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.

Recently, Show-Me Institute Executive Director Brenda Talent wrote in an op-ed that “To better serve the public interest, the LRA should stop trying to pick winners and losers in the market for vacant land.” This made me wonder — why does the Saint Louis Land Reutilization Authority (LRA) accept some bids while rejecting others, and what are the costs to taxpayers of its current approach to landholding?

The two high-rises pictured above both entered the LRA’s inventory in the 1990s, vacant, awaiting redevelopment. Only one stands today.

At left is a picture of the Continental Building, located at 3615 Olive St. in the city’s Grand Center neighborhood. A 1978 National Register nomination notes, “Built in 1929 with William B. Ittner as architect, the Continental is the most sophisticated statement of art deco in St. Louis.” At right is a picture of the Regency Nursing Inn, which stood at 4560 West Pine Blvd. Built between 1964 and 1966 at a cost of $2.3 million, the convalescent home and medical office building opened for business in 1966. A leasing guide for the 15-story reinforced concrete building stated, “Because of the imposing character and dignity of the REGENCY, pride of tenancy as well as functional interior design will delight the most discerning.”

Although the Continental Building was “sophisticated” and the Regency Building merely “functional,” both ultimately fell into disuse and were subject to vandalism. The LRA assumed ownership of both buildings in the mid-1990s through the tax foreclosure process authorized by the 1971 Municipal Land Reutilization Law. Today, both properties are back in private hands after sales by the LRA, but only the Continental Building still stands. The Regency Building was demolished in 1998 at the behest of the LRA, at a cost of $263,940.

So, what gives? Does the LRA have a preference for art deco over mid-century modern? Or is there another explanation for the LRA’s decision to save one high-rise and demolish the other?

During the June 25, 1997, meeting of the LRA, the agency rejected a $10,000 offer by Roberts West Pine Development and Associates to purchase the Regency Building for rehabilitation as condominiums, deciding instead — in an executive session — to sell the property for $1 to West Pine Court LLC. Minutes from the meeting indicate that West Pine Court LLC had the support of the alderman, whereas Roberts West Pine Development did not.

Today, the site is home to low-rise, brick-faced townhouse condominiums, funded in part by the city’s first residential tax increment financing (TIF) project. To date, the developer has received more than $400,000 from this subsidy.

The Continental Building, too, stood vacant prior to its rehabilitation in 2001 by Owen Development. The residential conversion project received $5.8 million in state historic preservation tax credits and additional funds from the federal historic preservation tax credit. Minutes of the Jan. 26, 2000, meeting of the LRA reveal that the developer had “the enthusiastic support of the alderman” for the proposed rehabilitation of the building as apartments.

The LRA has wide statutory latitude to do anything it pleases, including rejecting high bidders and accepting low bids from the politically favored. As former Commissioner Howard Hayes said during the Oct. 25, 2000, LRA meeting, the agency has “an unspoken bond with 28 aldermen, because they speak for the people of St. Louis, they have been duly elected.”

Does the LRA’s “unspoken bond” entail listening to aldermen while harming taxpayers?

Consider the timeline of what happened here:

• The LRA rejects a $10,000 bid for the Regency Building, a mid-century modern skyscraper.
• The LRA accepts a $1 bid from a developer who simultaneously requested a TIF from the city.
• The LRA demolishes the building at a cost of $263,940.
• The LRA retains the art deco Continental Building in its inventory, pending its transfer to a developer for rehabilitation.
• As of 2010, taxpayers are out at least $400,000 on the West Pine townhouses and more than $5 million on the Continental Building.

At a bare minimum, the LRA should subject its parcels to competitive bidding. The fact that the LRA can raise costs to taxpayers with zero oversight and no accountability is reason enough for today’s Missouri policymakers to revisit and rethink the powers of this ill-conceived agency. In the 21st century, aldermen should not have the powers of land patronage.

The annual debate about the Saint Louis County sales tax pool is being treated more seriously this year in the legislature, according to reports I have read and heard. In short, the proposal to abolish the sales tax pool and allow any city that chooses to become a point-of-sale city has a real chance of passing.

In Saint Louis County, any point-of-sale cities that had local sales taxes predating the county’s general tax are allowed to continue to keep the majority of the sales taxes collected within the city, and are required to share a portion of the taxes with the pool. Cities that did not have local sales taxes predating the county tax, or which voluntarily chose in the early 1990s to become part of the tax pool, must now add all of their sales tax collections to the pool, along with the contributions from point-of-sale cities, and distribute the taxes to the various cities based on population. Eliminating the sales tax pool (or just destroying it by allowing cities to join and leave anytime they want) would be a poor policy choice for Saint Louis County. We need to expand the sales tax pool, not eliminate it.

Bear this in mind when considering the issue: All of the major eminent domain controversies in Saint Louis County have occurred in point-of-sale cities. The large majority of retail-based use of tax-increment financing (TIF) in Saint Louis County occurs within point-of-sale cities. As the East-West Gateway Council of Governments has documented, this use of TIF has not led to real economic growth in our region, just the proverbial rearranging of deck chairs.

So, if we know that point-of-sale cities abuse eminent domain more, and wastefully use TIF more, wouldn’t we want fewer point-of-sale cities, rather than more?

The sales tax pool is not “socialism,” as some of its detractors have called it. This is all about what happens to money once it goes to the government. The debate is strictly about which government gets it. I could go on and on about this, frankly, and will be happy to do so in the comment section if anyone should desire. Until then, please check out the op-ed I wrote four years ago, which still applies perfectly.

We need to expand the sales tax pool, not rescind it. The system in which cities keep all of the sales taxes generated within their boundaries incentivizes the abuse of property rights, over-emphasizes retail at the expense of other business groups, and perpetuates the idea that governments and their faulty plans for interventionist “economic development” are good for our society.

Lawmakers in Missouri are doing the same thing over and over again and expecting different results. Government officials tried to expand Lambert–St. Louis International Airport not too long ago, and it didn’t work. They spent $1.1 billion in taxpayer money to build another runway at Lambert. It was the largest public works project in the history of Saint Louis, so I’m surprised that nobody is talking about it. The Riverfront Times gave the project the “Best Boondoggle” award twice — once in 2003, and again in 2004.

Here’s the back story: Evidently, government officials decided that two runways weren’t enough for Lambert. Construction on the runway began in 1998, and it continued despite several setbacks. (As the Riverfront Times aptly put it, “Still, the bulldozers rolled on.”) Following the 9/11 terrorist attacks in 2001, Trans World Airlines went bankrupt and American Airlines bought it. In 2003, American Airlines cut its operations in half at Lambert, and revoked the airport’s hub status. In the meantime, people flew far less than projected.

Unfortunately for Missouri taxpayers, this story doesn’t have a happy ending. The new runway did not reduce delays. Plus, with each passing year, Lambert saw fewer takeoffs and landings. Just one year after the new runway was built, only 5 percent of flights used it. Several airlines asked to avoid using the new runway altogether. Because it was built so far away from the terminal, planes had to taxi as many as three miles to the terminal, burning more fuel.

Not only did the project fail to bring the traffic it promised, it tore apart the city of Bridgeton. Government officials used eminent domain to move seven major roads, kick 6,000 people out of their homes, and bulldoze six churches and four schools in order to make room for a third runway.

Government does not have a good track record in steering economic development — particularly in the Saint Louis area. Studies repeatedly show that they fail to produce the results that they promise. Most recently, the East-West Gateway Council of Governments concluded that the Saint Louis government has provided $5.8 billion in subsidies to private development in the city, but doesn’t have much to show for it.

Expanding the airport didn’t work then, and there’s no compelling reason to believe that it will work now. (Remember: No formal agreement has been signed, nor has any study been completed.) Lawmakers are in danger of repeating the same mistakes, so they should take a longer look at this.

We have a shared goal: an economy that is thriving and attractive to new businesses. Lawmakers are sticking the same old policies (tax credits!) — even though they have been shown to fail. If lawmakers in Missouri were serious about growing the economy, they would abandon the failed policies of the past and take a different strategy.

Last night, I attended the monthly meeting of the Special Administrative Board (SAB), which governs the St. Louis Public Schools. Following the meeting, I spoke with Rick Sullivan, SAB president, who confirmed that he is aware of the vacancy on the Land Reutilization Authority (LRA) Commission caused by the resignation of Howard Hayes, the longest-serving commissioner.

In an interview, SAB President Sullivan said, “I would expect an appointment to be imminent. The board discussed it today.” He continued, “I need to confirm qualifications and willingness of some people we’re considering.”

Although Sullivan did not name any potential candidates for appointment to the LRA Commission, he elaborated on the SAB’s selection criteria: “[W]e want somebody who understands all of the issues related to LRA, familiarity with real estate or otherwise.”

When asked whose interests the new appointee will represent, the school district or residents, Sullivan said that the appointee “[has] a responsibility to represent the interests of the city and take into consideration how they’re appointed. So, first and foremost are the residents of the city, city interests, and then keeping in mind where that appointment came from.”‘

Sullivan hinted strongly that the SAB hopes to have its appointment in place by the March 30, 2011, meeting of the LRA Commission.

The Show-Me Institute will continue to follow these developments closely. Stay tuned to Show-Me Daily for the latest on this story.

The head of the Saint Louis Land Reutilization Authority (LRA), which owns more than 9,300 vacant city parcels, has resigned. The resignation of LRA Commissioner Howard Hayes came two weeks after the Show-Me Institute began inquiring about Hayes’ appointment, and three weeks after the institute met with LRA staff members to discuss the city’s landholding policies. The LRA’s Board of Commissioners consists of three members, one each appointed by the city’s mayor, comptroller, and Board of Education.

Hayes was the longest-serving member of the LRA, having begun his service on Jan. 1, 1999, as the representative appointed by the Saint Louis Public Schools. During his tenure, the LRA’s property holdings rose from 8,729 parcels to more than 9,300 — an increase of nearly 8 percent.

The Show-Me Institute made an effort to contact each member of the LRA Commission prior to publication of the institute’s initial LRA findings. Indeed, the institute contacted Saint Louis Public Schools for comment about our research multiple times, on Jan. 31, Feb. 2, and Feb. 11, and met with LRA staff members in late January.

On Feb. 14, Hayes resigned his unpaid position as a member of the LRA Commission with the following statement:

This letter is to serve as my official resignation from the Land Reutilization Authority.

It has been a unique experience that will long be remembered.

A phone call today to Saint Louis Public Schools confirmed that the Special Administrative Board will meet Thursday night, March 10. The school district’s communications director promised me that he will ask the SAB whom it intends to nominate as Hayes’ replacement.

Our yearlong study into the practices of the LRA found that the agency rejects roughly one out of every two offers to purchase vacant city property.

The Show-Me Institute will be following the selection of a new commissioner closely, because this represents an opportunity for a fresh start at the LRA. Will a new commissioner choose to sell more property? Will a new commissioner change LRA policy? We’ll keep you posted.

Alex Ihnen of nextSTL has reviewed my research of Saint Louis’ Land Reutilization Authority (LRA). The LRA is the city’s largest landholder, owning more than 9,000 city parcels, and is tasked with moving vacant city property into productive use by selling to private individuals so that they can redevelop the property into new homes and businesses.

Yet my research shows that the LRA frequently does not sell its property to people who want to buy it.

Although his post is peppered with a few unsubstantiated negative comments about the Show-Me Institute, Alex raises some good questions. I think others may have similar questions, so I will answer Alex’s questions here.

Furthermore, the Show-Me Institute is the only organization that has done the legwork to collect data on the LRA’s actions, so we are able to answer almost any question about the LRA’s operations. You ask the question, and I will be happy to do the necessary query writing to answer it for you! So, fire away in the comments section.

Continue reading "Facts Are Facts: The City Has Refused to Sell a Great Deal of Its Property" »

Last night, Channel 4 aired reporter Craig Cheatham’s investigation into why the city of Saint Louis was rejecting offers to purchase some of its vacant land. The station’s investigation was spurred by Show-Me Institute research.

As I’ve written previously, the city’s Land Reutilization Authority (LRA) owns more than 9,000 parcels of vacant land, and isn’t selling most of it. Cheatham investigated two properties where the LRA had turned down great offers, for no apparent reason. To my (happy) surprise, Cheatham’s investigation led to the LRA re-evaluating its rejection of one offer to buy property: Anthony Barber’s offer to purchase 1252 Academy Ave. in order to develop the property into a restaurant. You can see 1252 Academy in the photo below.

Photo by Thomas Duda

According to Cheatham’s report, the LRA met with Barber today to reconsider his offer. The agency may, facing public scrutiny, accept Barber’s offer.

This is great news! If the LRA sells 1252 Academy, that is one less vacant eyesore, and one less property the city has to spend money maintaining — and those costs can add up. Furthermore, I am sure the neighbors of 1252 Academy will prefer living next to a restaurant rather than a vacant, boarded-up city property.

But the LRA’s decision to reconsider its decision on 1252 Academy makes me wonder whether the agency is open to reconsidering other offers it has rejected. According to Show-Me Institute research, the agency has rejected offers to purchase more than 2,200 of its properties. Only about a quarter of them were rejected because the agency thought the would-be buyer didn’t have the means to complete the project. The most common reason for rejection was that the agency was holding property for “future development.”

Of course, in most cases, that future development has yet to materialize.

Is the LRA open to taking a fresh look at some of the other offers it has rejected? As part of my research into the city’s landholding policies, I’ve worked to collect the data necessary to put together a list of other offers that might be worth reconsidering. It would be wonderful if the agency would seriously consider recanting some of its past rejections.