For advocates of free markets, St. Louis city presents a disturbing environment for the conduct of business. Indeed, the fact that so few construction projects occur here in the absence of subsidy necessarily makes the rare market-based development a news item in its own right. But what about projects that do not make the news?

Pictured above in August 2010 is the 1818 Washington Ave. Building in downtown St. Louis. Paired main entry doors punctuate the center of the building’s primary facade, while four ground-level storefront bays are at right. A pizza restaurant occupies this retail space, displaying a bright red-on-white background ”Now Open” sign, in addition to handsome neon signs for Bud Light and Bud Light Lime.

Two blocks to the southwest, at 2001 Olive St., a one-story building features plywood boards over the entirety of its glazed area. Permanent signage for the pizza place remains atop this building, while a banner reading “We Will be Relocating to 1818 Washington Ave. July 1st, 2010,” with red lettering on a white background, hangs from a ground-level storefront bay at left.

In a truly competitive free market, the story would end here: A business moved from one building to another. So what?

As this business relocation occurred in St. Louis city, however, legislated market distortion and an administrative exercise in symbolic violence likely contributed to the outcome pictured above.

On the legislative front:

Ordinances 67319, 67462 and 67463 designated 1818 Washington Ave. as a redevelopment area, executed a redevelopment agreement between the developer and the city of St. Louis, and authorized “$2,380,000 Plus Issuance Costs” in Tax Increment Financing (TIF) notes for the construction of 1818 Washington and another nearby project.

On the administrative front:

In addition to TIF, the 1818 Washington project stands to utilize “Federal and State Historic Tax Credit programs.” Combined, they could yield up to 45 percent of the project’s costs in tax credits for the developer — 20 percent for the federal credit; 25 percent for the state credit. (The building is a contributing resource in the “Lucas Avenue Industrial Historic District (Boundary Increase),” after all.)

In a free market, favorable lease terms or a street address on the vaunted Washington Avenue could prove enticements enough for a business to relocate. In St. Louis city, we are instead left to ask what role public monies are playing in a business location decision, and whether associated municipally approved TIF legislation is actually legal.

Missouri TIF law states the following in §92.805(4), RSM0:

For redevelopment projects or redevelopment plans approved after December 23, 1997, if a retail establishment relocates within one year from one facility to another facility within the same county and the governing body of the municipality finds that the relocation is a direct beneficiary of tax increment financing, then for purposes of this definition, the economic activity taxes generated by the retail establishment shall equal the total additional revenues from economic activity taxes which are imposed by a municipality or other taxing district over the amount of economic activity taxes generated by the retail establishment in the calendar year prior to its relocation to the redevelopment area;

If the pizza restaurant succeeds at growing its revenues dramatically at its new location, the rehabilitated building’s developer will prosper as government loses funds that it would receive were the restaurant not in a TIF district. Had the rehabilitated building attracted a business truly new to St. Louis city, government would receive a greater share of the TIF project’s associated revenues.

Subsidizing projects that displace economic activities from one site to another is a losing proposition for cities and their residents. In St. Louis city, the elimination of TIF would allow our community to awake from its current nightmare of ever-increasing taxes and instead move us toward broadly shared prosperity, courtesy of the free market.

I am a big fan of Jack Cashill’s writing over at Ingram’s, “Kansas City’s Business Magazine.” We just got our monthly edition today, and I highly recommend his editorial about the absurdity of modern urban planning. Here is one great line about his recent vacation to a decidedly unplanned New Jersey locale:

City planners would hock their first-born to create this kind of pedestrian traffic, but they don’t know how. They can no more plan “fun” than they could anticipate a popular demand for a fried Oreo. This hodgepodge of stuff was driven by the consumers as gauged and tweaked by savvy, on-site merchants over decades.

The entire article is well worth a read, as is the article on the water and sewer infrastructure in Kansas City.

I attended my first Land Clearance for Redevelopment Authority (LCRA) board meeting in Saint Louis yesterday. I couldn’t help but notice stark similarities and differences between the LCRA and the Land Reutilization Authority (LRA) board.

One stark difference is the amount of information that each board expects from the petitioners. When presenting before the LRA board, an individual has to demonstrate financial ability and provide the written endorsement of an alderperson, as contributors to Show-Me Daily have communicated previously. When presenting before the LCRA board, apparently, the presenter provides neither. He only has to cite the dollar amount that the developer is spending on the project, as well as the projected number of jobs that will be created.

As a related point of contrast, committee members of the LRA board pose probing questions to petitioners, whereas those of the LCRA members ask few, if any.

As a point of similarity, both the LRA and the LCRA promote policies that remove properties from the tax base and therefore reduce the amount of property tax revenue received by the city. Each has a different way to accomplish this, however — the LRA board denies proposals from individuals to buy properties that are withheld by the city, and the LCRA board approves proposals from private corporate developers to abate property taxes.

I encourage you to compare the number of suits in the first photo below to the number in the second photo.

To me, it begs the following question: Whom is Saint Louis City government serving: taxpaying individuals or corporate developers?

Land Clearance for Redevelopment Authority (LCRA) Meeting, August 24, 2010

Photo Credit: Thomas Duda

Land Reutilization Authority (LRA) Meeting, June 30, 2010

Photo Credit: Thomas Duda

Santiago, Chile, is a city of more than 5 million people, with one of the highest standards of living in Latin America. In the latest episode of EconTalk, host Russ Roberts of George Mason University talks to Mike Munger of Duke about the city’s mass transportation system. In the middle part of the last decade, Santiago featured a flourishing system of private buses, with more than 3,000 companies offering quick and inexpensive transportation all over the city and mostly managing to turn a profit. The system was not without its flaws, however. The buses emitted a great deal of pollution, and overzealous bus drivers often caused accidents or hit pedestrians in efforts to pick up passengers before their competition.

Such problems led the government to scrap the private system in favor of a public one in 2007, and Munger explains how this led to far worse outcomes on pretty much every measure. The average commute for a mass transit rider immediately skyrocketed from 40 minutes to an hour and 40 minutes. This encouraged more people to drive or use small taxi services, feeding a vicious cycle. Furthermore, because bus drivers are paid based on how often they are on time, they have no incentive to stop for passengers at bus stops if they are running late. The extremely lengthy lines for buses routinely lead to pushing and shoving to board and fights often break out. Although the public system was specifically designed to solve safety problems in the private system, the number of wrecks actually increased because the city purchased extra long bendy buses, which require two lanes to turn, so cars frequently crash into them. Finally, the system as a whole went from running a profit of $60 million to requiring a government subsidy of $600 million — more than $100 for every resident of Santiago.

Munger argues that the problems with the private buses could have been solved relatively easily without resorting to socializing the system. A very minimal licensing requirement could ensure that the buses do not emit excess levels of pollutants, and the enforcement of property rights in private bus stops has been shown to prevent buses from driving recklessly to swipe passengers out from under the competition. Although Saint Louis and Kansas City do not have the same level of demand for bus services as Santiago, the city has shown that government ownership is not necessary for a decent mass transportation system.

A trolley line serving the Kansas City Strip recently opened and is slowly building a clientele in the area by providing easy transportation to bar patrons on weekend nights. The Kansas City Star reports:

While ridership has fluctuated wildly depending on the weather, it has ticked up most weekends since June (except for the slow July 4 weekend), reaching more than 800 people on July 30 and 31.

That’s not yet close to the system’s capacity of 1,200 per night.

“You don’t change people’s patterns immediately,” [chief executive of the Kansas City Transportation Group Bill] George said. “Let’s face it, this is not a mass transit town.”

But he said ridership is where he hoped it would be at this point.

Most remarkable of all is that this trolley line receives very little government funding:

KC Strip received $100,000 in tourism tax dollars through the Neighborhood Tourist Development Fund.

The City Council also approved $295,000 in convention/tourism taxes. Of that, $95,000 was a grant and the rest a secured loan, to be paid back over four years.

These are tiny subsidies compared to the $25 million in federal funding that the Loop Trolley in Saint Louis is set to receive. The KC Strip trolley service should prove to be a fairly good market test for trolleys in Missouri’s cities. If it prospers, it will show that such mass transit options do not require lavish public subsidies to survive. However, if it fails to make money, it’s a good indication that people are not terribly interested in riding a trolley system, so we should save our public dollars for more pressing needs.

What a difference a month makes.

In July, the city of St. Louis’s Land Reutilization Authority (LRA) Board of Commissioners heard public testimony from six persons seeking to purchase property, and the board actually approved three of the sales! (Commissioners deferred action on one of the properties and offered a five-year “garden lease” on each of the other two parcels subject to public testimony.) Per its usual practice, the LRA sent buyers off with the encouragement that they “will receive a letter in the mail” enumerating their required next steps for taking title to the city-owned properties.

All other agenda items received their recommended actions.

The above may seem like nothing more than minutiae to persons unfamiliar with the problems associated with LRA ownership of formerly private lands, but for persons who live next door to any of the LRA’s thousands of parcels in the city or for taxpayers anywhere in the city, the above actions are of particular significance.

One person who testified this month seeking to purchase a vacant lot adjacent to her home spoke of how burglaries are “a constant problem,” and that she hoped the acquisition of the lot would allow her to better protect her property. Another potential purchaser expressed her desire to become a homeowner, only to be rebuffed by the commission with an admonishment that she “talk to the alderman,” demonstrate stronger financial abilities, and await further review by the commission at the next meeting. A husband and wife expressed their desire to purchase the lot adjacent to their home in order to provide space for room additions to accommodate their daughter, son-in-law, and grandchildren. Two representatives from a church spoke about how the purchase of a fenced parking lot would greatly assist in the church’s programming and outreach.

Considered together, the myriad of motivations and the multitude of proposed uses for LRA-owned land parcels suggest to me that individuals, when free to conduct land transfers, make better decisions about land use than do any seemingly well-intentioned bureaucrats on an executive commission.

The LRA meets in the Board Room at St. Louis Development Corporation, 1015 Locust Street, Suite 1200, at 8:30 a.m. on the last Wednesday of each month.

I bristle when public policy advocates contend that persons who oppose a favored policy simply lack an understanding of “how well the program works.” Instead of wasting breath on patronizing dismissals of those who offer alternative perspectives, perhaps a policy advocate’s time would be best spent providing the public with valuable, unbiased information with which we can form our own opinions.

It is in this spirit that I present one of my works in progress from my summer here at the Show-Me Institute.

Backers of the 25-percent Missouri Historic Preservation Tax Credit often cite the statistic that our state is “first in the nation” for “federal historic rehab tax credit projects,” so I thought that it could prove valuable to see exactly where said federal projects occurred.

Click here to view a draft map of Missouri rehabilitation projects that received the 20-percent Federal Historic Preservation Tax Credit. Data comes from a June 2010 information request to the National Park Service, and includes projects dating from 1996 to mid-June 2010.

I see no need to editorialize about the map at this stage in my research, but I think that those who proudly support historic tax credit programs would do well by the public to explain why spending millions on certain construction activities is an appropriate use of public funds.

However, given that “historic preservation” is a catchall for education, place-making, job creation, and aesthetics, defining the precise function of public expenditures made in the name of preservation is an impossible task. Our positions as taxpayers, historians, developers, contractors, homeowners, tenants, policymakers, and tourists necessarily inform our differing and potentially divergent perceptions of these policies and expenditures. Our propensity toward repeated engagement in the same argument about the relative worth of a tax dollar spent on historic preservation as opposed to one spent on public education, while refusing to acknowledge some basic facts about the program in question, often leaves us blowing hot air.

At present in Missouri, recipients of historic preservation tax credits need not acknowledge the receipt of public funds in any format on the project site. In fact, recipients of historic preservation tax credits need not even acknowledge the historic significance of their taxpayer-supported property on site, such as in the form of a plaque. If we are to have a truly informed debate about the worth of the historic preservation tax credit, I would hope that we can all agree that disclosure is a good place to start.

Without good information, our state will never make good policy.

In my mind, the verdict is still out on whether the historic preservation tax credit really does what its backers aver.

The Kansas City Star recently wrote that the Power and Light redevelopment project in downtown Kansas City will cost more than originally planned. The city originally lent the project $295 million, but now estimates that it will cost taxpayers another $230 million by 2033.

The project, cast as a “self-sustaining venture,” has had trouble occupying its 511,000 square feet of retail space. City planners blame the vacancy on the downturn of the economy. Without a fully occupied site, the project is having trouble recapturing the tax dollars originally allocated to finance the project.

This is not to say that the project was a failure, but rather to point out the difficulty in predicting its success. Of the original $295 million, $212 million was used to rebuild infrastructure around the project area (which could more readily be considered a legitimate expense). Many of my friends love the Power and Light District as a weekend hangout, but rosy projections and rationalization won’t save taxpayers any money.

A perfect example of the inherent fallacy of utilizing a centralized plan is found in Nassim Nicholas Taleb’s book The Black Swan. He writes:

The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events.

Governments who believe they have a better chance than individuals of predicting future events have the tendency to be vastly irresponsible, and the bill almost always lands at the feet of the taxpaying public.

As plans like Kansas City’s Power and Light District come together, they are sold to the public in the most favorable light with the most favorable projections. Unfortunately, those projections almost never translate in the real world. Public projects usually cost more than expected and produce less.

The fact remains that the project has been undertaken, and I believe City Manager Troy Schulte put it best:

“20-20 hindsight is always good, but I’d tell taxpayers to come down and enjoy downtown, because you’re paying for it,” he said.

I was pleased to see that the Post-Dispatch ran a letter to the editor today that I wrote in response to its recent editorial calling for St. Louis officials to renew efforts to subsidize the NorthSide redevelopment plan. This is the text of the letter:

Developer Should Bear Risk of Failure

In responding to Judge Robert Dierker’s ruling that St. Louis officials lacked authority to offer hundreds of millions of dollars to subsidize the NorthSide redevelopment plan, the editorial board, in the editorial “Celebrating Decline” (July 12), implies that the plan can proceed only if the city provides the anticipated subsidies. The developer’s own estimates indicate a belief that he will realize a profit of at least $251 million even without those subsidies.

Nothing in the ruling prevents the developer from pursuing his quixotic vision or from enjoying any profits that might result from its success; rather, it requires that, like all other entrepreneurs, the developer must personally bear the risks of failure instead of pushing them onto the taxpaying public.

Dave Roland — St. Louis

Policy Analyst, Show-Me Institute

In the first half of the 20th century, Saint Louis boasted an extensive system of streetcars, which were slowly wiped out by the private automobile in the later 1940s and 1950s. One of the last profitable streetcar lines in the area served the Delmar Loop (so named because it was where the streetcar looped around), and it may be making a return:

[A] federal grant [...] could finally make a long-sought streetcar route a reality.

The U.S. Department of Transportation announced today a $293 million investment in transportation projects around the country, including $24 million for a two-mile trolley line that would run between Forest Park and the University City Loop. [...]

Supporters of the Loop trolley have said it could cost between $45 million and $55 million, with private donations covering the portion not covered by public funds.

I think it’s laudable that a great deal of the trolley’s expenses will be paid for with private funds, but I’m still suspicious of anything that requires federal funds. If it’s such a great idea for everyone involved, why can’t all the money be raised from Loop merchants and other donations — or, if a government entity has to be involved, University City? Costs aside, I have a number of other reservations about the project.

Driving on Delmar between Skinker and Kingsland is already a nightmare, and I’m pretty sure a slow-moving trolley would make matters even worse. If the trolley only ran in the Loop itself, that wouldn’t be such a huge issue because people wishing to bypass the area already know how, but it will also be running up Delmar to DeBaliviere and from there to the art museum. Those are both pretty major thoroughfares, so the trolley could cause traffic to pile up, which will cut into any environmental benefit it might have.

Furthermore, this area is already overserved by rail. Anyone wishing to travel from Forest Park to the Loop can do so quite easily by hopping on the MetroLink, as the Loop Trolley Project’s own website shows.  Granted, MetroLink can’t drop you off every block, but the entire Loop is only about seven blocks long, which is hardly a long walk from one end to another.

Finally, if trolley riders aren’t brought to the area by other forms of mass transit, they will have to park and ride. The Loop has a large parking lot, which is often near capacity as it is, but I am not sure where people wishing to ride from Forest Park are supposed to park their cars. Without more parking capacity, I don’t see how the line can attract enough riders to make it worthwhile, but I don’t know where they will put more parking.

I don’t think any of these points show definitively that the Loop Trolley is a bad idea, but they are questions that should be addressed before we start lavishing tax dollars on the plan.

According to the United States Census Bureau’s American Community Survey, the city of Saint Louis has an estimated 21.5-percent residential vacancy rate. This rate compares unfavorably to the 12-percent rate for the nation as a whole and aligns closely with those found in Cleveland, Ohio, and Buffalo, N.Y. In raw numbers, this amounts to 38,743 empty housing units within the boundaries of Missouri’s second-largest city.

With vacancy pervasive throughout our community, St. Louisans may often logically conclude that said emptiness is the direct consequence of the stark reality that persons simply do not want to live here in the same numbers that they once did. In fact, it would be difficult to argue that losing nearly two-thirds of the city’s peak population would have a negligible impact on the appearance of the city’s landscape.

But does so much property necessarily remain vacant from a lack of market demand for single-family homes, larger yards, and new business locations, or could vacancy be the product of market distortion by a governmental agency?

At the urging of a colleague, I attended my first ever hearing of the St. Louis Land Reutilization Authority (LRA) on Wednesday morning, looking for an answer.

Within moments of its commencement, the meeting shattered every expectation that I had for a body with the following statutory mandate (emphasis and link added):

The land reutilization authority is hereby created to foster the public purpose of returning land which is in a nonrevenue generating nontax producing status, to effective utilization in order to provide housing, new industry, and jobs for the citizens of any city operating under the provisions of sections 92.700 to 92.920 and new tax revenues for said city.

Instead of operating in a manner consistent with its above-enumerated legislative intent, the LRA appeared to operate according to a morass of opaque cultural practices that stand divorced from any legislative language. Indeed, the insistence by the assembled commissioners that prospective buyers of tax-foreclosed properties have the express written support of the alderman representing the ward that is home to the vacant property struck me as patently absurd. (After all, the word “alderman” does not appear in Chapter 92 of the Revised Statutes of Missouri.) Five people attempted to purchase property from the LRA this month without a letter of support from their alderman. Of those five, four offers were rejected, because the LRA purportedly treats a lack of aldermanic support as a reason to reject a prospective buyer’s offer.

After witnessing Wednesday’s proceedings and perusing the many purchase offers on the LRA agenda, I can say with great certainty that much of the vacancy subject to the LRA’s jurisdiction in St. Louis city is not a consequence of a lack of private demand for property; rather, much of it derives from government legitimation and infringements on the free market.

[NOTE, 6/28/10: According to officials at the Department of Economic Development (DED), the DED did undertake a review of NorthSide Regeneration LLC's tax credit application, and fixed the discrepancies it found in the company's application before formal application submission. Show-Me Institute research found discrepancies in approximately 20 percent of the reported property values in the initial submitted application. The DED did not send some of the documentation surrounding the application process after a Show-Me Institute Sunshine Law request, because DED officials say it was part of the issuance process, rather than the review process. An earlier version of this post stated that the DED overpayed for tax credits; the present version does not. Indeed, the DED now asserts that it paid according to figures on a document other than the application submitted.]

The Show-Me Institute’s public information specialist, Audrey Spaulding, released a report on Friday documenting more than 100 discrepancies in the 2009 application for Distressed Areas Land Assemblage Tax Credits submitted by NorthSide Regeneration LLC to the State of Missouri. On New Year’s Eve, the state’s Department of Economic Development (DED) approved the inconsistency-riddled application, granting $20 million in taxpayer funds to the LLC.

Internal documents from the DED disclosed last week reveal that a state agency moving full-speed ahead to grant “the maximum allowed issuance ($20M) before the end of [2009],” while failing verify the applicant’s purchase price claims. Indeed, the DED’s outreach to a St. Louis–based independent private consultant consisted solely of a request to verify the number of parcels per acre in the area submitted for tax credit reimbursement.

In its typical bureaucratic fashion, the DED pressed ahead in its approvals without asking even the most basic question: What exactly is the state paying for, here?

Thanks to Audrey’s reporting, we can answer the question that our state’s bureaucrats failed to ask. Consider the following:

2829 Saint Louis Avenue, pictured above in June 2010, is a one-story, red brick, flat-roofed home with side entry, wood porch, and full basement. A raised limestone water table extends horizontally across the one-bay primary facade below a centered rectangular window opening, while a narrow band of white terra cotta projects outward from the brick wall above the window opening and below a band of white terra cotta coping. The west facade appears to be a former party wall, revealing a parapet that steps downward to the rear of the regular, 25-foot-by-130-foot lot. Presently in poor condition, the modest 908-square-foot home still retains remarkable stability — a product of its solid 1880s construction.

According to the city of St. Louis Assessor’s Office, the home has a total assessed valuation of $1,370.00, of which $360.00 is assessed land. During the past three years, its property tax bills were as follows: $119.06 (2009), $122.45 (2008), and $122.68 (2007). At present, the City of St. Louis lists the property’s appraised value at $7,200.

Prior to its acquisition by N&G Ventures LC in late 2005, the building appears to have served as a modest residence. Since its acquisition, the building’s condition has likely deteriorated, as evidenced by a collapsed rear wall and disintegrating side wood porch.

The above image places 2829 St. Louis Avenue in the context of its contemporary St. Louis streetscape. I could not resist adding a few annotations, courtesy of information contained both within the approved DALATC application and the St. Louis city Assessor’s Office.

I would venture to guess that most residents of St. Louis city would scratch their heads and dig a little deeper if confronted by such an outrageous claim.

Now, the DED says that they were not hoodwinked; they did their job.

I still have to ask — what did the DED think that it was paying for, here?

[NOTE, 6/28/10: According to officials at the Department of Economic Development (DED), the DED did undertake a review of NorthSide Regeneration LLC's tax credit application, and fixed the discrepancies it found in the company's application before formal application submission. Show-Me Institute research found discrepancies in approximately 20 percent of the reported property values in the initial submitted application. The DED did not send some of the documentation surrounding the application process after a Show-Me Institute Sunshine Law request, because DED officials say it was part of the issuance process, rather than the review process. We are engaging in further research to verify these claims and will post more as we learn more. Stay tuned.]

Today, I appeared on the Charlie Brennan Show to talk about the discrepancies in NorthSide Regeneration LLC’s tax credit application filed in late 2009 (you can read more about that, and the discrepancies, here).

A lawyer for NorthSide, Irvin Ness, called in to explain the discrepancies, which appear to total more than $500,000. Ness said that the tax credit application we used to conduct our review was outdated — that NorthSide had submitted an updated application in December 2009 to update the reported property prices in a way that would correctly reflect the certificates of value on file with the city of Saint Louis.

Although this explanation could prove to be true, there are at least two reasons to doubt it:

1. I based my review on a copy of NorthSide’s tax credit application, which was provided to me by the Department of Economic Development (DED) in response to a Sunshine Law request submitted on Jan. 13, 2010. If an updated version had been filed before that time, the DED should have sent it rather than an out-of-date version.
2. My request specified that I wanted to receive “Copies of documents and emails regarding the review of NorthSide Regeneration LLC’s application for DALA tax credits in 2009.” I have made the documents they provided available online (in six parts, here, here, here, here, here, and here). They include no mention of property price discrepancies, or that the application had been resubmitted to reflect new property prices. If the application had been updated to reflect different prices than those that were initially submitted, and the DED had any correspondence about such an updated application, the DED failed to fulfill my request adequately.

At least until NorthSide can produce an updated version of its tax credit application that was actually submitted to the DED in 2009, it’s difficult to determine which error was committed — errors on the application, or errors in fulfilling my requests.

In any case, Charlie Brennan has invited me to appear again on his show, along with Ness, on Tuesday morning. Tune in then to hear more!

Thanks to everybody who listened to Audrey Spalding’s segment on KMOX this morning about discrepancies in the tax credit application filed late last year by NorthSide Regeneration LLC.

Audrey’s report is now available on the Show-Me Institute website, detailing how the property value amounts that NorthSide reported to the state appear to be overvalued by more than half a million dollars in comparison to the certificate of value amounts filed with the city of St. Louis.

For more of Audrey’s work covering the north side redevelopment project in St. Louis, follow the article links on her staff bio page.

A June 2 article in the St. Louis Business Journal discusses a plan to revitalize a former shopping mall and office space, as well as the former Dillard’s building and Union Pacific railroad building downtown. The plan is to convert them into multiple repurposed buildings: The Laurel, Park Pacific Apartments, The St. Louis Centre, and The One City Centre.

This initially sounds great (I am definitely in favor of a better-looking city), but after factoring in the cost of $89 million from Missouri taxpayers, the plan begins to lose its luster.

Private developers are footing the majority of the bill, but the remaining government intervention into this real estate market seems ill-advised. When an investment becomes economically viable, a private entrepreneur will usually dive in with no cost to the state. Whenever the government involves itself in a market, on the other hand, either through subsidies or special taxes, it entails some amount of dead-weight loss, but by placing some trust in reducing burdensome regulation and allowing the market to work, we can eliminate some of this wasted productivity.

If politicians had a demonstrated track record of choosing investments that paid off, there could be an argument for such targeted tax credits — but no such track record exists. If no private developer finds it worthwhile to redevelop a set of properties without receiving massive tax credits, the project is probably not an efficient way to invest our tax dollars, especially at this time when fiscal discipline is so important. The government would better serve the people of Missouri by trusting the market to do its job.

Lewis Greenberg's yard art. Photo from the St. Louis Post-Dispatch

A Ballwin-area retired art teacher was sentenced to jail time on Monday for non-compliance with two city ordinances. The ordinance offender, Lewis Greenberg, is charged with littering and storing hazardous materials.

The photo above is of Greenberg’s offense. He maintains that the structures in front of, around, and behind his house are art. Although art isn’t easy, these structures do look like abstract sculpture. The tangle of wood and metal, Greenberg told the Post-Dispatch, represents the Holocaust.

Greenberg’s neighbors, however, don’t appreciate his yard art. And, they haven’t liked it for a long time. In 2007, a woman from the area blogged: “OK, so where does Greebergs right trump the neighbors right to have a peaceful life in a quiet subdivision?”

Writes a commenter on the most recent Post-Dispatch article, about Greenberg’s sentencing:

If he wants a yard full of junk – then he can move out in the country where there are no rules. In a town and a subdivision where there ARE rules – he is BREAKING THE LAW and it needs to go….

Well, not quite. Greenberg’s art is on his property. He isn’t breaking a law just because what he has built on his property is unusual and doesn’t quite fit in with the Ballwin-area aesthetic. There is no right to uniformity.

Some neighborhoods do have codes, such as the one enforced in Shaw, that can limit what individuals can do with their property. It appears that, although the City of Ballwin has an extensive housing code, Greenberg’s neighborhood doesn’t have a rule to protect itself against his abstract yard art. Instead, the city has charged him with littering and storing hazardous materials — charges that seem like a stretch.

A survey of the Ballwin City Code reveals that the term “litter” refers to substances that could injure a person’s feet or car tires, trash and debris, earth left from an excavation, and traffic obstructions. Clearly, Greenberg’s lawn art doesn’t fall into the first, third, or fourth definitions of litter. And, although commenters hasten to compare his art to junk, can items strategically placed in order to construct sculptures on a person’s private property really be classified as trash?

As for the hazardous materials charge, it could be argued that children could run onto Lewis’ property and hurt themselves. However, unlike a person keeping dangerous animals on their property, if anyone hurts themselves on Greenberg’s property, it is entirely that person’s fault. Furthermore, if a person did hurt themselves while on Greenberg’s property, that person could attempt to find recourse through the court system. It’s not the city of Ballwin’s place to stop low-risk accidents from occurring through prior restraint. If it were, the city should immediately crack down on the construction of swimming pools.

I suspect that the neighborhood’s problem with Greenberg’s lawn art is not one of danger, but one of annoyance. It is unfortunate that the City of Ballwin is claiming to protect the safety of “the children” in an effort to censor Greenberg. Instead of reacting in this negative way, the annoyed neighbors could have realized what Mr. Plumbean and his neighbors realized:

My house is me and I am it. My house is where I like to be and it looks like all my dreams.

I live in the Shaw neighborhood in Saint Louis, and I subscribe to the area’s email listserv. Last week, a subject of much debate was the Shaw Neighborhood Local Historic District’s long list of Use, Rehabilitation and New Construction Standards, which describes which architectural details, roof shapes, roof materials, etc., that residents are allowed to use.

When a person walks through a neighborhood like Shaw that features aesthetic continuity, he sees only part of the story; historic codes like those in the Shaw neighborhood entail many unseen costs and negative unintended consequences, which I will attempt to enumerate in this post. For these reasons, historic building codes discourage the practical use of existing structures — the very thing they are supposed to encourage.

1. Historic codes violate private property rights.
    
   They restrict individuals from altering, adding to, or demolishing the buildings that they own. By purchasing an older property, an individual assumes the risk that it could lose value in the future. Property owners have an incentive to maintain their investment, because otherwise the value of the property will decline.
2. Mandating aesthetics should not be the role of government.
    
   Ensuring that a building is structurally sound is one thing, as David Stokes has written previously, but mandating how a building looks aesthetically is another. In my opinion, individuals should be free to enter into voluntary agreements of this nature, but only as a private matter (e.g., neighborhood covenants). I disagree that it should be the role of the government to ensure that the block “works visually,” as one person writes on Shawtalk:
   

   There is something to be said for architectural cognizance-for having the entire block look so different that it no longer works visually. Sort of like wearing a plaid shirt with flowered pants and a striped jacket-one can do it but it looks silly.

   Furthermore, mandating and regulating this conformity is largely redundant, because the majority will not choose to make egregious violations of social convention, such as paint their houses hot pink. As an analogous example, there is no law against cutting in line, but people choose to wait their turn out of social convention. People choose to wear jeans because many other people also wear them. Businessmen and politicians wear dark suits because their peers and colleagues do.

3. Historic codes increase the cost of the materials required to rehabilitate a house.
    
   A homeowner has to search for windows, doors, and millwork that fit the conditions of the code. There can also be additional costs for compliance, such as, say, the need to build a different fence because the one you have is an inch too short. As a negative consequence of this increase in cost, homeowners have less of a marginal incentive to repair their property.

   Tangentially, supporters of historic credits argue that the regulations benefit the local economy, because the code-appropriate items are often made regionally or locally. This argument fails because it ignores the unseen. The resources that are devoted to making code-approved materials could be put toward other uses. It’s possible that local manufacturers do not possess a comparative advantage in manufacturing windows and doors, and that they could manufacture other products more efficiently.

4. Historic codes discourages people from making technological improvements to their home, such as upgrading the energy efficiency.
    
   How new can something be and still be considered historic? Is modern plumbing historic? Is central air historic? Is an Internet hookup historic?
5. Housing codes are passed under the guise of protecting quality, but homeowners have other avenues of redress.
    
   Another commenter observes:
   

   It also plays into safety issues as some people would do very flimsy and faulty work in an effort to sell the house without regard for how well the job was done.

   This is one reason that the judicial system exists. If a carpenter does flimsy and faulty work, the homeowner can take him to court. Furthermore, if a carpenter does flimsy and faulty work, the homeowner would discourage his friends and neighbors from hiring him. The carpenter would lose business as a consequence.

6. Historic codes like Shaw’s favor home ownership over renting; cementing such preferences through policy also should not be the role of government.
    
   The Shaw Neighborhood Historic District Rehabilitation and New Construction Standards explicitly state the following:
   

   it is the intent of this ordinance to decrease the density of housing units within the neighborhood without demolishing buildings. Whenever feasible, buildings should remain with the same amount or less living units as the building was originally designed.

   [...] Buildings should not be converted from single-family to multi-family. Two-family structures should not be converted to more than two units. Four family buildings should not be converted to more than six units with no units having less than six hundred net rentable square feet.

   First, this code prohibits a person from subdividing her property. This means that she cannot lease out her property and receive rental income. Second, this policy restricts renters and people of lower income from moving into the neighborhood.

   Through this policy, the government favors home ownership over renting. Owning a home is a significant investment that isn’t suitable for all individuals; by renting, many people who can’t afford the investment commitment and risk of a home can live within their means.

Yesterday, I complained that the city should not be waiving parking fees downtown on one of its busiest days of the year, but should instead raise the fees. The city is constrained, however, by the archaic technology of most of the parking meters. Well, it didn’t take long for some of my ideas to get implemented, even if it happened in a different part of the city. From the Riverfront Times:

The parking meters in Grand Center that used to shut down at 7 p.m. each night (allowing free parking to theater-goers and gallery patrons) have been dialed back to 10 p.m.
[...]
Since April 1, drivers who don’t feed the meter after 7 p.m. have been issued a warning and served with a flier alerting them to the change. The grace period ends May 1. After that, parking scofflaws will get a $10 ticket. Parking rates for the meters are 25 cents per 20 minutes.

As KSDK reporte[d] earlier this spring, Grand Center Inc. is partnering with the city in the new parking policy and will get a portion of the revenues from the meters. Grand Center Inc. wants to use that money to build a new parking garage in the district, according to the television station.
[...]
“We’re happy that some of the parking meters will allow you to park for four hours instead of 90 minutes,” says Pinmann. “That would give people enough time to see a show and stay longer.”

In January Grand Center began a $10 valet service that offers people a $5 discount if they get their ticket validated after dining at a restaurant.

Kudos to Grand Center Inc. for implementing a policy that both efficiently rations parking spaces in midtown and will allow them to improve the area. A shortage of parking spaces is not a problem that most areas in the Saint Louis region face on a regular basis, but let’s hope it becomes one — and that, when it does, area leaders will have the wisdom to charge for the spots.

Today is the Saint Louis Cardinals’ home opener, and — like all good Saint Louisans — I am excited about the beginning of what looks to be a great season. Because Saint Louis is such a great baseball town, today will be a huge celebration downtown, which is as it should be. In an attempt to make the atmosphere even more festive, the mayor’s office declared that the parking meters near Busch Stadium will be turned off for two hours before and after the game.

Naturally, this helps those few people who are lucky enough to snag a temporarily unmetered space, but shutting off the meters is actually detrimental to everyone else involved. Parking spots are a scarce resource, and they are rarely scarcer in downtown Saint Louis than on opening day. By eliminating the fees for parking on the street, the city encourages more people to drive downtown instead of carpooling or taking mass transportation. This imposes extra costs on everyone, because travel will take longer with the extra traffic. With demand for parking skyrocketing today, the city should raise parking fees to encourage people to conserve scarce parking spaces.

Unfortunately, this solution would be extremely difficult to implement in Saint Louis for an event like opening day, because the city parking meters only allow people to pay for two hours maximum. No one is going to pay for two hours before the baseball game and then return to their car to pay for another two in the middle of the sixth inning. Until the city upgrades its parking meters, it will have to forgo the efficient allocation of parking spaces (and the concomitant revenue) during big events.

In an unexpected turn of events, Paul McKee, the developer behind a projected $8.1 billion development project in the city of Saint Louis, is facing the possibility of eminent domain. The Missouri Department of Transportation (MoDOT) has made offers for several NorthSide properties, and, unable to come to an agreement with the developer, has filed suit. A map of the properties in question is included below.

Map by Audrey Spalding.

When I spoke with Drew Gates, a spokesperson for MoDOT, he emphasized that McKee and MoDOT could likely reach an agreement, and that negations for the properties were ongoing. The suit, he said, is simply the first step of the paperwork process that MoDOT has to follow.

I have to wonder why McKee is digging in his heels in these price negotiations. After all, the state has already paid in part for these properties — and not an insignificant amount.

In late December 2009, the state of Missouri awarded NorthSide Regeneration LLC $19.6 million in tax credits under the Distressed Areas Land Assemblage Tax Credit Act. The act, the purported purpose of which is to encourage development, grants developers who purchase a large of area of land up to 50 percent of the land acquisition costs and 100 percent of the interest costs. The state’s definition of acquisition cost includes the purchase price of the land, closing and brokerage costs, and costs for environmental assessment, demolition, and maintenance.

In its DALA tax credit application, NorthSide submitted a list of properties eligible for the tax credit, along with the associated reimbursable costs (the linked document includes purchase price and interest costs, but not demolition, maintenance, brokerage, etc.). So, I checked the properties named in the MoDOT suit against the properties NorthSide claimed as eligible for partial reimbursement.

As far as I can tell, every property that MoDOT is trying to purchase was claimed for the DALA tax credit.*

Because the state awarded NorthSide the $19.6 million as a sum, instead of calculating the credit per individual property, it’s impossible to ascertain exactly how much the state has already paid for each of these properties. But the state did pay, and a good estimate for the amount paid for each individual property would be at least 50 percent of the price NorthSide claimed on its DALA tax credit application.**

When I spoke to Philip Morgan Jr., the attorney for MoDOT in this suit, he seemed to have no idea that the state had awarded tax credits for these properties. Gates, when asked whether these tax credits were a factor in the price negotiation process, paused, and said the negotiations were “based on the value of the property.”

Gates would not disclose how much MoDOT has offered for the properties. But if MoDOT and NorthSide do come to an agreement, it will be interesting to compare the price MoDOT paid to what NorthSide listed as the property purchase prices in its tax credit application. The costs NorthSide reported are as follows:

1. 1101 O’Fallon St. — $537,000
2. 1401 N. 11th St. — $537,000
3. 1443 N. 10th St. — $537,000
4. 1401 Hadley St. — $212,500
5. 1201 Cass Ave. — $145,000
6. 1525 N. 10th St. — $230,000
7. 1600 and 1616 N. 11th St., 1601 and 1617 N. 10th St., and 1000 Howard St. — $135,000 (total)
8. 1400 N. 13th St. — $537,000 (not pictured)

I am not aware whether this is a violation of the tax credit statute. However, it seems as though the state will be paying for these properties more than once.

** The state awarded just slightly more than 80 percent of the total amount that NorthSide requested. Given that acquisition costs other than the purchase price of a property, not to mention interest fees, can add up to a significant amount, estimating the state’s payout per property at 50 percent of the reported price seems reasonable.

I am in generally opposed to the use of tax increment financing (TIF), because I don’t believe the government should be in the business of picking economic winners and losers. But I felt it was only fair to point out that the use of TIF does not always result in disaster, as is exemplified by the case of Brentwood Promenade. A recent St. Louis Business Journal article describes the success of the project, for which the city of Brentwood issued a $21.5 million bond backed by TIF financing in 1997. On March 1, the city of Brentwood made its final payment and dissolved the TIF district two years ahead of schedule. The city now stands to collect about $2 million in annual sales taxes from the shopping center’s tenants, which include Target, Trader Joe’s, and Bed Bath & Beyond. This will provide the city with a projected 33-percent increase in sales tax revenue. Property taxes from the 25-acre area have grown from approximately $60,000 a year to about $900,000 a year today. This success of this retail center (success that is obvious to shoppers trying to find a parking space on a weekend) is also credited with increasing additional investment in the city, as exemplified by the increase in the amount of new home construction in the city.

But, as anyone who has lived in the St. Louis area for a long time knows, tax increment financing is not always so successful.  The St. Louis Business Journal article reminds us of the year 1991, when the city of St. Louis backed the bonds for Midland Group’s $53 million St. Louis Marketplace. When the retail center didn’t meet revenue projections, the city was on the hook for $3 million. Also instructive is a January 2009 report by the East-West Gateway Council of Governments, which found that 80 percent of TIF money during the previous 15 years was devoted to retail projects, and that instead of creating growth, the process has simply moved temporary growth around.

Even when TIFs are successful, such as in the case of Brentwood Promenade, there are numerous other concerns with using this financing method. Although TIFs are intended to be used to develop “blighted” areas, they are often utilized in areas where development would have happened anyway, which deprives municipalities of revenues in the short term that are instead being used to pay for the project. Even worse, the designation of “blight” can allow the government to condemn property through the use of eminent domain.

But perhaps the most insidious trait of tax increment financing is that it gives government the power to decide exactly which developments will take place, and where, rather than allowing development to happen as it naturally would under market conditions. The economic advantages afforded to those who receive the TIF open the door for political favoritism, which should have no place in development. Equally important, it is not the government’s responsibility to oversee retail development — which, as the East-West Gateway report shows, characterizes the overwhelming majority of these projects in the St. Louis area. So, even when these retail projects are successful and the city benefits, do the ends justify the means?

This morning at the office, David Stokes brought in a mailer he received from Advance Saint Louis urging him to vote in favor of Proposition A, which would institute a half-cent tax in Saint Louis County dedicated to funding Metro. The top fact used to support the mailer’s headline, “Our Economy Depends on Metro,” reads “Transit generates JOBS. To date, $15 billion in new development has occurred within a 10 minute walk of MetroLink.” Strictly speaking, I don’t think this statement is false, but it definitely misleads by omission.

First — and this should be pointed out every time a politician talks about creating jobs — it should be pointed out that jobs are a cost, not a benefit. Goods and services are the benefits we get from the cost of working, and if we can create more goods and services with less work, we should. If Metro could transport the same number of people just as efficiently with half as many employees, that would be a clear benefit to the overall economy (Metro might even come close to breaking even if that happened). Furthermore, creating jobs by spending tax dollars ignores the unseen costs of the taxes. If that money had not been taxed away, taxpayers would have spent it on a multitude of goods and services, or saved it to be lent out to entrepreneurs, home buyers, and the like. With the tax in place, those goods, services, and loans (and the wages that depended on them) will never exist, so we will never know the true opportunity costs of spending more tax dollars on Metro.

With regards to the statement’s second sentence, the mailer never claims that the $15 billion in new development near the MetroLink was actually caused by the MetroLink. I take the absence of such a claim to be good evidence that Advance Saint Louis has no good evidence that MetroLink has substantially contributed to this new development. I’m sure MetroLink is at least a marginal factor in some of this development, but I’m sure a much bigger factor is that MetroLink runs through the most desired areas in the Saint Louis area: downtown, the Central West End, Washington University, Brentwood, Clayton, etc. MetroLink follows development, not the other way around.

Finally, the bottom of the mailer informs us that Metro “operates with one of the lowest costs per passenger to the taxpayer,” which ignores two important points: 1) relative comparisons tell us nothing about the absolute costs and benefits of the system and 2) a new tax to support Metro will obviously lower Metro’s ranking on that metric.

At the aforementioned forum/debate on Proposition A, which would establish a new half-cent tax to fund MetroLink’s expansion and other Metro services, an important question was raised: What constitutes a plan?

Speaking in favor of the tax increase, Mayor John Nations of Chesterfield said that the details of plans for future expansion are contingent on the availability of funds from the federal and state government. Speaking in opposition of the tax increase, John Burns of Citizens for Better Transit noted that MetroLink’s plans do not stipulate where and when a project would be built, and that a “plan” needs to answer these questions before it can really be considered a plan.

This difference strikes me as an application of the following passage in Economics in One Lesson, “Public Works Mean Taxes,” by Henry Hazlitt:

But a bridge built primarily “to provide employment” is a different kind of bridge. When providing employment becomes the end, need becomes a subordinate consideration. “Projects” have to be invented. Instead of thinking only of where bridges must be built the government spenders begin to ask themselves where bridges can be built.

Public works projects are acceptable when they serve an actual purpose. However, successfully securing funds from the federal or state government does not constitute an actual purpose. This is a concept on which John Burns, Henry Hazlitt, and I appear to agree. If they are to be economically productive, such expenditures must fulfill a need other than diverting creating jobs — or, as Mayor Nations said during the debate, “providing an economic engine for the region.” At the very least, a plan should include basic information such as when and where a public works project will be built. Otherwise, it’s another proverbial “bridge to nowhere.”

Yesterday, I attended a forum/debate on Proposition A, the proposed half-cent tax to fund MetroLink’s expansion and other Metro services. Speaking in favor of the tax increase, Mayor John Nations of Chesterfield indicated that Missouri provides little or no financial assistance for projects like bus and light rail expansion, and he implied that the state should increase this amount. I disagree that Missouri and the federal government should provide financial assistance for Proposition A, for the following three reasons.

First, neither Missouri nor the federal government is presently flush with cash, and the money could instead be spent on other programs, like education, or returned to taxpayers. Missouri’s projected mid-year FY2010 budget gap is $690 million, and officials are seeking ways to reduce this deficit, not expand it.

Second, in general, public works projects should be paid as much as possible by the taxes of those who benefit. This is a more efficient means of taxation, and it encourages funds to be spent more wisely. If I were a taxpayer living in rural Missouri, I would not be enthusiastic about paying for the bus and light rail system in urban Saint Louis, which is something that I would use very rarely, if at all. If I were a taxpayer in a state other than Missouri, similarly, I would be even less enthusiastic about subsidizing public works projects with benefits concentrated in a state in which I may never set foot.

Third, federal funding is not “found money” — it still comes out of the pockets of taxpayers, no differently than money spent by state and local governments. Public works projects that use federal funds should exercise the same kind of fiscal responsibility as those that don’t. Unfortunately, when planners have access to federal funds, they are even more shielded from seeing the true cost of their spending, and this causes them to over-consume.

This article about local food in San Francisco illustrates the problems with subsidizing food production on pricey urban real estate. When people could more profitably use land for other purposes than growing fruits and vegetables, it takes huge subsidies to keep it cultivated. It’s not enough for people to prefer local food — they have to be willing to pay so much for it that no other use of the land would be more profitable:

“It’s really a conundrum,” says Sibella Kraus, president of nonprofit Sustainable Agriculture Education, or SAGE, which encourages sustainable local farming. “There is this demand for local, but we’re not really investing in local.” Ms. Kraus, known for her work planning the San Francisco Ferry Building market, says that while development is at a lull now due to the real-estate downturn, government at the state and local level hasn’t created enough incentives to prevent farmland loss when economic activity rebounds.

It’s worth noting that the advocates quoted here are not fighting for environmentally sound agriculture, or for forging relationships with farmers, or for supporting small farms. All those things could be done at a distance. They want the farming to take place at close geographical proximity; they think minimizing the physical space between grower and consumer is what matters. If what they really cared about were the environment or small farms, they would drop their demands for farmland in San Francisco — where it makes no sense economically — and instead support those practices where farmland is affordable. Which is more sustainable: farming in a rural area where land values are stable and crops pay for themselves, or farming next to a big city where the high price of land means the enterprise would fail without subsidies?

So, advocates should abandon the idea that “local” is a code word for “sustainable” or “better.” It isn’t. It just means “close by.” If you look around and see that the farmers near you are environmentally responsible, you can’t conclude that farmers everywhere are equally responsible. And those other farmers are local from the point of view of their neighbors. Every destructive, unsound farming practice is local to the people who live near it.

When cities or state grant subsidies to local agriculture — and in every policy I’ve seen proposed, “local” is defined in terms of a geographical area — they can’t be sure that those subsidies will go to the good local farmers and not the bad local farmers. Even if all the farmers who currently work in that region are all virtuous, there’s no guarantee that an unscrupulous farmer from somewhere else won’t move in to become local and claim the subsidy.

To those who argue for such subsidies in Missouri, I say: Not in my backyard!

This notice may be too late for those of you who read our blog to tune in, but for those of you Columbia readers who encounter this blog entry right after I post it and find yourselves near a radio, be sure to tune in to The Eagle 93.9 FM at 4:33 p.m. to hear research assistant John Payne talk about unemployment and possibly our new study of the relationship between taxes and economic growth.

I wanted to note that Alderman April Ford-Griffin called me today to discuss the proposed open space map that NorthSide Regeneration Regeneration LLC submitted as part of its plan for a $8.1 billion development of the city of Saint Louis.

I have written about how owner-occupied homes appear to be slated for open space, as are some area businesses.

When I asked Ford-Griffin about the fate of Fehlig Brothers Box & Lumber, a 137-year-old area business that, according to NorthSide’s plans, will become open space, she said that much detail can’t be read into the company’s plans.

“That is a concept,” she said. “That is not a document where you take it and say this is what’s going on this block and this is what’s going on that block,” she said.

You can read the updated report, with Ford-Griffin’s comments, here.

On Feb. 23, I wrote about the proposed “open space” that NorthSide Regeneration LLC, has planned for the company’s $8.1 billion development of the city of Saint Louis. According to NorthSide’s plans and other publicly available documents, at least four owner-occupied homes are slated for open space.

When discussing the possibility of eminent domain, NorthSide representatives, including developer Paul McKee and attorney Paul Puricelli, have stated that eminent domain won’t be used to take owner-occupied residences. The specificity of the qualification “owner-occupied residences” should make anyone looking into the project take pause. After all, there are many types of properties that are important to lives and livelihoods that aren’t owner-occupied residences — for example, businesses. In the latest Show-Me Report, I profile Fehlig Brothers Box & Lumber, a business slated for open space.

First, I’d like to thank Hugh Scott for his response to my op-ed arguing against expansion of the MetroLink system. I doubt we will ever see completely eye to eye on the subject, but an informed dialogue can still be illuminating for everyone involved.

Before I respond directly to any of Scott’s points, let me just clarify something that may have been unclear from the op-ed (a 700-word format does not allow for full explanation of every point): I was not arguing against the proposed half-cent sales tax. My point was that we should not expand the MetroLink system into areas with relatively low population densities because the lines would have low ridership and be even more heavily reliant on tax dollars than current lines.

Scott observes that the flexibility of buses is a disadvantage as well as an advantage, a point well-taken. Light rail is undoubtedly better than buses when it comes to understanding routes. However, the question is whether that disadvantage outweighs the advantages of flexibility and lower costs that buses provide, and my answer is that it depends on population density. The denser an area, the more rail should be preferred to buses, and vice versa.

With regard to the possible lines of MetroLink expansion, Scott is perfectly right that Metro does not plan on expanding the system without federal funds to diffuse the costs of constructing the line(s). However, even if a new line would not cost area taxpayers a cent to build, it could still be a bad deal for them if very few people rode it and they were then on the hook for operating costs. Again, my argument is that the best method of forecasting ridership is through population density. Aside from the north-south corridor, none of the proposed lines come close to matching the densities found along the current lines.

Finally, I agree that MetroLink performs well against the light-rail systems of other cities, but that is a relative metric when the question should be an absolute one: Do the benefits justify the costs? Even existing lines do not meet the profit-loss test used in the private sector, so light-rail systems are not efficient by our most common metric for success. Perhaps we need another absolute standard we could use to determine which light-rail lines are successes and which are failures, but for now the best that can be said is that it is unclear whether the benefits of MetroLink expansion would outweigh the costs.

The home of Shirley Hamilton, in the 2200 block of Madison Street, in Saint Louis’ north side.

Although NorthSide redevelopment plans for her area indicate that Hamilton’s neighborhood is slated to be replaced, Hamilton said she’s not concerned. As a resident of a city block with only three houses, she said, she’s been expecting this. “It’s been going on as long as I’ve been here,” she said.

Another home on the 2200 block of Madison. Photos by Caitlin Hartsell.

Shirley Hamilton has been living at 2209 Madison since 1978. Her home is one of three houses on the 2220 block of Madison, all of which are small, but tidy. Between each house is a good amount of open space.

These three houses fall squarely within the boundaries of the recently approved $8.1 billion development of the city of Saint Louis’ north side. Of course, about 4,600 other properties also fall within those boundaries, but in the case of the 2200 block of Madison, NorthSide Regeneration LLC, the company behind the development, may be endangering one of its most frequently invoked promises.

That promise concerns the use of eminent domain. Although eminent domain is constitutional, it can be very unpopular, especially if it appears that a government agency is using that power merely to help a private business.

Proponents of the development, including developer Paul McKee, NorthSide lawyer Paul Puricelli, Alderman April Ford-Griffin, and Alderman Marlene Davis, have said repeatedly that the city won’t use eminent domain to take owner-occupied homes, and that fears to the contrary are unfounded. In fact, the company went even further. When NorthSide applied for millions of dollars in tax credits from the state, the company submitted an affidavit stating, among other things, that “The Applicant has not identified any owner-occupied residences for acquisition under the Redevelopment Plan.” McKee, the chief manager of NorthSide, signed it.

Along with that affidavit, NorthSide submitted a list of about 260 owner-occupied residences to the state. Hamilton’s home and the house sitting the farthest west on her block were on that list.

NorthSide has also disclosed some of its preliminary plans for the area in its redevelopment plan, which was submitted to the city when the company applied for nearly $400 million in tax increment financing (it has been approved for up to $380 million). One of the more interesting pages of that plan is page 24, which is a map of “proposed open space” for the area.

According to that map, NorthSide plans to remake four city blocks into open space: the area lying between Madison Street and Maiden Lane, west of 22nd Street and extending a little past Jefferson Avenue. In other words, despite all the assurances about the limits on eminent domain for the NorthSide project — including the affidavit of its chief manager — Hamilton and her neighbor are two owners who may not have long to occupy their homes.

That’s not to say that the company didn’t try to purchase Hamilton’s home. About a year ago, she said, she got a letter from a lawyer, representing an anonymous buyer, looking to purchase her home. When Hamilton called the number listed, she said, she was quickly offered $60,000 for the property. But Hamilton, who is retired, wasn’t interested in searching for a new home, and asked instead if the buyer could offer her a deed to a different property, elsewhere in the city. The lawyer promised to check, Hamilton said, but never called back. A few months later, Hamilton said, she was sent the same form letter.

Hamilton said that her next door neighbor did sell. According to city property data, the second house on the block is owned by MLK 3000, one of the companies that NorthSide used to acquire properties under the radar. Hamilton said she isn’t interested in moving, but if the developer could offer a trade instead of money, she would consider it. She’d like to stay in the city.

An email inquiring about how concrete the plans for open space are, and whether NorthSide would adjust its plans if property owners were unwilling to move, did not receive a response from Bill Laskowsky, NorthSide’s chief development officer, and a company representative.

Ultimately, Hamilton said, she’s not concerned. As a resident of a city block with only three houses, she said, she’s been expecting this.

“It’s been going on as long as I’ve been here,” she said. Laughing, she noted that when Mayor Freeman Bosley Jr. was in office, her home was slated to become a golf course.

“I’ll deal with it when it comes,” she said.

According to NorthSide’s plans and its submitted list of owner occupied residences, two other homes appear to be slated for open space: one on the 2500 block of Madison, and one on the 2700 block of Glasgow Street.

Within other documents submitted by NorthSide, the company has designated the area surrounding Hamilton’s home as “mixed use,” which could indicate a different set of plans for the area.