St. Louis resident Jim Roos, in front of the offending sign. Photo by the Institute for Justice.

Good news for Saint Louisans: That “End Eminent Domain Abuse” sign that you can see at the intersection of Hwys. 44 and 55 is here to stay. In a partial free speech victory, the U.S. Supreme Court declined to hear the appeal of a circuit court ruling that struck down portions of Saint Louis City’s sign code for violating the free speech clause of the First Amendment.

For those of us in the Midwest, this is great news. This means that government cannot regulate signs and murals based on their content. And, as a result, the St. Louis Post-Dispatch reports that the offending portion of the city’s zoning code may have to be rewritten.

This is also a meaningful victory for anti-eminent domain activists in Saint Louis. Jim Roos, the plaintiff (pictured above), has had more than his fair share of struggles with city government. Using eminent domain, the city took 24 different properties from Sanctuary in the Ordinary, or managed by Neighborhood Enterprises, a nonprofit that provides low-income housing that Roos founded.

In protest, Roos painted the large “End Eminent Domain Abuse” sign on another property threatened with eminent domain. As a result, the city hit Roos with a citation, and said that a permit was required. He applied for a permit, only to be denied.  We wrote about this issue in 2011, in a post aptly titled, “Using Your Property to Criticize Us for Taking Your Property? You’d Better Believe That’s Illegal.”

Fortunately, Roos  and the Institute for Justice, a nonprofit libertarian public interest law firm, continued to challenge the city’s zoning code, leading to the partial free speech victory today.

Those of us in the 8th Circuit (Missouri, Arkansas, Iowa, Minnesota, Nebraska, North Dakota, and South Dakota) can take solace in knowing that our First Amendment rights are a little more secure. However, as Michael Bindas, the Institute for Justice attorney who represents Roos, pointed out, “Unfortunately, citizens in some other federal circuits do not enjoy the same protections that Jim’s case secured.”

Hopefully this case will help give victims of eminent domain abuse the courage to stand up and complain about it. Of course, the best victory for property owners would be for laws that allow eminent domain abuse to be repealed.

You can learn more about Jim Roos and the Institute for Justice here.

The St. Louis Post-Dispatch has reported that the City of Saint Louis will be entering into an agreement to sell 1,200 parcels to NorthSide Regeneration, a company that has proposed an enormous development of the city.

Some might say that the agreement is a validation of the city’s strategy to hold property for development. But even though political points may be gained by trumpeting development before it occurs, development of these parcels has not actually happened.  As one writer put it, “…until development occurs on a large portion of the land, the strategy will only have proven that after three decades, the city has found someone else to mow the yard.”

Indeed, while the prospect of selling 1,200 city-owned properties is great news for the city and its residents, this single development will not remake Saint Louis, even if successful. The city has dug itself into an incredible vacancy hole that would require almost another nine developments like the NorthSide one — just to take care of the vacant property that the Saint Louis land bank, also known as the Land Reutilization Authority (LRA), owns. And this proposed development took years to come about.

According to St. Louis Magazine, the NorthSide development was in the works since at least 2003, and no comparable large-scale development has taken place in Saint Louis. If we are pinning our hopes on more developments like NorthSide, we have to wait another 40 years. How much land will the city have amassed by then?

As part of the Show-Me Institute’s review of the operations of the LRA, we collected a great deal of data to see how frequently the agency was accepting and rejecting offers to buy its vacant property. We found that the LRA rejected formal offers to purchase more than 2,200 different parcels between the years 2003 and 2010. That is certainly a larger number than the 1,200 parcels being discussed as part of the NorthSide deal.

Some may be curious as to whether offers in recent years to purchase LRA property were rejected in the NorthSide footprint.

The map below shows all offers to purchase LRA property, with larger marks indicating higher-value offers. Between 2003 and 2010, offers to purchase more than 300 different properties within the NorthSide boundary were rejected.

However, to make the situation complicated, offers to purchase more than 280 properties in the area were accepted. While some offers were rejected because the agency was holding the property for “planned unified development,” others were accepted.

What I find more troubling is the city’s bad (but recently abandoned) habit of holding property off of its public for-sale list. Up until the publication of Show-Me Institute research, almost half of LRA property was not advertised for sale. This was due in part to agency staff members and area aldermen designating property as “Class C,” meaning that it was not “suitable for public or private use.” In practice, that designation made it more difficult, if not impossible in some cases, for people to purchase vacant property. Below is a map showing parcels not advertised for sale in red, with LRA parcels advertised for sale in green. The NorthSide boundary is included for reference.

We only have records for formal, written offers to purchase LRA property. It is impossible to know how many would-be buyers were discouraged from buying property in the NorthSide footprint as a result of the LRA’s practices.

The Show-Me Institute is proud to release a new policy study by Wendell Cox, one of America’s foremost demographers and a leading voice against government land use regulations. In the new study, Cox focuses on how Saint Louis can position itself for future growth by maximizing two of its assets – a low cost of living and low housing prices. One way to keep housing and living costs low is to refuse to implement the types of urban planning strategies many planners would like us to enact: “smart growth” policies like urban growth boundaries and higher density zoning mandates. The lack of those requirements in the Saint Louis area is one thing that has kept our cost of living low. On the other hand, the enactment of such things on the coasts, particularly the West Coast, is one of the reasons a substantial number of people are leaving California. Those land use rules put the price of housing and the cost of living beyond the reach of many people.

People in the Saint Louis area often talk about the problems associated with so many different governments and so many types. Those problems are real, but there are positive aspects of having a large number of small governments, too. One of the best aspects of having a high number of smaller governments (such as the 90 different municipalities in Saint Louis County) is the inability to enact comprehensive planning in the area. Government-directed urban planning is too often just an excuse for others to tell you how to live. We do not need growth boundaries in Saint Louis. We do not need higher density zoning (which should be allowed, of course, if that is what people want; it just should not be mandated by government). We do not need excessive impact fees for construction. We do not need — and more importantly, do not have — any number of other examples of land use rules governing our lives. What does that lack of mandated planning give us? More freedom and lower housing costs; two wonderful things.

Wendell Cox is uniquely qualified to comment on the affairs of Saint Louis. While his writings and lectures are international in scope, he resides in the Saint Louis area. The Show-Me Institute is excited to have him writing for us, and you can view his full policy study here. You can also enjoy a conversation between Wendell and Rick Edlund, Show-Me Institute’s director of communications, here.

The failed Citadel Development in Kansas City. What would such a development spearheaded by a land bank look like? Photo by Josh Smith.

On Feb. 8, I testified in Jefferson City before legislators who are considering a bill to create a land bank in Kansas City. I was there to talk about the track record of a land bank that we already have in Missouri. You may know it as the Saint Louis Land Reutilization Authority (LRA). According to our research, the LRA has frequently rejected offers to buy vacant city property, and has practices that seem to invite political favoritism.

The bill being considered, House Bill 1659, would grant a Kansas City land bank the powers that the LRA currently enjoys, and more. I wonder why Kansas City needs a land bank, given the lack of successes that we have seen in Saint Louis. In fact, there already is a government entity that deals with vacant land in Kansas City. The Jackson County Land Trust currently takes ownership of tax-delinquent properties that fail to sell at tax auction, and works to sell them.

It may seem confusing, but the actions of a land trust can be drastically different than those of a land bank. A land trust generally does not attempt to acquire property for development nor does it take an active role in deciding what the best use of the property might be. A land bank can do both of those things.

As we have seen in Saint Louis and elsewhere, city government can do a very poor job when it comes to identifying successful future developments. The LRA is an example, as is Ballpark Village in Saint Louis. The failed Citadel Development in Kansas City (pictured above) provides perhaps the starkest, most recent example.

HB 1659 would require that all property the Jackson County Land Trust holds within Kansas City be transferred to the Kansas City Land Bank. During the House hearing of HB 1659, the bill’s co-sponsor, Missouri Rep. Michael Brown (D-Dist. 50), stated that this legislation would only involve property for which there are “plans.” Does Kansas City really have plans for all 2,800 parcels within its boundaries that the Land Trust currently holds?

Brown also noted that the Jackson County Land Trust is having difficulty returning property to private, productive use. Yet, in August 2003, the Kansas City Star reported that, since 2001, the Jackson County Land Trust had sold more than 1,100 properties for more than $1 million. This is a faster rate of sale than what we have seen in Saint Louis.

The land trust owns approximately 3,200 parcels, with approximately 2,800 in Kansas City. According to the last state audit that examined the Land Trust’s operations, the trust held 3,087 parcels in August 1999. By comparing that number to the land trust’s current holdings, it appears that, in the course of selling and acquiring properties by default, the land trust has added just a little more than 140 parcels to its inventory during the past decade.

For comparison purposes, the LRA has added more than 800 parcels to its inventory. The LRA has acquired about six times as much property as the Jackson County Land Trust, and from a parcel base less than half the size of Jackson County.

What evidence is there that the Land Trust is doing a poor job of getting property back into private ownership? It appears, purely from a numbers perspective, that the Land Trust has done an adequate job of selling property. And yet, based on our review of the past eight years of its operation, the Saint Louis LRA has struggled – due to political and structural issues – to get vacant property back into private, productive use.

Shouldn’t the Missouri Legislature require evidence showing that the Jackson County Land Trust is inadequate and that creating a land bank is in the best interests of state taxpayers and Kansas City residents before passing HB 1659?

Rep. Brown stated during the hearing that “We don’t know all the wonderful things that could happen with this land bank.” Perhaps we do have a glimpse, thanks to Saint Louis, of the failures that could occur.

Show-Me Institute Policy Analyst Audrey Spalding is in Jefferson City today to give testimony about land banks.

The state legislature is currently considering legislation that would create a land bank in Kansas City with much the same power and authority as the Saint Louis land bank, the Land Reutilization Authority (LRA). Audrey’s policy study on the LRA, “Standstill: Is Saint Louis Hindering Development by Waiting for Large-Scale Miracles?” (published last April) provides important insight into the potential pitfalls of a land bank with expansive authority to acquire and hold property.

The lessons of the LRA are well worth considering for any proposed land bank. Lofty public policy dreams often run afoul of the law of unintended consequences, and the long history of the LRA may serve better as a cautionary tale than an achievement to be repeated.

The guard is changing at Saint Louis’ regional chamber of commerce, the St. Louis Regional Chamber and Growth Association (RCGA).

Dick Fleming, the group’s longtime head, is stepping down from the organization he has helmed since 1994, and his replacement will come from a city just a short drive east on I-64: Louisville, Ky., also known as the “Gateway to the South.” Joe Reagan moves to Saint Louis from Louisville’s equivalent of the RCGA, the Greater Louisville Inc., or GLI. Marketed during Reagan’s tenure as “Possibility City,” Louisville will have to find a new chamber head for the first time since 2005. Louisville is already writing the postscript to Reagan’s legacy.

But the fact of the matter is that no man, or government, or organization, or even coalition of organizations, can plan an economy, or at least plan it well. That is an incredibly important point to highlight and probably the fairest thing that can be said as Reagan joins the Saint Louis community; it also is probably one of the most damaging points one can raise about how the RCGA and organizations like it behave.

Our local chamber loves to get the pat on the back for positive economic news and to pump “public-private partnerships,” oftentimes fueled with tax credits, that fail to substantively move the economic needle in the region’s favor. Meddling in the economy, local or national, destroys wealth more often than it creates it, leaving taxpayers with the promise of prosperity but little else. And it is no secret that Saint Louis city has languished for decades under one failed economic plan after another, compounded by the exodus of residents into nearby counties and driven by the continued intransigence of the city’s political class to step away from its cronyistic tendencies. In short, the economic development status quo is not a blueprint for a prosperous future for this region, and has not been for some time.

Which is why I hope that Reagan’s arrival in Saint Louis is not just more of the same. More precisely, I hope that Saint Louis — and Kansas City, and the state of Missouri — at least return to some sense of regional economic normalcy, if not runaway growth in the coming year. That is a Christmas wish of sorts, I suppose, but a wish that the RCGA, GLI, or any similar organization has limited or no power to bring to fruition.

Maybe a New Year’s resolution for the state and the city is in order instead: To simply let the market work. It does not matter if it is Saint Louis’ chamber hawking Aerotropolis, or Moberly’s chamber hawking Mamtek, or a political class increasingly disconnected from the electorate hawking Solyndra. There are no easy, centralized solutions to our economic woes. Acting like there is in Saint Louis only prolongs the municipal pain. Like all taxpayers, Saint Louisans cannot depend on a small group of decision-makers to make their lives better.

Free markets make genuine and sustainable economic growth possible, and if there is going to be a “Possibility City” in this region, let it be more than just another marketing slogan with another cartridge of development silver bullets as its driving force. Reduce taxes and regulation, get out of the way, and let the free market flourish. May RCGA’s new administration regain its faith in that formulation.

It is not our intention to be the Inspector Javert to the Jean Valjean of Winghaven, constantly chasing Paul McKee’s proposals around to criticize them like the fanatical French cop pursued the reformed Valjean. Nonetheless, bad proposals for Saint Louis keep coming from Paul McKee, and if it falls to us to keep saying “stop,” then so be it. (Thanks to johncombest.com for the link, and to Victor Hugo for the references.)

The latest proposal is to transfer the bottle district TIF (tax increment financing) from the original developers to the control of Mr. McKee and his entities. To be clear, McKee and his groups were not involved in the original TIF proposal, so we cannot pin all of this on him. However, unlike tax credits, the TIF law was not drafted with the intention of TIF being transferable. I do not think it is right for one stalled TIF proposal to just be assigned to someone else – and I do not care who that someone else is. (Note: I am not saying transfering the TIF is illegal, just improper.) At least some people in city government seem to be aware of this issue:

[Saint Louis Development Corporation Executive Director Rodney] Crim wouldn’t specify what, exactly, the city objects to. But he suggested officials have concerns about using TIF for one project to help fund another.

“My focus is on what can and cannot be done with the Bottle District TIF,” he said. “We just have some more talking to do.”

I think it is especially wrong to continue to subsidize property that at this very moment is being made more valuable because of major public improvements. Here is one description of the property:

Located just north of the Edward Jones Dome (home of the Rams) along Interstate-70, the site is one of the most desirable development locations left available Downtown. Once the new Mississippi Bridge is complete,  its location next to the bridge will make the site even more visible and accessible than it already is.

Former longtime New York Sen. George Washington Plunkitt would have fully understood developers seeing their opportunities and taking them, but even he would never have asked for the new land to be subsidized on top of it. If this land at the base of a major new bridge has to be subsidized, I guess we are at the point where we just admit everything gets a tax subsidy, unless, of course, you are just a small entrepreneur without political connections.

In 2006, Indiana leased its 157-mile toll road to private investors for a $3.8 billion lump sum payment. The lease would last for 75 years, and the money generated from the deal would fund pent-up transportation projects (which were estimated to cost $2.6 billion).

At the time, there was an incredible amount of blowback, with the deal barely squeaking through the legislature and facing court challenges.

“The whole thing stinks,” said Indiana State Rep. B. Patrick Bauer, then the House Democratic leader. The two companies, he said, “got a heck of an unbelievable deal. We got a bad deal.”

And now, Governing magazine reports that the companies that bought the lease may not be able to make payments related to the deal. The project lost more than $260 million last year.

More astonishingly, Indiana officials say that the terms of the deal mean that if the toll road project defaults or goes into bankruptcy, the companies that bought the toll road could either find new investors, or the toll road would be returned to the state, with Indiana keeping the $3.8 billion.

In this case, it appears that the Indiana government got a pretty good deal.

Compare the case above to the news that developers are asking Saint Louis County to issue $7 million more in debt to finance the NorthPark development. The NorthPark development was also launched in 2006, during the height of the real estate bubble.

From the St. Louis Post-Dispatch:

“The developers are not only seeking to refinance the mortgage, but they’re also upping the size of it by almost 50 percent,” said Brian Tournier, director of research with Ascent Investment Partners in Brentwood, which specializes in bond investments. “And the county, ultimately, will be on the hook.”

As business owners know, the reward for taking on risk is the possibility of making a profit. The risk of failure is why so many of us do not set out to build a better mousetrap, be it Pets.com, Myspace, or Zynga.

What is so shocking about the Indiana toll road case is that it was a situation where government allowed the private sector to take on risk — for a price. If the state really won’t be held financially responsible if the project continues to lose money, then the state managed to shift all of the risk associated with the project to the private companies that invested in it.

In the case of NorthPark, it looks like the county is getting ready to take on more risk. And why, exactly? NorthPark could stand to profit if the development is successful. But if it isn’t, the county could lose. Proponents may point to job or investment increase estimates. But those numbers frequently fail to materialize.

There is no better example of what can go wrong when government takes on risk than that of the fiasco in Harrisburg, Pa. The city took on $125 million in debt to rebuild and expand its incinerator, which it hoped would become a money-maker. Instead, the incinerator project is more than $288 million in debt. The city, bankrupt as a result, has to cancel Christmas (well, its annual Christmas parade).

When you hear elected officials talking breathlessly about taking risks for the promise of money or jobs, think about Harrisburg or Mamtek, right here in Moberly, Mo. Though the jobs and investment numbers promised may be little more than a dream, the risk of failure is real.

I have to say, in light of other failures, this line from Saint Louis County Councilman Steve Stenger (D-Dist. 6) about NorthPark troubles me: ”The county knew the risks going in to this development. But that’s a risk that you have to take if you want progress.”

If officials want to get into the business game of taking on big risks with the potential to make big profits, they should get out of government. In business, if you make the wrong choices and fail, you are financially responsible. When government tries to take on the risk of private businesses, taxpayers are on the hook for failure. And sadly, government officials rarely are held accountable for bad bets.

In this case, Missouri can learn from Indiana and Mamtek. A better move is to leave risk and profit to the private sector.

I have a request of the urban planning firms in Missouri. I would like to see examples where cities, counties, etc., hired a planning firm to determine the appropriateness of a blighting, conservation, etc., declaration for the purpose of TIF (Tax Increment Financing) or other types of abatements / incentives, and were told “no, they are not applicable here” by the urban planning firm. Are there any such examples, anywhere in Missouri, where planning firms that governments hired gave a negative answer to these types of questions? And I mean a completely negative answer, not a “you can’t do this, but you can do this” answer.

If anyone with a planning firm can send me any such examples, I would appreciate it. You can send them directly to me (david.stokes@showmeinstitute.org) or post them in the comments. My guess is that a totally negative answer has never happened in Missouri, at least in the past 20 years. I won’t be totally surprised if it has happened on a very few occasions, and I’d love to be proven wrong by finding a number of examples where it has occurred.

Working at the Show-Me Institute, located in the highly walkable Central West End, my colleagues and I often take short walks to lunch. Recently, food trucks have entered the competition for our dining dollars.

Given the large crowds that form around these trucks, they seem to be a hit, but apparently this is not the case for everyone. This week, police have cracked down on food trucks in the area — allegedly in response to a complaint.

A regulation in the city code forbids street vending within the Central West End, but until recently the restriction had not been enforced. Earlier this week, officers and inspectors issued warnings to multiple food trucks asking them to leave the area or face fines for violating vending regulations.

Christine Harbin, a former SMI policy analyst, wrote numerous times on these restrictions on private enterprise. First spotting food trucks in the Central West End back in March, she later followed up on the issue in a video interviewing both food truck owners and their customers. The verdict is still clear: there exists a strong consumer demand for these food trucks. Why should government inhibit healthy competition and growth of consumer choices?

Some people worry about the safety and health concerns associated with food trucks, but like any other restaurant or food provider, they must undergo government health and safety inspections to obtain permits for legally selling their goods.

Another common concern is the potential increase in street congestion. In Dr. Donald Shoup’s book, The High Cost of Free Parking, he explains the best way to manage street traffic is to introduce market determined parking fees.  Parking is not a free good, and should not be treated as one. Busy streets with more traffic and higher demand would have higher parking fees, while quiet less crowded streets with lower demand would cost less. This would force food trucks to internalize the externality of over consuming street parking.  If the trucks wanted prime location they would have to pay extra for it.

These trucks may be “technically illegal” in the area, but clearly there is a demand here that the government is barring. Originally, the downtown area had this same restriction, but now it benefits from many popular street vendors and food trucks. Why should the Central West End or any other area be treated differently?

Consumers would benefit if this restrictive ordinance was repealed throughout St. Louis, allowing their preferences — not the preferences of bureaucrats — to dictate food trucks’ placement and success.

To follow this issue further, watch Christine’s other video on the subject in which food truck owner Jeff Pupillo and a number of customers weigh in on food trucks and the unwanted competition they provide for some local restaurants.

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

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

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

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

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

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

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

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

Because every mall needs an eBar.

And, just because I can: