decrease for major sporting events was apparently dead on (not that it was a difficult prediction).  

In case you have not watched it yet, please enjoy this video of the Show-Me Institute turning all of our interns loose in a ticket-scalping competition last summer.

A Community Improvement District (CID) proposal in Nixa, Mo., which had been lying dormant for a few months, resurfaced at a city council meeting this week. That is unfortunate. At the very least, the Nixa City Council should reject the proposed board of directors for the new district, which has three of the five members from the same family (see page 3 of this file). That is not the way to operate public dollars, unless you want to make Nixa, Mo., more like Sauget, Ill.

I also hope city officials will require the businesses to post notification of the extra sales tax at the front door and the check-outs, so that shoppers can make an informed choice. (The state legislature needs to correct the mistake that applies notification rules only to TDDs and not to CIDs.)

Nixa is a very nice town and does not need to start playing the game of subsidizing private businesses with tax dollars. If they choose to start playing it anyway, I hope they make several of these improvements to the proposal. Nixa has some dedicated activists who have brought this matter to our attention, and I wish them the best in fighting this proposal in their community. Just like the proposed Tax Increment Financing (TIF) in Columbia, the worst part of this CID is the path on which it puts Nixa. Once you approve one of these types of programs, every development in the city is going to demand one. There is no end to the game until you have hollowed out your property tax base.

If I got to pick it, the slogan for my beloved home state of Missouri would be: “Missouri: We’re In The Middle.” Most ways you look at it – geography, politics, various standard-of-living measures – we rank in the middle of the states. Sure, there are exceptions. We are low on occupational licensing and excise taxes, and high on meth (in more ways than one… well, actually, just in one more way than one).

One thing on which we rank very high is the use of Tax Increment Financing (TIF). This excellent paper on TIF, by Randal O’Toole with the CATO Institute, ranks Missouri third in total and fourth per capita in the sale of TIF bonds from 2005 to 2010. (See page 12 of the paper for the table.) This is not something of which to be proud.

TIF is common in Missouri. Right now, we have more ongoing applications than I can keep track of. The city of Columbia wants a giant TIF for its downtown area.  A TIF is being sought for a section of St. Charles, even though the main landowner of the area in question is a tax-exempt educational institution. Just a few months ago, Kansas City approved a gigantic TIF for the city. Developers are seeking a TIF in Shrewsbury that will do nothing but continue the rearranging of the deck chairs for retail in Saint Louis County. From the Patch story on that proposal, if I may be so bold as to quote myself:

David Stokes, a policy analyst with the Show-Me Institute, said what he heard was “just a terrible economic fallacy.”

“Of course it’s just preliminary, but from what I can tell it is just another example of the economic issues the East-West Council of Governments supported in their report two months ago, which is that every city is doing something to support their own little city, but it’s killing our county’s economic base, and it’s hurting the region,” Stokes said. “It might benefit Shrewsbury in the short run but seems it’s just going to be another type of TIF development that’s going to hurt our region.”

“Maybe if it can’t be done without public dollars, maybe it just shouldn’t be done,” he said.

The problems in these cases is the cities, not the counties. In fact, St. Charles County Executive Steve Ehlmann, along with his predecessor, Joe Ortwerth, have been strident in opposition to TIF in that county, to their great credit. Also to his credit, Saint Louis County Executive Charlie Dooley has recently taken the lead in opposition to these TIFs – he really gets it that a few cities are helped but the entire county is hurt. And Jackson County Executive Mike Sanders at least sued to get more equal representation on the Kansas City TIF commission.

But, even though they have instituted county TIF commissions in Saint Louis and its currounding counties, the insane rule still applies that city councils can override the TIF commission with a supermajority vote. So, the city council for the 15,000 people of Bridgeton gets to override the Saint Louis County TIF Commission and determine tax policy that will affect the one million people of Saint Louis County. I totally support county TIF commissions, but the part of the law that allows city councils to override the TIF commission with just a supermajority vote is insane. They should not be allowed to override it at all. Lot’s more to come on this issue in the coming weeks and months. And this time, I mean it.

Last week, the Kansas City Star ran an excellent story on radically higher property assessments in Kansas City. The key point is Jackson County went decades without properly assessing these people’s homes. Yes, the property owners benefited from lower assessments over that time, but now they are paying the price with dramatic increases in assessed valuations. While I understand the need to update assessed values, I hope someone in the Jackson County assessor’s office has been held responsible for letting these neighborhoods go so long without proper assessments.

In Saint Louis County, the assessor physically inspects every property over a six-year cycle. I was amazed to read that Jackson County let certain neighborhoods go so long without physical inspections. From the article:

[Jackson County Assessor Curtis] Koons, who came to Jackson County from Cass County in September 2007, said the last inspection of county residential properties was at least 14 years ago, and the last thorough physical inspection, where every house was measured, dated back at least 25 years.

I thought Jackson County was in violation of state law, but apparently it is not. Saint Louis County cites state law in support of its six-year inspection cycle, but apparently that law applies only to Saint Louis County. More precisely, it appears the six-year rule is part of the county’s assessment maintenance plan as approved by the state tax commission (I have requested a clarification, and will update this post with a comment when I receive an answer).

State law or not, allowing so many properties to go so long without an exterior physical inspection is crazy. You can accomplish a lot with a physical inspection just by viewing the home from the sidewalk and offering an interior inspection if the homeowner wants one — which they almost never do.

Jackson County’s plan to update its assessed values will eventually work out. By that I mean that in a few years when the entire county’s assessment schedule has been updated, tax rates can be equalized (i.e., lowered) to adjust for the higher assessments. But for now, the homeowners in this first round will see much higher assessments without corresponding decreases in rates, and the tax bills they receive in October will be killers.

Title reference here.

Let’s all applaud the Federal appeals court who ruled in favor of Jim Roos that freedom of speech is more important than stupid sign regulations. We have followed this case, and the broader issue of eminent domain abuse, closely at SMI. Needless to say, we think this is an excellent ruling and a victory for liberty in Missouri.

Show-Me Institute intern Bruce Stahl and I went to Del Taco to see just how bad the property was. After all, city officials have blighted, and re-blighted, the property.

The flying saucer–shaped property seems fine to us. It has an operating business, with many customers. Are city officials just blighting Del Taco in order to award tax subsidy?

If you lived in an alternate universe where Eva Gabor got her way over Eddie Albert, your version of the sitcom “Green Acres” might look a lot like this (via The Pitch):

Newly tabulated information from the Environmental Working Group, which is critical of U.S. farm policy, shows that absentee landowners and investors receive subsidies that, in the public’s mind, go to struggling family farms. The U.S. Department of Agriculture last year sent nearly $100 million to cities with more than 500,000 residents.

Not very farmy communities in this area got in on the action. In Kansas City, Missouri, 1,611 recipients collected nearly $5 million in 2010. The city’s boundaries reach into four counties, so it stands to reason that the receivers include people who drive actual tractors and combines for a living. But zip code searches indicate that the subsidies are also being mailed to downtown addresses and people who live around the Plaza.

A little back of the envelope math tells us that each Kansas City recipient received just more than $3,100 on average. As The Pitch notes, many checks are probably supporting genuine family farmers, given the expansiveness of KC’s municipal boundaries. But on the Plaza? Not likely. Pick the right high-rise apartment and telescope, and maybe urban farmers can see their fields being tilled from afar. Is that the kind of situation legislators contemplated when they crafted the law that created the subsidies?

Naturally, agricultural tax breaks aren’t the only ones subject to the ingenuity of recipients, and the malleability of tax credit language can often make for easy (and profitable) contortions of a law’s intended purpose. Case in point: Saint Louis’ blighting of Del Taco. Fellow policy analyst Audrey Spalding has an indispensable post about how cities “blight” property to award tax subsidies. A sampling (emphasis added):

Colin Gordon, author of Mapping Decline: St. Louis and the Fate of the American City highlights one of my favorite examples of a contorted blight finding: Officials blighted a thriving shopping mall because it didn’t have a Nordstrom’s.

Because every mall needs an eBar.

And, just because I can:

News that the flying saucer–shaped Del Taco might be demolished has the Saint Louis community of architectural preservationists up in arms. There’s a Facebook group with 11,000 fans and growing. There’s a petition to save the building. Even the mayor has been tweeting passively pro–Del Taco tweets.

At the Del Taco with Show-Me Institute intern Bruce Stahl. Photo by Josh Smith.

At the Show-Me Institute, we first heard of Del Taco’s uncertain fate at last week’s Land Clearance for Reclamation Authority (LCRA) meeting. At the meeting, the agency declared the property blighted.

Blighting sounds bad, doesn’t it? The word calls to mind disease, destruction, and decay. Yet as anyone who has visited or driven by this Del Taco can attest, there’s a functioning business on the property. You can still get your burrito and fries at 1:00 a.m. at the Del Taco.

So, why would a city agency vote to find this building blighted?

The sad fact is, blighting in city of Saint Louis and throughout Missouri frequently has very little to do with the actual condition of a property, and everything to do with awarding tax subsidy. Colin Gordon, author of Mapping Decline: St. Louis and the Fate of the American City highlights one of my favorite examples of a contorted blight finding: Officials blighted a thriving shopping mall because it didn’t have a Nordstrom’s.

In Columbia, city officials almost blighted a functioning downtown hotel in order to award the building tax increment financing (TIF). At the last minute, perhaps after realizing how strikingly apparent it was that the hotel was not diseased, destroyed, or decaying, the council used a different portion of TIF law to award the subsidy. After all, it’s really just about the money, isn’t it?

Missouri law limits forms of property tax subsidy to properties that are blighted — most notably property tax abatement and tax increment financing (TIF). So the first step for anyone hoping to get tax subsidy for their development in the city of Saint Louis is to get city officials to declare the property blighted.

This isn’t the first time that Del Taco has been blighted.

In 2008, the Saint Louis Board of Aldermen blighted the property in order to enact a TIF agreement. Under TIF law, “blight” is defined as:

[...] an area which, by reason of the predominance of defective or inadequate street layout, unsanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use;

Well, for the sake of everyone who has eaten at Del Taco since the city blighted the property, I hope that the restaurant wasn’t blighted because it was a “menace to the public health,” or was “unsanitary.”

If you look at the blight definition closely, it becomes clear that certain definitions could be interpreted to include just about any property. For example, what property doesn’t have “deterioration of site improvements”? Paint fades and wood ages. And, I wonder, what qualifies as “inadequate street layout”? I find the phrase “social liability” troubling. Who decides what is a “social liability”? Would a bar qualify? How about low-income housing? And what could possibly be considered a menace to “public morals”?

In case you’re wondering, the Board of Aldermen’s TIF ordinance didn’t specify which conditions rendered the saucer-shaped building blighted.

At last week’s LCRA meeting, the agency voted to declare the Del Taco property blighted again. Apparently, the city’s earlier TIF agreement didn’t fix the problem.

If pretty much any property can be blighted under state law in order to award tax subsidy, why do only certain properties receive tax breaks? I’m going to state the obvious: If the definition of “blight” is so broad that it can be applied (and re-applied) to pretty much any property in order to award tax breaks, the application is arbitrary.

TIF and tax abatement is not being applied to the worst buildings in an area, as illustrated by the cases of Del Taco and the Regency Hotel. Instead, those tax breaks are awarded to particular properties and areas that catch a politician’s eye.

The East-West Gateway Council of Governments has studied TIF and tax abatement, and concluded that using TIF where there really wasn’t any blight didn’t make much sense. From the St. Louis Post-Dispatch:

Maggie Hales, East-West Gateway deputy executive director, reported on the study to the St. Charles County Council during a work session Monday. Hales told council members the three-year study covered eight counties in two states. She said that overall, TIFs have a negative effect on communities and there are racial and economic disparities when and where they’re used.

“The TIF statute was originally designed to alleviate blight,” Hales said after the work session. “In areas where there isn’t any blight, I don’t know as a policy matter it’s a good investment of public tax dollars. [...]“

Instead of blighting and re-blighting properties like Del Taco, here’s a better idea: Lower property taxes for everyone. Take politicians out of the process entirely.

As a former Columbia resident, I’m not surprised that the city is working to build more bike trails. Columbia has a dedicated group of enthusiastic bikers, and some of the most beautiful trails I’ve ever seen. I put more miles on my bike than on my car during my time in Columbia. And who wouldn’t, with the MKT trail connecting the city to Missouri’s KATY trail, a stretch of more than 200 miles, some of which runs along the Missouri river?

But the cause of expanding bike trails, no matter how popular, should not give Columbia community leaders carte blanche to lay bike trails down wherever they please. If some person, business, or organization owns property and doesn’t want a bike trail running through it, they should be able to politely reject the city’s plan to construct a bike trail on their property.

Unfortunately, it appears that the city council may decide to ignore such a refusal. And, in a strange twist, the city is poised to harm the ability of some Columbia residents to enjoy the outdoors in the name of encouraging other Columbia residents to enjoy the outdoors. PedNet, the Columbia organization that promotes bike travel and the expansion of bike trails, is urging the city to use eminent domain in order to construct a bike trail on the Columbia Audubon Society’s (CAS) property.

Bill Mees, who is on the board of CAS, worries that the construction of the trail will irreparably damage the bird-friendly property. From his op-ed in the Columbia Missourian:

Actually, the trail would extend the full length of the south side of CAS property. The southwest corner is a steep forested hillside. Compliance with the Americans with Disabilities Act will require switchbacks and extensive grading. Result: 100- to 200-year-old trees cut down, and others damaged or killed by the construction.

I wonder, does the city of Columbia think that the views of people who enjoy biking matter more than the views of people who enjoy bird watching?

Some might argue that bike trails constitute a “public purpose,” and that the use of eminent domain is warranted. After all, eminent domain is used for roads. Aren’t bike trails, as a form of alternative transportation, just as valid of a public purpose?

In short: No. As much as bike enthusiasts might hope for a future when more people use bikes as their primary form of transportation, goods will not be transported by bike trail. Even the local grocery store’s stock involves road transportation. If public transportation rates were to double, roads would still be necessary — how else could buses travel?

Bike trails in general are traveled by a small set of the population. The bike trail that proponents want to construct on the Audubon Society’s property will be used by an even smaller group. Why take, and partially destroy, the Audubon’s Society’s property for use by these favored few?

It’s not as if there is no alternative. According to Mike Hood, the director of the city’s Parks and Recreation Commission, sending the bike trail through the Audubon Society’s property would cost nearly $1 million. An alternative route, along a section of existing sidewalk, would cost between $120,000 and $150,000.

I’m no city council member, but the decision seems easy. Choose the low-cost option that doesn’t require taking someone’s property.

I appeared on KMOX radio with John Hancock and Mike Kelley this morning to discuss property taxes. I appreciate both of them giving me the opportunity to appear alongside new county assessor, Jake Zimmerman. You can listen to the broadcast here, if you missed it, and if you are as interested in property taxation as I am — or if you just want to learn more about how to appeal your assessment and ultimately lower your taxes, which is also a perfectly fine reason to listen. Please stay tuned for some major work from the Show-Me Institute on property taxes, soon to be released by Christine Harbin and me.

I received a text message from one friend after the show stating that he planned to be the first person in Missouri history to appeal his assessment in order to get it higher, not lower, per our joke about that on the show. So, it is good to know that I accomplished something this morning.