If your future dream involves a shopping excursion to the Crossroads Art District in Kansas City, it may cost you a little bit more thanks to a proposed Community Improvement District (CID) for the area. CIDs are another example of the alphabet soup of special taxing districts in Missouri. Sing it with me:

“Is this a CID? Or is this an EEZ? Or is this a TDD? I thought it was old KC? Or just another subsidy…”

On the ladder of subsidies, CIDs are at the lower end of noxiousness. Nonetheless, as someone else (I don’t recall whom or where) said (paraphrasing here), “CIDs represent an admission that local government has failed in basic responsibilities.” Stepping into a void left by poor public services with new private activity is one thing. Stepping into the void with new, additional taxes and rules is quite another.

Along with all the other special taxing districts and subsidies, CIDs represent a constant growth in the public sector to do basic things that used to be better delineated between public or private responsibilities.

Police protection? Public. Better driveways to your own store? Private. Pretty flowers to beautify your shopping center? Private. Now we have turned these latter areas into semi-public responsibilities supported by tax dollars, be they TIF, TDD, or whatever.

I am pleased to read that there may yet be some serious opposition to the Crossroads CID proposal, as reported by Tony’s Kansas City. It should be far more difficult than it is to get these special districts established. Sometimes CIDs can focus on legitimately public interests, and you can argue that is the case here. (If it stays focused on security.) But often these types of districts easily morph into taxpayer-funded expense accounts for businesses that lack the proper oversight of tax dollars (like the Lake Lotawana CID). And the more you have of them, the harder it is to monitor all of them.

I hope the residents and business owners of the Crossroads district think long and hard about this latest tax proposal. I think their goals can be accomplished through private action (like the education campaign they have been waging) instead of new taxes.

In Part Four, I wrote about how the number of jobs in Saint Louis’ “central core” fell dramatically in the last decade. The Brookings Institution found that in the 3 miles surrounding Saint Louis’ business district, the city had lost almost 28,000 jobs from 2000 to 2010. Of the job growth the region did experience, those jobs predominantly materialized far outside the city center.

Kansas City feels Saint Louis’ pain. Like Saint Louis, Kansas City has undertaken a series of urban redevelopment plans of its own that, again, have focused on attracting the “hip” class to the city center, oftentimes with significant tax incentives. And as has become commonplace, the hip have come, but the jobs have not.

A report released [...] by the Brookings Institution said that in 2010 just 16.9 percent of the area’s jobs were in the core, defined as within three miles of Kansas City’s downtown. That’s down from 20.5 percent in 2000.

Dragged down by the Great Recession, the raw number of jobs in the central core also shrank from 180,000 in 2000 to 140,000 in 2010, according to the study.

For areas between 3 and 10 miles from the city center, the number of jobs also dropped. But between 10 and 35 miles from the central business district? As in Saint Louis, the total number of jobs rose — and in Kansas City’s case, they rose significantly.

The chart below, created by the Kansas City Star, tells the decade-long tale.

Indeed, all of the regions in Kansas City were buffeted by the Great Recession. Notably, the 10- to 35-mile band was still shy of its intra-decade high as of 2010. But the downtown Kansas City job figures tell a pretty unambiguous tale: jobs have been falling in Kansas City’s central core. Like Saint Louis, population in downtown Kansas City rose over the decade, but . . . (emphasis mine)

. . . new residents hadn’t translated directly to job creation in the core by the time the Brookings information was compiled.

Since then, “we’re seeing some small businesses locate in the Crossroads and the like, but they don’t employ that many,” said Jeff Pinkerton, economist at the Mid-America Regional Council. “And we haven’t had any major employer move downtown recently.

“The fact is that jobs follow rooftops, and housing is growing in the suburbs.”

As has been explained before, “the hip crowd” does not typically have much in the way of jobs coattails. Unfortunately, it seems, Saint Louis and Kansas City know this all too well.

As I have reiterated many times during this series, Missouri’s taxpayers have ample reason to be skeptical of whether “hip” developments, often fueled by tax incentives, are producing valuable dividends to the state and region. But let’s focus on just Saint Louis’ downtown area for a moment longer. As I observed in Part Three, Saint Louis’ downtown population rose from about 4,000 people in 2000 to about 7,000 people in 2010. But what happened to the net number of jobs downtown during that time?

In a study published last week, the Brookings Institution found that Saint Louis’ “central core” — which Brookings defines as the 3-mile radius around a city’s central business district — lost almost 28,000 jobs between 2000 and 2010. That is the equivalent of almost one-in-six jobs disappearing from the downtown area in one decade. Areas just a bit further outside the central core fared similarly. Between 3 and 10 miles from the city center, the Saint Louis region lost almost 39,000 jobs.

The only area that saw growth in Saint Louis was the 10- to 35-mile ring, which gained a paltry 572 jobs. The math is not in hip developments’ favor, despite what some consultants might say.

But the math also makes another conclusion inevitable: that Saint Louis’ central core — the area where the “hip” development disproportionately predominates — lost employment market share to its outer-ring rival between 2000 and 2010. Today, only 13 percent of Saint Louis’ regional jobs are in the central core, about half the national average; meanwhile, more than 60 percent of the region’s jobs are between 10 and 35 miles away, compared to the national average of 43 percent. Saint Louis is now the fifth-most decentralized city in the country in terms of regional job distribution — behind only Detroit, Chicago, Atlanta, and Philadelphia.

While the resident population in downtown Saint Louis has grown, the number of jobs in the 3-mile ring around Saint Louis’ central business district has actually fallen. And again, all the while, the overall population of Saint Louis city has declined. This does not sound like an urban development plan that is working. City centers were built to facilitate commerce. In Saint Louis, that commerce appears to be bleeding out into some of the furthermost stretches of its region.

But Saint Louis is not the only major Missouri city experiencing a job drain. Stay tuned.

The Missouri Supreme Court enabled Saint Louis City to award a staggering $390 million TIF (Tax Increment Financing) package to NorthSide Regeneration (a.k.a. Paul McKee).  This is not only the largest TIF in Saint Louis history — it is the largest TIF ever awarded in the state of Missouri.

Do you think that pumping hundreds of millions of taxpayer dollars to one developer is the key to successful North Side revitalization? I would love to be wrong on this, but can someone please give me evidence (economic, historic, etc.) where this type of huge subsidy to one developer working hand-in-hand with government planners has managed to successfully revitalize a community? Some say that McKee’s dream is worth a shot despite a high uncertainty that it will work; I obviously do not agree in this case. But who knows, maybe McKee will be to Saint Louis what Baron Haussmann was to the rebuilding of Paris.

If you are not familiar with the NorthSide project saga, I recommend reading this short article in St. Louis Magazine to get the Cliff’s Notes version.

Articles written about why we must invest in transit in Saint Louis often say young people want to live in vibrant, diverse, dense downtown areas. They say transit is an essential factor in that equation. Why is investment in these young urbanites so important? As we learned in Patrick Ishmael’s posts on “The Smallness of the Potentially ‘Hip’ Core,” there has been a belief in America that the “creative class” is the key to revitalizing cities. It is the idea that we must attract and accommodate the 20- and 30-somethings who are marrying later and focusing on careers in areas such as software, social media, and entertainment. They do not want to live in suburbs, so we must give them what they want if we want a revitalized downtown.

But over the past decade, the “cool” cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing “cool” cities, such as Raleigh and Austin, are not transit-centered places.

So why do we keep hearing that transit is what causes economic development and revitalizes downtowns? Transit may attract a certain demographic, but trends over the past several years in our country hint that this demographic is not the economic driver it appeared to be.

Now, it is not to say that transit precludes development. But why keep focusing our efforts (and subsidies) on something that is not an absolute necessity to promote growth in Saint Louis? We have written about our support for toll roads to limit subsidies for roads, but at least those subsidies benefit a majority of the population. With transit, we are taking money from a majority of the population to pay for something that benefits the few. Even Citizens for Modern Transit unintentionally admits this with their statement “You may not ride transit, you may not know anyone who uses the bus or MetroLink; however, Missouri needs transit.”

Last week, Kevin McDermott of the St. Louis Post-Dispatch’s Political Fix blog wrote briefly about the “hip development” debate we have discussed here and asked this about Saint Louis’ recent downtown redevelopment projects: “Economic engine or not, does anyone really think that area was better, in any sense of the word, 15 years ago than it is now?” Yes, the area around Washington Avenue obviously looks nicer. There are also more people living there. But this is a classic example of seen benefits with unseen costs.

Below is a map of tax credits that the Missouri Department of Economic Development issued in Saint Louis City spanning the years 1999-2011. The legend is denominated in dollars of credit issued. The larger the circle, the larger the credit awarded.

You can find the statewide distribution spreadsheet here. You can also hover over the dots to view some details on individual projects, and you can zoom the map out to see tax credit projects in other parts of the state. (To drag the map with your mouse, hold the shift key first.)

Dump hundreds of millions of dollars anyplace and something sure as heck better happen there. Washington Ave. is a good example of this. State tax credits have blanketed the central corridor of Saint Louis City over the last decade, and indeed, the population has risen in the area. But by how much? In a blog post titled “The Heavy Hand of Demographic Change” for the blog Rooflines, Alan Mallach of the Brookings Institute compared Saint Louis’ downtown growth to that of other cities.

Saint Louis’ downtown population rose from just shy of 4,000 people in 2000 to about 7,000 people in 2010, a net increase of more than 3,000 people and nothing to sneeze at. But outside the downtown area? Saint Louis City’s overall population fell from 347,000 people in 2000 to 319,000 in 2010, a net loss of about 28,000 people. The state dropped hundreds of millions of dollars into the heart of Saint Louis’ downtown through tax credits and moved the population needle some; meanwhile, thousands of residents outside the city’s central corridor were heading for the exits. Some “creatives” have come, but development “coattails” clearly did not.

That is a development paradigm that is simply not working. Empower individual innovation, not government “experts.” Trust city residents, not hip developers. It may be less “cool” to redevelop our cities this way, but it will probably be far more effective.

On Monday, I hit the idea of “hip” development pretty hard, but let me be clear about one thing: To me, that a district is off-beat, historically interesting, or otherwise unique is a net positive. Every city has enclaves and community identities that make wonderful contributions to how a city feels. It is part of the reason I like living in cities. But those city and community identities are best developed organically, not artificially.

Why? Because governments are terrible at figuring out how development dollars should be allocated — to entertainment? to bars? to factories? to homes? — and simply do not have the knowledge that is embedded in the marketplace to make many developments successful. The decisions of individuals, maximizing their own well-being, are why most cities came to be. They are why good cities became great, and great cities became world-class. It is why cities that have fallen on hard times can be great again, if the government will stop meddling.

On a personal note, I was raised in the Northeast area of Kansas City, which for the last 100 or so years has been a heavily immigrant community. It is not necessarily “hip,” but it is real. Inexpensive housing plus ready employment made it an ideal place for a newcomer to the States to, sometimes literally, set up shop and grow a family. It is why my mother’s Italian family came there, why Jewish families came before them, and why Hispanic and Vietnamese families came after them.

“Old Northeast,” as it is often called, has a meaningful and enduring story, I think, because its history emerged naturally. Its story is a story of people, not of government or government-sponsored “big ideas.” It is a story about authenticity, not artificiality — about the uniqueness of the Kansas City experience. One chapter closes, another opens, and the story continues, but it is a story built by people, not by development experts that the city or state enlist to “revive” an area’s fortunes. Part of the problem that Missouri and her cities have is that instead of harnessing the potential of all their citizens and diversifying their growth opportunities, they are too often just tinkering with one government-subsidized development after another.

Check back later this week for Part Three. Rest assured, we will be adding meat to these broad philosophical bones.

The other the day, The Daily Beast published an outstanding piece on redevelopment trends in our urban communities. Joel Kotkin, a professor of urban development, wrote the article, which addressed the idea that, as Kotkin put it, “the ‘creative class’ of the skilled, educated and hip would remake and revive American cities,” and that governments should pursue projects that would bring them to their urban centers.

Urbanists, journalists, and academics — not to mention big-city developers — were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. And [development consultant Richard] Florida himself has prospered through books, articles, lectures, and university positions that have helped promote his ideas and brand and grow his Creative Class Group’s impressive client list. …

Well, oops.

Another way I would describe this development strategy: “Warehouse lofts over warehouses.”

Indeed, the recasting — and really, inversion — of the American city by contemporary urban planners does not share a great deal in common with why American cities developed in the first place: because that is where the jobs were. As transportation and communication became more expansive and readily available, living in or near the city center for work became less of a necessity and more of an active choice. In a time where “creatives” can give a presentation over Skype and telecommute to work, location-location-location ain’t as necessary as it used to be when it comes to jobs. Moving downtown in the 21st Century oftentimes has less to do with labor needs as it does with identity preferences.

And that is, of course, the development quandary. My proximity to my place of work is going to affect where I live greatly if my job is in manufacturing. Indeed, many cities were purpose-built for the manufacturing industry: shoes, cars, etc. But manufacturing is not the industry cities seem to devote too much attention to these days, and unfortunately for cities, the “creatives” they are trying to attract do not exactly have development coattails.

Kotkin:

Indeed in many ways the Floridian focus on industries like entertainment, software, and social media creates a distorted set of economic priorities. The creatives, after all, generally don’t work in factories or warehouses. So why assist these industries? Instead the trend is to declare good-paying blue collar professions a product of the past. If you can’t find work in deindustrialized Michigan, suggests Salon’s Ray Fisman, one can collect “more than a few crumbs” by joining the service class and serving food, cutting hair or grass in creative capitals like San Francisco or Austin.

The story actually quotes Florida, one of the lead movers in the “hip” development scene, admitting to a serious flaw in the last decade’s worth of development fads: “On close inspection, talent clustering provides little in the way of trickle-down benefits.” In other words, if you build it, the “creatives” might come to your converted warehouses and niche dining establishments . . . but that is about it. (Emphasis mine.)

Yet this footprint of such “cool” districts that appeal to largely childless, young urbanistas in the core is far smaller in most cities than commonly reported. Between 2000 and 2010, notes demographer Wendell Cox [who has written for Show-Me], the urban core areas of the 51 largest metropolitan areas — within two miles of the city’s center — added a total of 206,000 residents. But the surrounding rings, between two and five miles from the core, actually lost 272,000. In contrast to those small gains and losses, the suburban areas — between 10 and 20 miles from the center — experienced a growth of roughly 15 million people.

The smallness of the potentially “hip” core is particularly pronounced in Rust Belt cities such as Cleveland and St. Louis, where these core districts are rarely home to more than 1 or 2 percent of the city’s shrinking population. Yet the subsidy money for developers is often justified in the name of “reviving” the entire city, most of which has continued to deteriorate.

More on this topic shortly.

Starbucks is one of the most ubiquitous brands on the planet: Since its founding in 1971, the upscale coffee chain has expanded rapidly to more than 20,000 stores worldwide. Many American urbanites have probably grown accustomed to passing one regularly, if not frequently dropping in themselves. The company has arguably saturated the U.S. market, making its weak presence in Kansas City proper a curious anomaly. This prompted me to delve deeper into potential reasons for Starbucks’ tepid growth in Missouri’s largest city.

A book co-authored by Arthur Rubinfeld, known as the “architect behind Starbucks’ expansion,” outlines the logic underlying the company’s growth strategy. With a target market comprised of “urban professionals, high-income individuals from the age of 18 to 45,” Starbucks sought to conquer the country’s major metropolitan areas. Demographic considerations, the intensity of competition, city-specific macroeconomic conditions, and a number of other factors, determined the pattern of expansion.

The areas surrounding Kansas City are home to a multitude of Starbucks coffee shops, which form something of a ring around the city itself. This same distribution is not evident in other Midwestern cities such as Saint Louis, Oklahoma City, Omaha, and Indianapolis. We can learn a lot about certain areas from the behavior of private enterprise.

My colleague Patrick Ishmael and I intend to explore this phenomenon in greater detail. We wish to better understand why Starbucks has chosen to focus disproportionately on Kansas City’s peripheral markets. As Rubinfeld’s volume makes clear, a substantial amount of research goes into determining how capital can be most profitably distributed. Accordingly, there is almost certainly a strong rationale under-girding Starbucks’ behavior in Kansas City. Perhaps further investigation can teach us some important lessons about the business climate in the City of Fountains.

Note: The green circles with white numbers simply represent areas with such a high density of Starbucks stores that individual emblems cannot be displayed. A circle with a number, n, corresponds to an area with a concentration of n stores.

There has been a lot of talk in the community about transit-oriented development (TOD) and its supposed benefits (which I contest). If you want to hear about these supposed benefits, a second round of public meetings regarding future Saint Louis TOD projects are scheduled over the next week.

Citizens for Modern Transit recently hosted a luncheon with national TOD expert Dena Belzer on the Economics of Building Around Light Rail. I had an opportunity to review her Powerpoint presentation, which did not convince me of any such economic benefit.

Granted, I have to hedge my comments with the fact that I did not physically attend the presentation. That being said, the most outrageous trend running throughout the presentation is that TOD will save money. It will save money for the government, it will save money for households, employees, employers — pretty much everybody.

The presentation suggests that compact development helps municipalities save money. Just like you save money at Jos. A. Banks buying two suits to get the third one free, when you did not even need a suit. Spending money just to get a “good deal” is not always a good justification for spending that money.

And what about households? Belzer’s presentation suggests that TOD can save households billions of dollars and that money can be reinvested in the community. First of all, TOD will not save us money when we are paying for it in our taxes.

Secondly, she cites figures that suggest Portland’s transit policies save residents $2.6 billion per year. However, more than half of that imaginary figure comes from the estimated value of commute time that has been reduced due to transit options — the opportunity cost. I do not know about you, but I have not found a way to manufacture gold coins from the time I save on days that traffic is light. Nor do I mind my commute to work. Many people choose to spend more time commuting in favor of lower housing costs, community preference, or a variety of other factors.

Other people prefer to use transit or live near a Metro stop and enjoy a predictable commute. There is nothing wrong with that. However, it is not a sufficient reason to compel all taxpayers to subsidize housing, retail, and office facilities around transit stops so that planners can impose their views on the rest of us.

Simply put, Transit-Oriented Development (TOD) is an expensive way to create any visible signs of economic improvement. But it is kind of like growing carrots. You have no idea how those carrots are doing while they grow underground. The new fertilizer that your neighbor swears by seems to be doing the trick, and their pretty green tops shot up so fast. Then you pull one out of the ground to find this weird, oblong, mutated claw-shaped thing that kind of resembles a carrot.

You still got a carrot, but it definitely was not what you were expecting. Believe it or not, government-subsidized economic development programs often end up with the same result. It may seem like these new Transit-Oriented Developments will create jobs and attract new investment to the area. And you might see some new stores pop up and think, “Wow, this is progress.”

But what is underneath? In the Saint Louis area, governments provided about $2 billion of economic development incentives for retail development from 1990 to 2007. Over this time, only 5,400 retail jobs were added to the region. You might say, “That is better than no jobs, Kacie, stop being such a Debbie Downer.” But the East-West Gateway Council of Governments released a report that estimates each one of these jobs costing about $370,000 each.

That is insane! If you knew the real cost before these types of projects were put into place, would you still support them?

If I could create something that would decrease poverty, raise incomes, provide more jobs, or lower gas prices, I would. But these are the types of problems that we cannot fix in the same way that we would fix a broken chair leg or leaky faucet. Russell Roberts, an economics professor at George Mason University, notes that “we want to change outcomes without consequences with the ease of adjusting the thermostat on the wall of our house.” He explains that the economy cannot be controlled in the same way. The economy is “the product of human action but not of human design,” he said.

New Transit-Oriented Development (TOD) in Saint Louis is a tool the government uses as an attempt to design where and how we live. They want to make more people ride the Metro, reduce car trips, and increase economic development in the area. There is nothing wrong with wanting economic development, but the government cannot see into the future. I used to work for the government, so trust me — they know just as much as you or I do. They cannot prove that Transit-Oriented Development will achieve their goals.

Just because the government creates shops and housing around a Metro station, it does not mean that more people will want to ride the Metro. Those who already used the Metro will continue to ride it, but those of us who prefer to drive our cars will continue to drive our cars.

Surveys suggest that four out of five Americans prefer a home with a yard as opposed to living near shops, transit, or jobs. It is a waste of resources to create TODs because they simply are not capable of achieving the intended goals. If the government really wants us to ride the Metro, they will have to do something more drastic, such as shutting down all the roads, or making it illegal to drive. But I think it is safe to say those things will not happen.