By Audrey Spalding
Show-Me Institute

A proposed $8.1 billion development of the city of Saint Louis’ north side will take another step forward this week. Two board bills are scheduled to be introduced at the city’s Board of Aldermen meeting on Friday.

The first, #218, is a draft ordinance to approve the proposed development, and to enter into a development agreement with NorthSide Regeneration, LLC, the company behind the project. The second, #219, is a draft ordinance to approve tax increment financing (TIF) for two of the four designated areas of the project. The TIF monies for those two areas, if approved, would come to a total of $200 million, just over half of the $390.6 million that NorthSide Regeneration is asking the city to approve for the entire project.

Whether the city will back any bonds issued on future TIF monies is unclear.

The Board of Aldermen can’t vote on these bills right away; the bills may be assigned to a committee, and must be read at least two  more times at subsequent board meetings before being put up for vote. The vote may not happen for weeks, or even months, although the draft redevelopment agreement lists Dec. 2009 as its expected approval date.

Attached to the bills is a 102-page draft redevelopment agreement between NorthSide Regeneration and the city. The draft agreement is similar to the previous versions of NorthSide’s TIF application. There is also some new language in the draft agreement concerning how the city and development company can terminate the agreement, the transfer of properties from the city to the developer, and conflicts of interest.

According to the draft agreement, NorthSide Regeneration can terminate its agreement with the city as long as no TIF obligations are outstanding, while the city can do so if the development company either fails adhere to its development schedule, violates the agreement, becomes bankrupt, fails to pay TIF application fees and administrative costs, or abandons the development.

If the draft agreement is approved as is, a large number of properties will be given from the city to the development company. Currently, the city and city-based agencies own about 1,400 vacant properties in the development area.

Most of those properties are held by three agencies tasked with acquiring foreclosed or abandoned properties, and then either selling those properties or holding them in anticipation of a large-scale development.

Another portion of the agreement explicitly states that public officials involved in the process of negotiating or approving the development cannot have personal or corporate stakes in the development.

By Andrew Guevara
For the Show-Me Institute

A group of veterans traveling across the United States in an effort to promote climate change legislation and to discourage U.S. consumption of oil from foreign countries stopped in Jefferson City on Wednesday. The group, Operation FREE, describes itself as “a coalition of veterans and national security groups working together to raise public awareness about national security threats posed by climate change and our reliance on fossil fuels.” Its tour began on Oct. 12 and will end in about two weeks.

The biodiesel-fuelled bus in which the group is traveling is painted with the tour stops on one side and the words “More jobs. Less Pollution. Greater Security.” on the other. The group said it has also purchased carbon offsets to make the tour carbon neutral.

“Every time we pollute, we create a possible threat,” said Billy Froeschner, an Iraq veteran from Missouri. Froeschner said that “threat minimization,” or “reducing threats before they happen,” is one reason they embarked on the tour.

In all, six veterans spoke about the negative consequences that they said could result from global warming, including increased global wars for resources, increased weather disasters, and disgruntled, displaced populations.

Furthermore, they said, the United States is at war for the wrong reasons.

Raf Noboa, an Iraq veteran from Colorado, said that he “thought [Americans] were there to secure a democratic regime,” but began to realize that this was not the case. Noboa said he believes that the military maintains its presence there in order to secure the oil in the region.

Ed Maye, a disabled veteran from Indiana who served in Operation Desert Storm, later echoed Noboa’s statement. “We were there to protect the oil for Americans,” Maye said.

One reporter asked Noboa whether the tour has anything to do with the current climate bill in Congress, the American Clean Energy and Security Act.

He responded, “That’s part of the debate.”

“We’re way at the beginning of the process,” Noboa said. “What the bill looks like now will be different at the end.”

He also said that the United States spends $1 billion per day on oil that goes to unfriendly regimes. According to figures cited by Noboa, the average Missouri household spent nearly 6 percent of its annual income, or about $2,000 per year, on gas.

In addition to the cross-country tour, Operation FREE has launched television advertisements, met with White House officials, visited 26 U.S. senate offices, and stood on a podium with 12 U.S. senators as they introduced the Clean Energy Jobs and American Power Act, sponsored by Sens. Barbara Boxer (D-Calif.) and John Kerry (D-Mass.).

Other stops in Missouri included Richmond Heights and Springfield on Oct. 12, and Kansas City.

Andrew Guevara is a student at the University of Missouri–Columbia.

By Audrey Spalding
Show-Me Institute

A lawsuit filed on Oct. 9 alleges that a recently passed state tax credit is unconstitutional. The tax credit, established under the Distressed Areas Land Assemblage Tax Credit Act (DALATCA), awards up to $20 million each year to developers for costs associated with purchasing and maintaining properties that are part of a large-scale development.

DALATCA may soon be used in connection with a proposed $8.1 billion development of the city of Saint Louis’ north side. The development company undertaking that project, NorthSide Regeneration, LLC, is expected to be the first to apply for DALATCA funds. According to Ann Perry, manager of development finance at Missouri’s Department of Economic Development, no developer has yet applied for the tax credit.

NorthSide Regeneration plans to collect up to $83.6 million under the tax credit, according to documents submitted to the city in September. If approved by the city’s Board of Aldermen, the organization will apply to receive the money in equal payments of $16.72 million over the course of five years, beginning in 2010.You can download a copy of the three-page DALATCA application here.

The $16.72 million annual payout is more than was allowed under state statute until DALATCA was amended in April. Under the previous version of DALATCA, the maximum tax credit payout was capped at $10 million per year. In fact, the state’s website that lists statutes has not yet been updated to reflect the changes.

Irene J. Smith, former alderman, administrative judge, and mayoral candidate, is the attorney representing the plaintiffs. Smith, when reached by phone on Monday, said one of the unconstitutional  characteristics of DALATCA is that the act’s purpose is disconnected from its cost. While DALATCA’s stated intent is to encourage development, Smith said, it reimburses developers for land acquisition and maintenance costs. “That doesn’t pertain to development or redevelopment,” she said.

Another allegation of unconstitutionality in the suit is that the amendment to DALATCA was slipped covertly into HB 191, a bill that amended many disparate statutes. In the suit, Smith characterized the title of HB 191, “Relating to taxation, with penalty provisions and an emergency clause for certain Sections,” as “… overly inclusive and amorphous in violation of the Missouri Constitution, Article III, Section 23.”

Smith did not seek to file the lawsuit — she was approached by Keith Marquard and Barbara Manzara, the two plaintiffs in the suit. Both Marquard and Manzara are active critics of NorthSide Regeneration’s proposed development. Smith said the goal of the suit is for the court to declare DALATCA void.

Former state House Speaker Rod Jetton, who sponsored a version of the DALATCA bill in 2007, was not immediately available for comment.

By Audrey Spalding
Show-Me Institute

On Sept. 23, when the Saint Louis Tax Increment Finance (TIF) Commission met to consider a proposed $8.1 billion development of the city’s north side and a portion of downtown, more than 500 people showed up. But only a little more than 200 people could attend the hearing, held in room 208 of City Hall. The rest loitered outside the packed room, and many left.

At that hearing, more than 70 handwritten comments were submitted to the commissioners, but those comments were neither read out loud during the public comment portion of the meeting, nor did the commissioners have enough time to read them before voting. Commissioners did listen to two hours of public comment, but did not reply directly to speakers’ concerns. The commission spent little time debating the project before voting unanimously to recommend the Board of Aldermen award $390.6 million in TIF monies to the development company, NorthSide Regeneration, LLC.

The written comments were not made available to the press at the Sept. 23 meeting. However, Policy Pulse obtained the electronic copies after requesting them under the state public records statute. You can view typed comments and letters from the city mayor, comptroller, and others here. You can read the handwritten comments here.

Of the handwritten comments, 49 were against the project, and 11 were in favor. The rest of the commenters wrote either that they were “neutral” or wrote to request that the meeting be held in a larger venue.

“Whomever was in charge of planning this meeting did a really horrible job of providing space for the number of affected & interested people,” wrote Ben Schartman, a resident of the city’s north side. “It is embarrassing & disrespectful that at a meeting to decide something of great import — millions of public dollars to be spent — that no effort was made to make this meeting open to the people & citizens who will be affected. I am opposed to granting McEagle TIF financing. I am opposed to the idea of spending public dollars on a decision that has such little public support.”

“To me, it was a waste of my time,” wrote Delores Cauley, whose home on Bacon Street is included on the property list of 4,609 properties submitted to the city on Sept. 8. “It took a half a hour just to get in. Now we are just in the hallway waiting to get in to the meeting. So what was the purpose of all these people coming down. And we have not heard anything. How in the hell can we make comments when we have not heard anything. To me this was just a ploy to waste our time because people were not going to show up. Now we are just out here hot and upset. You all knew exactly what you all were doing.”

Those who wrote against the project wrote about concerns of the use of eminent domain, a perceived lack of engagement with the current residents, a need for more information about the project, and the use of public dollars for private profit.

“A church is a place of worship. We as a church have been here for 50–60 yrs. We are a part of the community,” wrote Doreen Alexander, writing on behalf of Shining Light Pentecostal Church, which has six properties listed within the development application, including the church itself, its parking lots and two vacant properties. “We have dreams and plans to help in our community and feel it is not right to take our property for your profit. It is against God’s will I believe!”

Of the 11 who wrote in favor of the project, the focus was on the promised jobs that the large-scale development would bring.

“I represent the St. Louis Baptist Ministers Union; St. Louis Clergy Union and the West Side Missionary Baptist Church,” wrote the Rev. Ronald Bobo. “We support this development due to the job and housing needs in this community. It is sorely needed and wanted.”

Others in favor wrote simply “Jobs Jobs,” or “Need jobs and development.”

By Andrew Guevara
For the Show-Me Institute

The state House of Representatives has been called out for soliciting lobbyists, spending questionable amounts on gifts to representatives, letting employees work less than the standard 40-hour workweek, and awarding a printing and copying service contract without a competitive bid process. Those allegations are detailed in a recent audit of the House of Representatives by State Auditor Susan Montee.

Similar to improprieties reported in an audit of the Senate, auditors discovered the House to have solicited lobbyists to cover various costs, such as food and beverages for late hours worked during legislative sessions, Christmas parties, and retirement receptions. The House also did not maintain records of these lobbyist gifts, according to the audit, so it is impossible to know exactly how much was spent.

“However, the amounts could be substantial,” the report notes, and then alludes to the amount that lobbyists paid for Senate expenses, announced in the Senate audit findings.

On personnel matters, the House did not require its employees to work the minimum of 40 hours per week. Rather, employees were required to work only 35 hours per week. They also received more generous annual leave benefits than other state employees, according to the report.

Out-of-state travel for outgoing representatives was also reported in the audit. Three outgoing members ran up travel costs of $4,560 for attending out of state conferences during 2006, and another spent $909 to attend a swearing-in ceremony for a national organization’s new officer.

Other noted expenses included $15,149 paid for lapel pins and charms as gifts for each member of the 2007–2008 legislative class, at $73 apiece. Likewise, $19,442 was spent on similar gifts for the most current legislative class, at $93 apiece.

The audit also reported that the House did not provide documentation of the outsourcing of its print shop and copy service activities in June 2005, when it entered into a five-year contract. Prior to that date, those services were completed in-house. The state auditor found no evidence that the House had done any cost-benefit analysis to justify the outsourcing. Moreover, no formal requests for proposals were completed.

Since the outsourcing of print and copy services, $2.5 million has been spent on the private vendor’s business. The contract period will end on June 30, 2010, at which time the state auditor recommends that the House conduct a cost-benefit analysis of its outsourcing.

In response to the state auditor’s criticisms, the House said in a statement that efforts will be made to ensure complete documentation when dealing in the future with major procurement projects, and that it will continue to review compliance efforts as reported to the Committee on Administration and Accounts, the Committee responsible for all financial and business matters of the House.

By Andrew Guevara
For the Show-Me Institute

In a recent audit of the state Senate, state auditor Susan Montee found that Senate staff solicited lobbyists for gifts, didn’t follow a competitive bidding process for certain contracts, and often were not required to keep records of time worked.

The audit reports that senators and Senate officials solicited donations used to pay for Christmas parties, gift cards for Senate staff, and retirement and gifts for outgoing senators. These donations were deposited into a private account outside the jurisdiction of the state Treasury. This practice has been in place for more than five years, according to the audit report.

The Senate Administrator’s Fund bank account was established in December 2003 to receive donations from lobbyists for use in buying food and beverages for senators and Senate staff when working late during the legislative session, and for annual staff Christmas parties. Since the creation of the fund on June 30, 2008, donations totaling $76,070 have been deposited into the account and a total of $60,945 has been spent.

“We could locate no statutory or other authority for Senate officials to open a bank account outside the state treasury,” the state audit report said.

According to the audit, the Missouri Ethics Commission accepted the establishment of the fund with the stipulation that all donations would be reported on the lobbyists’ monthly expenditure reports; however,  many of the donations were not so reported. Between April and August 2008, at least nine donations, totaling $8,035, were not properly reported by the lobbyists on their monthly expenditure reports filed with the Missouri Ethics Commission.

In addition to its criticism of lobbyist solicitations, the report observed that neither support staff employees nor their supervisors were required to sign time sheets. Even the personnel staff of some senators were not required to maintain detailed records of their work hours. The responsibility for that record keeping falls squarely on each senator, because senators have the discretion to decide how their personnel staff records work time.

Another major area of criticism in the report was that the Senate did not always comply with competitive bidding processes. Proper documentation was not kept for the bidding on $9,775 worth of digital recording hardware and software system, $21,707 worth of computers and related equipment, and $13,202 for legal services provided for a Senate committee.

The state auditor expressed concern about the Senate’s reliance on computerized systems, including databases that contain information about pending legislation, voters and constituents, assets, and employee records, and pointed out that no backup system for this data exists. If a disaster were to occur, the report noted, all records would be lost.

Andrew Guevara is an intern at the Show-Me Institute.

By Andrew Guevara
For the Show-Me Institute

From Washington, D.C., Rep. Blaine Luetkemeyer (R-Mo.) conducted one in a series of hour long “tele–town halls” on Sept. 24.  Tele–town halls are not a new phenomenon — politicians began hosting virtual town halls four years ago — but they have gained a great deal of critical attention in light of the unwieldy crowds that have shown up at recent in-person town halls.

Many members of Congress have decided to use this contemporary version of the traditional town hall. Even President Barack Obama drew in more than 400,000 participants during a series of health care  tele-town halls held by the American Association of Retired Persons (AARP) this summer.

Exactly 3,698 people participated in Leutkemeyer’s tele–town hall, said Paul Soca, Luetkemeyer’s press secretary, and others have drawn even more callers. “We have had as many 8,000,” he said.

A tele–town hall involves an automated telephone service that allows an elected official to  hold a group meeting with several hundred or even hundreds of thousands of constituents during the time it would take to conduct a single town hall, without having to be in the same room or gymnasium with them.

The inventor and largest provider of this service is Tele–Town Hall, LLC. An automated system calls a number of people within the speaker’s targeted population and invites them to stay on the line to hear and interact in the town hall. Participants can pose a question for the speaker by pressing a button to be queued to ask their questions live — or, depending on the speaker’s preference, are sent to staff, who screen participants before placing them in line to pose their question.

Rep. Todd Akin (R-Mo.) and Rep. Roy Blunt (R-Mo.) have also used the service, said Shaun Thompson, a vice president of Tele–Town Hall, LLC. In fact, the company’s website shows Blunt using the service in one of its demonstration videos.

For Luetkemeyer’s tele–town hall, participants who had signed up on the congressman’s website were invited via email with a number to call and a code. Simply by pressing “*3,” participants would be queued to ask Luetkemeyer a question.

When asked whether the tele–town hall service serves as a means for politicians to avoid the raucous crowds and opposition supporters at town halls, Thompson said, “I don’t think it’s anything at all as a sort of alternative to real town halls. All of our clients in the federal level are using this as a complement to live events.”

According to Sloca, Luetkemeyer has had about 90 in-person public meetings with constituents in the past six months, with the bulk of those held in April and August.

During Luetkemeyer’s hour-long tele–town hall, he took questions from eight callers that touched on the topics of health care, illegal immigration, cap and trade, nuclear weapons, and protection from products made in China. Others expressed discontent with the situation in Washington.

A caller who had worked in the health care industry for 31 years asked multiple questions to Luetkemeyer about federal health care reform. She also added as a stipulation to one of her health care questions, “if you have read the [health care] bill.” Leutkemeyer said that he had.

“Congress needs to leave their mitts off of Medicare and Medicaid,” said one female caller.

Another spoke about stimulus funding for what she said were unnecessary projects such as the infamous bridge to nowhere, the “bridge that nobody uses, nobody uses!”

After a tele–town hall has ended, the service provider compiles a detailed report of all the people who participated and other data, such as how long callers stayed on the line. If someone who wanted to ask a question did not reach the front of the queue, the automated system advises them to stay on the line so that they can leave their question as a recording.

At the conclusion of Luetkemeyer’s tele–town hall, the congressman asked callers who had not been able to ask a question to stay on the line and “leave a message.”

Andrew Guevara is an intern at the Show-Me Institute.

By Audrey Spalding
Show-Me Institute

After more than two hours of public comment but minimal debate, the city of Saint Louis Tax Increment Finance (TIF) Commission voted unanimously to recommend that the Board of Aldermen approve developer Paul McKee’s pitch for an $8.1 billion development of the north side and award TIF monies for the first two phases of the project.

The proposal now will be heard by the city’s Board of Aldermen before final approval.

It was surprising, with all the discussion about how this development would affect the north side, that the commission recommended funding for the first two development areas, “A” and “B,” which aren’t really a part of the north side, while leaving areas “C” and “D” for later consideration.

According to the TIF application submitted by the development company, NorthSide Regeneration, LLC, parts A and B are the only portions for which the company has funding. Part A reaches south into the downtown area of Saint Louis, while part B is located near the $640 million Mississippi River Bridge, which is proposed to connect I-70 at the I-55/I-64/I-70 interchange to I-70 on the Missouri side of the river near Cass Avenue, according to the Missouri Department of Transportation.

Andrew Glassberg, a political science professor at the University of Missouri–Saint Louis, said in a phone interview on Friday that he thinks the city could broker a better deal than the one recommended for McKee.

“One of my problems with the city is how many times they’ve been burned by these projects,” he said. With a project like the Mississippi River Bridge, Glassberg said, property values are likely to increase once the area becomes more accessible.

In other cities, he said, local governments actually recoup the gains from similar projects, as opposed to paying a developer to reap the benefits. “It’s appropriate for the public entities to capture a portion of that gain,” he said.

WHAT THE PUBLIC HAD TO SAY

About 500 people, both for and against the development, showed up at the commission’s hearing. However, many weren’t able to get into the packed room that City Hall had set aside for the hearing. There was space for a little more than 200 in the 2nd floor room, which wasn’t enough to accommodate the turnout.

“This is the largest TIF hearing we’ve ever had,” said David Newburger, TIF Commission chariman.

An upstairs gallery overlooking the meeting room that could have accommodated some of the spillover crowd was left vacant, with no explanation as to why. As Barbara Geisman, the city’s executive director of development, began a power presentation detailing the proposed development and recent changes made to it, a number of people began banging on the closed doors to the gallery. None were let in.

During public comment, a number of people spoke in favor of the plan, but the majority of those who stood in front of the TIF commissioners expressed disapproval. (Full disclosure: I stepped out of the meeting for a few minutes to interview some people waiting outside, but if everyone who spoke during the time I was gone had voiced approval of the plan, the number of speakers who indicated their opposition throughout the course of the meeting still would have constituted the majority). Those who spoke out against the plan focused on the use of eminent domain, the developer’s disregard for community engagement, and the paltry amounts allocated for resident and business relocation that are outlined within the plan.

Of those who spoke in favor, many had turned out wearing neon green shirts. Some shirts said “JOBS JOBS JOBS” on the back, and others simply had a union emblem.

Mark Kreutzman, a member of the Bricklayers Union #1, who waited outside of the hearing with a number of other union members, said he was there “for this development,” and for the “creation of jobs, which the city desperately needs.” Kreutzman said that he doesn’t live in the north side, or in the city.

Kreutzman said the union had heard of the proposed development through the Saint Louis Building & Construction Trades Council, which keeps tabs on development possibilities in the area.

Tommie Stewart, who also waited outside, and is someone who depends on construction for a living, said he was against the project. Stewart lives in and owns property in the north side, and said that he’s been in the area for 30 years. He hadn’t heard of the proposed development until he received a letter announcing the TIF hearing.

Of the comments made in support of the development, the major themes were job creation, belief in the vision that McKee had presented, and the fact that no one else had come forward with a plan to change the north side.

“I look at McKee’s plan as the only person thus far who has stepped up to the plate and offered a plan,” said Alderman Freeman Bosly, Sr., during the hearing. Alderwoman April Ford-Griffin and Alderwoman Marlene Davis also spoke in favor of the proposed development. Both strongly stated that fears of the use of eminent domain were unfounded, and that the development could do wonders for their wards.

After the unanimous vote, Sheila Rendon, president of the North Side Community Benefits Alliance (NSCBA), said there was still work to be done.

“The community still needs a community benefits agreement, she said. “We’re still going to push for a CBA. The community has to be recognized.”

By Audrey Spalding
Show-Me Institute

When the Saint Louis Tax Increment Finance (TIF) Commission meets this evening to hear developer Paul McKee’s pitch for an $8.1 billion development of Saint Louis’ north side, the 11 commissioners will hear a slightly different proposal than submitted Sept. 9.

On Sept. 15, according to city records, revisions to the application, including the size of the TIF that the development company is requesting from the city, were submitted to the TIF Commission. A phone call to the Saint Louis Development Corporation to request comment and clarification about when this application was first made public was not answered. The revisions can be found alongside of the Sept. 9 version of the application here.

In the Sept. 9 version, the development company, NorthSide Regeneration, LLC, had asked for $398 million. In the most recent version, the company is asking for a smaller amount, $390.6 million.

Many changes dealt with minor spelling, wording, or small numeric adjustments. Some of the major changes are listed below.

1. A new paragraph was added to the redevelopment plan (one of three booklets that are part of the TIF application). Within that paragraph, the development company promises not to spend TIF money to acquire owner-occupied homes, and that it has so far has not identified owner-occupied homes that it plans to take through eminent domain.
    
   That paragraph reads, in its entirety: “The Developer has not identified any owner-occupied residences for acquisition under this Redevelopment Plan with the use of tax increment financing revenues and has not identified any owner-occupied residences of acquisition. through the use of eminent domain under this Redevelopment Plan.”
2. The development company now estimates that the assessed valuation of property within the development area is now $53 million, a change from the Sept. 9 estimation of $57 million.
3. The development company has changed the breakdown of how it plans to spend TIF funds. Of the $390.6 million, the development company plans to spend the bulk of it, $345.5 million, on public infrastructure costs, $35.6 million on property acquisition and relocation, $7.6 million on building rehabilitation costs, and $1.6 million on studies and professional services.

Although McKee, Alderwoman April Ford-Griffin, and Alderwoman Marlene Davis said at a Sept. 21 community meeting that the financial portion of the application (labeled “Cost-Benefit Analysis”) had changed, the aggregate estimates of revenues and expenses appear to be unchanged.

By Audrey Spalding
Show-Me Institute

Blogger Douglas Duckworth just would not stop filming the Sept. 21 meeting at Ames Elementary School in north Saint Louis. Although Duckworth was asked to stop by Alderwoman Marlene Davis, developer Paul McKee, and Gail Brown, president of the Urban Planning and Development Corporation, countless times, he wouldn’t turn off his camera.

When asked to stop, Duckworth said more than once that the gathering was a public meeting in a public building, which meant he could film.

At one point, both McKee and Brown stood in front of Duckworth’s camera in order to block his view. You can see that here. Ultimately, Duckworth stopped filming at the end of the meeting because McKee said he would not take any more questions while being filmed.

The meeting at Ames, attended by nearly 100 people, was one of a series of community meetings held by McKee to explain the vision behind his proposed $8.1 billion development of a portion of north Saint Louis. There is a great deal of public interest in the development because it has a footprint of more than 1,100 acres, and would be funded in part by more than $770 million of government tax credits and subsides, of which about $398 million would come from the city in the form of tax increment financing (TIF).

The majority of the attendees were new faces — they hadn’t attended community meetings held by the North Side Community Benefits Alliance (NSCBA), a group critical of the proposed development. But some were familiar from other meetings. At least five NSCBA members were in attendance, and, more surprisingly, TIF Commissioner Sundy Elizabeth Whiteside, appointed by Mayor Francis Slay, attended.

Before the meeting began, Whiteside said that she believes McKee has good intentions, but that the size of the development is overwhelming. Whiteside also said that one of her concerns is whether current residents will be given more money for their property than just the appraisal value listed in the development company’s TIF application. Some of the 4,608 properties listed are appraised at less than $500.

On Sept. 23, less than 48 hours after the Ames meeting, the Saint Louis TIF Commission will meet to hear McKee’s pitch for TIF monies. The meeting is open to the public, and begins at 6 p.m. in City Hall, room 208.

At the Ames meeting, McKee went through a presentation detailing how far behind the north side had fallen in comparison to the city, as well as in comparison to nationwide statistics. According to McKee’s presentation, the north side had dismal income and education statistics when compared with the rest of the United States.

His vision for the north side, McKee said, is to bring in jobs and development. And, in order to do that, he needed a large amount of land, and the city’s help.

“I don’t know how to create jobs without land,” McKee said. “It takes land to create jobs.”

He said the major draw for a large-scale development in north Saint Louis is the city’s proximity to food and energy production. Within a 200-mile radius of the city, McKee said, there are more than 100 companies that produce processed food. Furthermore, he said, the three largest coal companies in the United States have their headquarters nearby.

In his presentation, McKee said he expected the development to bring in 22,000 jobs when completed and 43,000 construction jobs during the 20-year-long development process. With the increase in payroll and property taxes, McKee projected a 25-percent increase in the city’s tax base.

The meeting went smoothly until a woman asked McKee about an illustration of the proposed development and why the illustration showed green space in her neighborhood.

Backpedaling, McKee promised that many buildings within the development were considered “legacy properties,” and would be rehabbed rather than torn down. Of the properties he had already acquired, 75 to 85 buildings were considered legacy properties, McKee said.

“The last thing we want is to take the heritage or historic out of this community,” he said.

But the questions kept coming from community members.

Eminent domain was a common concern, which McKee, Ford-Griffin, and Johnson all said at one point or another was completely eliminated from the TIF application, which is not entirely true. Other questions focused on: the amount of compensation that would be given to home and business owners, should they be relocated; what McKee would do with the 60 or so properties he owns in the Old North neighborhood that is not included in the proposed development; and whether the development was designed to push low-income residents out in favor of the more affluent.

Later on, David Dorn, a retired police officer whose home is categorized as “blighted” by the development company, stood up to ask McKee why some homes were blighted simply because the city hadn’t seen property tax revenues from them in recent years. Some homes, such as Dorn’s, had been built under a tax abatement, and as such, weren’t generating tax revenues for the city, although they were new homes.

“You have to prove blight legally in order to apply for a TIF,” McKee said. “Don’t connect blighting with eminent domain.”

Ford-Griffin responded as well, in an attempt to explain the city’s role in the development process. She said that blighting was more of a formality. The city couldn’t give money to a development unless the area was blighted.

“You have to blight the property in order to get the incentives,” she  said.

At the tail end of the meeting, a man who identified himself as a local developer stood up to speak. He wondered out loud how McKee had gotten Davis and Ford-Griffin to defend the development, while he had been left to develop at his own risk.

“I’m not as rich as you, but I have done development,” he said. “And I have never … out of all the $300,000 homes I have developed in Mrs. Griffin’s ward, in other wards throughout the city, I have never had an alderperson beat my door down to give me any free concrete money, any money that the government has, any type of development assistance.”

McKee didn’t answer, again motioning to Duckworth’s camera in the back of the room.

By Audrey Spalding
Show-Me Institute

More than 4,600 properties are included in a proposed $8.1 billion development of Saint Louis’ north side. On Sept. 9, the city of Saint Louis made available to the public development plan and application for $398 million in tax increment financing (TIF) filed by the development company, NorthSide Regeneration, LLC. Within the application was an 80-page list of properties the company had either already acquired or was eying as part of its project.

Unfortunately, the city did not make the list available in spreadsheet form, which meant that it would take residents, such as Ann Dorn, some time to find out whether their property was on the list. A spokesperson for NorthSide Regeneration said that the company would not release the database, although it had been requested a number of times by the media.

Policy Pulse commissioned data entry by eight individuals to turn data from the supplied photostatic PDFs of the 80-page property list into searchable and sortable data. Today, that data entry was finally completed and a spreadsheet of their work is available for download here.

According to a preliminary analysis of the data, at least 20 different churches have property on the development company’s list: Rhema Baptist Assembly, True Light, Bethesda Mennonite, Star Bethlehem, Bethesda Mennonite, Zion Lutheran, Greater Mount Vernon, Faith Temple Church of God, True Grace Baptist, Greater Shiloh, Mount Tabor, Thessalonian, Faith Hope Charity Church, Church of the Living God, Revival Center Church, Bible Way Church of Christ, Evergreen Full Gospel Church, New Life of Praise, New Union Vine, Zion Temple, Samaritan Methodist, St. James, and St. Louis Park Baptist Church.

Properties are classified by 11 different “blighting factors,” which can refer to severe conditions, such as vacancy or unsafe conditions, or to less straightforward designations, such as the small size of a property or whether its assessed value hasn’t increased at the same rate as the city average from 2003 to 2008.

Of the properties, more than 80 are classified as blighted simply for having assessments that haven’t increased at the city’s average rate. None of those properties are classified as vacant, unsafe, or unsanitary, or as being in poor or dilapidated condition. Another 153 are classified as blighted for having no increase or decline in assessed valuation from 2003 to 2005. As explained before, this can be the case if a home was built during a tax abatement.

For a more complete analysis of this property data, stay tuned.

By Audrey Spalding
Show-Me Institute

Ann and David Dorn just spent $15,000 to fix up their home in Saint Louis’ north side. They installed a furnace and air conditioning, the couple said, and hired a local business to do the job.

Less than a week later, however, they found out their neighborhood was in the footprint of a proposed $8.1 billion development put forward by developer Paul McKee.

And, on Sept. 9, the day the city released the application for $398 million in Tax Increment Financing McKee and his development company, NorthSide Regeneration LLC, had submitted, Ann and David found out NorthSide had listed their home as blighted.

The Dorns’ home, a four-bedroom ranch in the Saint Louis Place neighborhood, is one of more than 4,500 properties included in McKee’s plan. The majority of those properties are listed as blighted, under 11 different definitions. Some blight designations are severe, such as vacancy, or unsafe conditions. Others are less straightforward. For example, a property is classified as blighted if it has a building older than 35 years old, or is smaller than 4,000 square feet. In the Dorns’ situation, a property can even be classified as blighted if the city hasn’t seen an increase in taxes from the property in recent years.

Ann said there’s nothing about the house that would make someone consider it dilapidated.

“We manicure our lawns; we plant flowers; if something breaks, we fix it,” she said.

But, Ann said, her home was built during a 10-year tax abatement that was intended to encourage people to move in and build homes in north Saint Louis.

“That’s why we are considered blighted, because we haven’t had a property tax increase,” she said.

The Dorns’ home is classified under a “6A blighting factor,” which is defined by the development company as “No increase or Decline in Assessed Value — 2003 to 2005.” Properties are also classified as blighted by the development if the property’s increase in assessed value was less than the city average from 2003 to 2008.

“If your property is in the development zone, your property is blighted,” said Romona Taylor Williams, an anti–eminent domain activist.

The proposed development has come under fire not only for its incredible size of 1,100 acres, but also for the possible use of eminent domain, a perceived lack of engagement with the community, and the hundreds of millions of dollars that NorthSide Regeneration has requested from city, state, and federal agencies.

To make matters more complicated, the north side is known for its deteriorating buildings and an exodus of businesses. The area isn’t homogenous, however. Boarded up buildings, some with a wall missing, often sit on the same city block as a working church, a playground, or an occupied home.

“I’m all for development,” Ann said. “I really am, especially if it helps the city.” As long as the land is vacant, she said, NorthSide Regeneration can develop it. “But don’t take owner-occupied and viable businesses and tear them down,” she continued. “If I’m an asset to the community, don’t punish us and try to take our property.”

WHAT’S PROMISED
The newest version of NorthSide Regeneration’s TIF application is large. More than 200 pages long and spanning three booklets, the updated version dwarfs what the company had first submitted to the city.

Within the revised application, the development company outlines how far the north side has fallen in comparison to the rest of the city, and promises up to 2,200 single family homes, 7,800 condominium or apartment units, 1 million square feet of retail or entertainment space, and 4.5 million square feet of office or business space.

To power this development, the company envisions three employment “hubs” in the north, east, and south areas of the north side. In the center, sitting on the empty field that was left over from the failed Pruitt-Igoe development, the development company plans to locate a “community hub,” what it calls the “active heart of the Redevelopment Area.”

In order to improve the area, the company has predicted that it will spend millions during 2010 and 2011 on sewer ($4.3 million), water ($0.9 million), infrastructure ($12.5 million), and building rehabilitation costs ($7 million).

According to the financial portion of its application, NorthSide Regeneration doesn’t stand to make any money from real estate sales until the third year of development. Even then, in 2012, the company predicts that its expenses from the first two years will still outweigh the combined third-year profits it expects to make from both real estate sales and other government money. However, those numbers don’t include the $398 million that the company hopes to get in TIF monies, which the company is likely to receive in the form of either a loan or bonds at the outset of its project.

“It’s a really exciting vision,” said historic preservation consultant Michael Allen, who lived in north Saint Louis for more than three years. “I haven’t heard a lot of criticism against the vision out there. My problem is with the execution of the vision.”

Allen, who was the first to discover that McKee was behind the large-scale purchase of properties in the north side under a number of different development company names, said that McKee hasn’t been forthcoming enough with his plan. For example, Allen said, he’s asked several times for a list of which buildings McKee plans to demolish and which ones he plans to rehabilitate. Allen said he’s never been given that list.

“McKee has looked defensive all along, and he’s done nothing to counteract that perspective,” he said.

EMINENT DOMAIN
Eminent domain, a process provided for in the state Constitution by which the government can take private property for “public use,” has been a major concern for critics of the project. At a number of meetings held by the North Side Community Benefits Alliance (NSCBA), a community group that has formed in opposition to the development, north side residents asked what the eminent domain process was, and why it could be used by the development company.

“It’s become a euphemism for condemnation and taking,” said Williams, who is also a member of NSCBA, when one resident asked her why eminent domain wasn’t used only for hospitals and roads.

Some of the third ward that Alderman Freeman Bosly, Sr., represents falls under the proposed development’s footprint. Bosly said he had attended three or four “Thursday meetings” that were also attended by McKee, aldermen who represented wards with land inside of the proposed development, Saint Louis Development Corporation representatives, the comptroller, a city counselor, and others.

“Almost every aspect of city government is sitting in that room,” he said.

During those meetings, Bosly said, city government hashed out the use of eminent domain, among other concerns, with the developer.

“If ever there was to be eminent domain,” he said, “it would have to be done on a case by case basis, something each alderman would have to do in their own wards. From my understanding of their comments, they ain’t going to do that.”

In its first application for Tax Increment Financing, NorthSide Regeneration LLC noted that it would use eminent domain, though only in very few instances in which the company can’t get owners to sell their homes. After consistent outcry, however, McKee and Alderman April Ford-Griffin, whose ward falls squarely in the development footprint, promised eminent domain wouldn’t be used at meetings with north side community members.

Indeed, the provision concerning eminent domain has changed in the revised application. It now states that eminent domain can be used in two ways. The first would be through the city’s condemnation process, which includes a public hearing. The second method would be through the Board of Aldermen, who would pass additional legislation allowing eminent domain if the development company couldn’t purchase some of its needed properties from owners voluntarily.

Barbara Manzara, NSCBA vice president, said that isn’t enough. She characterized the provision as, “If someone does not sell to me, I can go to the Board of Aldermen and I can get them to [use] eminent domain for me.”

“It’s a way to try to get people to stop fighting about it,” she said.

More than 4,500 properties are included in the proposed development. According to company’s TIF application, 44 percent of the development’s acreage is vacant, with the bulk of the rest either residential (18 percent), civic or institutional (12 percent), or industrial (10 percent).

After looking over the new TIF application, Manzara seemed most worried about the amount of money set aside for demolition and abatement.

According to the application’s financials, the development company expects to spend more than $30 million on “demolition and abatement” over the course of the next 20 years.

“I saw bulldozers,” said Manzara.

“Typically,” Allen said, “a house gets demolished for $10,000 or less.” Allen said he has worked professionally with a number of projects that involved TIF monies.

PUBLICLY PROVIDED PROFIT
Without government assistance, the proposed development may not even be profitable. In its application for $398 million in TIF funds from the city, the company states that when including all forms of government assistance, the project will have a profit percentage of 11.39 percent, or about $918 million, an amount that the company deems adequate for a project of this scale.

Without the city’s assistance, profit drops to 6.45 percent, or about $520 million. If other forms of government aid, such as tax credits, are taken out of the project’s bottom line, profit plummets further.

Plans call for a total of more than $773 million of the project’s cost to be provided, in one form or another, by government agencies. If all of that money were taken out of the project’s revenue stream, NorthSide Regeneration would be left with a profit rate of about 1.8 percent over the course of more than two decades, for an $8.1 billion project.

Those numbers do not take into account discounting factors, such as the net present value of future revenues and expenses. If such a discounting factor were included, the government-provided money, which is given at the beginning of the project, would have a greater per-dollar value than the projected revenues, which wouldn’t be collected for a number of years.

WHAT HAPPENS NEXT
On Sept. 23 at 6 p.m., the Saint Louis Board of TIF Commissioners will meet to consider NorthSide’s proposal. At that meeting, the commission can vote whether to accept or reject NorthSide’s application for TIF monies, or even table the decision for a later date.

If the TIF Commission gives the project approval, the development will then be considered by the Board of Aldermen.

This could be a great moment for the city, Allen said. After all, McKee has to have the city’s support in order to get more than $80 million in Distressed Area Land Assemblage tax credits, in addition to the much-publicized $398 million in TIF funding.

“The city has so much leverage,” Allen said. “The city can lay a vision on the table.”

By Andrew Guevara
For the Show-Me Institute

Several new studies on the economic impact of a pending cap-and-trade bill to reduce greenhouse gas emissions say that the act would significantly reduce employment in Missouri and the state’s total production.

The bill, the American Clean Energy and Security Act of 2009 (ACES), is currently under Senate consideration. Its counterpart in the House of Representatives, House Resolution 2454, was passed in late June with a margin of only seven votes (219-212).

Since the House vote, analysis of the impact of ACES has been done by a different number of organizations nationally and on a state-by-state basis. A previous Policy Pulse article reported possible economic implications for the state of Missouri, according to a study of a similar cap-and-trade program.

That study, released by the American Council for Capital Formation (ACCF) and the National Association of Manufacturers (NAM) was based on the Lieberman-Warner Climate Security Act of 2007.

Both ACCF and NAM released another joint study in August analyzing possible consequences of ACES on the Missouri economy. Missouri was one of 15 states originally examined by ACCF and NAM because the state’s economy was considered one that would be most affected by the legislation. A good portion of Missouri’s economy depends on manufacturing and industry.

This ACCF/NAM study claims that Missouri’s gross state product could be reduced by between $638 million and $1.1 billion per year by 2020 and $6.7 billion and $9.2 billion by 2030. Further, the study says, state employment could be reduced by between 43,300 jobs and 58,900 jobs by 2030. These statistics are both lower than those predicted for the Lieberman-Warner Climate Security Act of 2007.

Other industry groups, such as the American Petroleum Institute, also released studies in late July of the expected impact of ACES legislation for individual states. They report that Missouri’s state domestic product could be reduced by as much as $157 billion during the next 26 years. Missouri could also see a loss of 39,000 jobs in just a few years, according to the institute’s report.

Even though these studies report a potential reduction in Missouri’s employment rate, the American Council for an Energy-Efficient Economy contends that these studies have overlooked the energy efficiency measures in ACES. If those efficiency measures were included, according to the council, they would offset the increased costs of cap-and-trade provisions.

According to the council’s study, released on Sept. 9, the bill would create 8,400 jobs in Missouri by 2020 and 11,900 jobs by 2030 as a result of current energy efficiency provisions. The council also proposes that stronger efficiency measures be introduced into the Senate’s version of the bill, which they claim would create 12,800 Missouri jobs by 2020 and 19,900 by 2030.

Industry groups, such as the American Petroleum Institute and the American Coalition for Clean Coal Energy, have come out against ACES, and some, such as NAM, have partnered with the National Federation of Independent Business and state industry groups, including one in Missouri, to launch advertising campaigns against ACES. You can see one of these advertisements, aired in Indiana, here.

State politicians have come out against the bill as well. On Sept. 2, Rep. Roy Blunt (R-Mo.) and Rep. John Shimkus (R-Ill.) held a roundtable discussion in Saint Louis about the cap-and-trade bill and its affect on small businesses.
“No credible study has found that the national energy tax will save money or create jobs or do any of the things that its proponents have said it will achieve,” Blunt said during the event, according to a press release from his office.

Other members of Congress from Missouri have expressed similar sentiments.

“The cap-and-trade bill is probably the most onerous bill that we’ve ever seen in this country, because it is a $600 billion annual tax that we will be imposing on our people,” Rep. Blaine Luetkemeyer said during a radio address on Sept. 8.

Andrew Guevara is an intern at the Show-Me Institute. He is currently a student at the University of Missouri-Columbia’s Truman School of Public Affairs

By Audrey Spalding
Show-Me Institute

David Jackson says he has been asked to resign from the city commission that will consider developer Paul McKee’s proposed $8.1 billion development in north Saint Louis and whether to award McKee $398 million in tax increment financing (TIF) money. Jackson is one of 11 members, and has served on the commission for a number of years.

Jackson, who is also on the Saint Louis Public School District’s Board of Education, said that a member of the district’s Special Administrative Board (SAB) asked him to step down. He wouldn’t specify who.

This news is controversial because Jackson is seen as more sympathetic to critics of the proposed north side development. In August, he spoke at a TIF workshop held by the North Side Community Benefits Alliance, a group that has opposed provisions of the proposed development. In that same month, he also voted to move the commission’s hearing of the development to 6 p.m. rather than 8 a.m., a move that might enable more working people to attend the hearing.

“I was just taken aback because one of the things the SAB did when they took over the school district was that they reappointed me to the TIF commission,” Jackson said.

“I had a relationship with two of their members,” he said. “And that it comes a week and a half before the north side renovation TIF meeting.” But Jackson would not say explicitly that the request for his resignation had anything to do with the proposed development.

Alderman Antonio French, who first posted notice that Jackson was being asked to resign, broke it — how else? — through his Twitter profile.

“Backers of McKee’s project are attempting a TIF Commission shake up days before next week’s important meeting,” he wrote. “SAB may replace David Jackson.” French, when reached by phone, said that Jackson had told him personally that he had been asked to resign.

On Sept. 23 at 6 p.m., the TIF Commission will hear McKee’s pitch. Jackson plans to be there as a commissioner, and said he won’t submit a letter of resignation as asked.

Though he can be removed by the SAB, Jackson says there is a state law that says TIF commission members must remain until a TIF project is submitted to its governing body.

In this case, he said it means that “I should remain until the NorthSide Renovation project is submitted to the Board of Aldermen.”

When contacted, Richard Gaines, one of the three members of the SAB, was surprised that any such allegations were made. He said that Jackson had not been asked to resign, and that his review was not related to the development.

“David Jackson, as well as all other commissioners, comes up for review every two years,” he said.

“I called David Jackson personally to ask if he wanted to stay,” Gaines said.

“This sounds like some diabolical scheme,” he said. “And I resent that.”

By Audrey Spalding
Show-Me Institute

The Greene County Circuit Court ruled on Sept. 10 that public school teachers can choose whether to be represented by one union, multiple unions, or none. The court’s ruling in Springfield National Education Association v. the School District of Springfield is a setback for the Missouri National Education Association (MNEA), the largest teacher union in the state. The MNEA has consistently argued against multiple union representation for teachers, saying that public school teachers should choose one exclusive bargaining representative, or none at all.

The teacher union policy at the heart of the lawsuit was a new one that district administrators and school board members had put into place to allow a two-tiered election for union representatives. The first election was for whether teachers wanted single, multiple, or no union representation. The second, if teachers chose a form of representation, was to choose which representative (or representatives) would represent the teachers.

It was the first choice, which could allow multiple representation, that caught the attention of the union.

“There can be no true collective bargaining without the recognition of a single, exclusive bargaining representative that will assume responsibility for monitoring, implementing and enforcing an agreement,” wrote the MNEA in a position statement on collective bargaining.

During the trial, SNEA attorney Sally Barker used that same issue of bargaining effectiveness as part of her argument.

“The purpose of collective bargaining is not to serve the employer by fragmenting the employees,” Barker said.

The MNEA has taken such a strong stance against multiple representation because of a 2007 state Supreme Court ruling that public school teachers have the constitutional right to bargain collectively. Specifically, Article 1, Section 29, of the Missouri Constitution, which states that “employees shall have the right to organize and to bargain collectively through representatives of their own choosing,” was deemed to apply to public employees.

That ruling ushered in revisions of teacher union collective bargaining agreements, and at least one other lawsuit, against the Bayless School District in St. Louis. District administrators and district teacher union presidents have said in the past that the MNEA is looking for test cases to see how far the 2007 court ruling goes in bolstering the power of exclusive teacher unions.

But circuit court Judge Michael Cordonnier rejected MNEA’s stance against multiple representation in his written opinion.

“The word ‘representatives’ in Section 29 is unambiguous, plural, and must be read to include the possibility of more than one representative,” he wrote.

Furthermore, Cordonnier also disagreed with the union’s argument that the phrase “collective bargaining” is a word so well known and used that it is implicitly understood to refer to exclusive representation. He went back to the 2007 ruling for guidance. In its decision, the high court referenced in a footnote the dictionary definition of collective bargaining, which said that the phrase can refer to an “employer or group of employers on one side and a union or a number of unions on the other.”

During the trial, Cordonnier quizzed Barker at length about that footnote, and why it would have been included if the court had considered collective bargaining a term that refers only to exclusive representation.

“Frankly,” Barker said, “because I think it was presumed.”

Apparently, that didn’t convince Cordonnier.

“None of the definitions referenced by the Supreme Court suggest the phrase ‘collective bargaining’ mandates exclusive representation,” Cordonnier wrote in his decision.

The union has not yet appealed this ruling, according to court records.

An updated version of developer Paul McKee’s plan for the north side of Saint Louis was made available Wednesday. The proposed $8.1 billion development, outlined in his development company’s application for $397.7 million in tax increment financing (TIF) from the city, would include 4,608 properties. If McKee and the development company, NorthSide Regeneration LLC, manage to acquire all that land, they’ll be the second-largest landholder in the city, in terms of square footage. Only the city of Saint Louis has a larger footprint.

The big news is that this version of the application tiptoes around the use of eminent domain, whereas the previous version allowed for eminent domain, although sparingly. Here is the entire text of the application regarding eminent domain:

“The use of eminent domain will not be allowed pursuant to this Redevelopment Plan. However, the use of eminent domain may be allowed (a) for a public use, as such term is used in Article XXI of the City’s Charter; or (b) pursuant to existing or additional legislation of the Board of Aldermen if the Developer has pursued and exhausted efforts to voluntarily acquire property the Board of Aldermen deems necessary to implement one or more portions of this Redevelopment Plan and deems critical to the Redevelopment Plan’s success.”

Article XXI details how the Board of Aldermen can condemn a property. According to the statute, the condemnation procedure involves a public hearing at which the property owners can argue against condemnation.

“We are not about eminent domain residential,” McKee said at a recent community meeting in north Saint Louis. Aldermen April Ford-Griffin and Marlene Davis both said at the same meeting that they were opposed to the use of eminent domain.

The updated TIF application is quite large. It spans three booklets, and contains more than 200 pages. Of those pages, 80 are devoted to a list of properties included in the proposed development. One booklet is devoted to a financial analysis of the development, and lists additional tax revenue the city can hope to receive — if the development company’s growth assumptions are correct.

For the entire project, the development company predicts an annual rate of return of 11.39 percent, with the city’s help. Without the TIF monies, the development company predicts a lower rate of return, of 6.45 percent.

“This is likely too poor a rate of return to attract private investment,” the application states.

The development company is also asking for other forms of government assistance, which contribute to its estimated rate of return. For example, the development company hopes to receive $85 million in Distressed Areas Land Assemblage Tax Credits, according to the application. Other forms of government assistance being considered are federal and state historic tax credits and Brownfield tax credits. In its previous application, the company estimated those credits to total more than $175 million.

By Andrew Guevara
For the Show-Me Institute

On Saturday, the United We Stand Freedom Fest 2009 took place at Theis Park in Kansas City. The event was organized by Political CHIPS, and Modern-Day Patriots (formerly the Kansas City Tea Party) in order to rally for limited government and to protest some national issues, such as the health care plan currently being considered by Congress.

Alex Poulter, one of the organizers of the event and founder of Political CHIPS, said that the event was to “promote grassroots activism,” to “build momentum” for the free-market movement, and to say that “enough is enough.”

About 2,500 people showed up, according to festival organizers. No one showed up to protest the rally.

Many people came dressed in red, white, and blue, and some carried American flags. Others brought “Don’t Tread on Me” flags and signs protesting the proposed federal health care plan, cap-and-trade legislation, and pork-barrel spending.

One participant wearing a Soviet-style hat with a red star and sickle carried a sign proclaiming “Welcome aboard comrades!”

David Lightner, campaigning for his wife Patricia Lightner, former Kansas State Representative and Republican congressional candidate for Kansas’ 3rd District, said the turnout was “incredible.”

“Both sides, Kansas and Missouri, are fed up,” he said. “Overall, it is a great venue, turnout, and an excellent setting.”

Petitions were circulated throughout the event. One urged Rep. Emanuel Cleaver II (D-Mo.), Sen. Kit Bond (R-Mo.), and Sen. Claire McCaskill (D-Mo.) to support legislation to have the Federal Reserve audited.

A number of speakers flew in for the event. Presenters included: Apostle Claver Kamau-Imani, organizer of the Houston Tea Party and radio host of “The Christian Politician” in Houston, Texas; Michael Cannon, director of health policy studies at the Cato Institute; and Kevin Jackson, conservative blogger for blacksphere.net and author of “The Big Black Lie.”

By Dain Fitzgerald
For the Show-Me Institute

An often overlooked resource for citizens to track their government’s actions is the State Auditor’s Office, which reports periodic, detailed investigations into government agencies.

Several reports are made each month, and through those reports Missourians can take an ex-post gander at the goings-on of the various state agencies, counties, and school districts that serve them.

State auditor Susan Montee has released eight audit reports for the month of July. The Village of Sibley, Knox and Cooper Counties, and the Liberty 53 and Jennings School Districts have come under fire for various financial mishaps, oversights, and otherwise questionable practices.

Beginning with Sibley, the village has a surplus of cash — far more than is necessary for its Town and Road funds — which means it has been collecting far too much in taxes.

According to the report, “The village has sufficient cash available for almost 2 years without collecting any additional receipts.” Indeed, records apparently are not kept for monies received by Sibley, making oversight an impossible task.

Cooper County purchased a Harley-Davidson motorcycle at a cost of $13,500, when leasing it would have been far less expensive according to an audit of the county. The audit notes that there exists no formal policy with regard to reimbursing sheriff’s deputies for use of their cell phones for business relevant to the county, and the Road and Bridge departments failed to document fuel usage properly.

Knox County comes in for similar treatment, taken to task for failing to rein in its debt. Like Cooper County, Knox failed to adequately record fuel consumption by its Road and Bridge Departments. The county also did not keep contracts when contracting with assorted nonprofit organizations, according to the Knox County audit. Without contracts, the auditor notes, finding out how the money was spent is impossible.

The report criticizes the Jennings School District for spending more than it took in during the past four years — by $3.1 million annually. And the district wildly overspent on implementing a hand-held computer project that few are using.

The report states, “The project significantly exceeded its budget, was not properly bid, was mismanaged, and the usage of the units is low.”

Jennings is also noted as suffering from a lack of oversight with regard to the cellular phone usage of its employees; the district’s record listing the numbers of phones owned, and their assignment to employees, is not adequately maintained.

This lack of clarity can likely be attributed to the fact that no written cellular phone use policy currently exists. The district’s purchased phone plans have allowed for more minutes than have historically been necessary, and a written policy may have helped to iron out some of the particulars involving cell phone use inefficiencies, such as the over abundance of “rollover” minutes.

Overspending is evident in the Liberty 53 School District, as well. According to an audit of the district, previous administrations have failed to check spending during relatively prosperous times to allow for a financial buffer, resulting in an operating funds balance that will be deficient by $12.9 million by mid 2011.

The district also reimbursed questionable spending. In one instance, the district reimbursed former Superintendent Scott Taveau’s wife for $2,471 in alcohol expenses for his retirement party.

Dain Fitzgerald holds a B.A. in Political Science from San Jose State University. He will be writing more closely about future audit reports and other government issues for Policy Pulse.

The United States Postal Service announced Wednesday that it is considering closing 413 offices. Twelve of those post offices under consideration are in Missouri, all located in metropolitan areas, with nine located in Saint Louis and three in Kansas City.

In fact, the Postal Service seems to be focusing on metropolitan areas instead rural areas in its search for unneeded offices. Offices under consideration in nearby states are also located in major cities. In nearby states, two offices are being considered for closure in Kansas, both in Kansas City, and four are being considered in Illinois, all located in Chicago.

The 413 offices amount to a small fraction of Postal Service offices nationwide — about 1 percent of the agency’s nearly 37,000 offices.

The announcement comes on the heels of large-scale cost-cutting measures, including dropping the equivalent of 57,000 jobs, freezing employee salaries, and eliminating 12,000 carrier routes. According to a release, the Postal Service estimated those cuts would amount to about $6 billion in savings.

However, those cuts are not enough to stanch the Postal Service’s losses. With the cuts, the agency is still on track to lose $7 billion for its 2009 fiscal years. During recent months, the agency lost $2.4 billion during a three-month period.

“The organization’s financial situation is compounded by its obligation to pay $5.4 billion to $5.8 billion annually to prefund retiree health benefits,” a recent Postal Service release noted.

Though the losses are great, they aren’t new. The Postal Service has been a running a deficit for the past three years, including 2009. This year — if the agency ends up losing as much as it estimates — will be the costliest year, but others have been close. In 2008, the agency lost $2.8 billion, and in 2007 lost $5.3 billion.

By Audrey Spalding
Show-Me Institute

On Tuesday, the Missouri Supreme Court ruled unanimously that the state’s funding formula does not violate the state Constitution’s equal protection clause. The ruling caps a five-year-long court battle between many public school districts and the state. More than 270 school districts had joined together to file against the state for inequitable funding.

Currently, school districts receive money from three main sources:  local property tax revenues, the state, and the federal government. Property revenues make up the bulk of state funding for most school districts, with districts drawing an average of 47 percent of their funding from local taxes during 2008, according to Department of Elementary and Secondary Education (DESE) records. State contributions are the next-largest funding source, accounting for an average of 42 percent of district revenues, with less than 10 percent of district funds coming from federal sources.

The districts alleged that the state’s funding scheme, which sets a minimum state contribution per student, is unfair.

The state calculates a per-student minimum level of funding, and will contribute up to that amount, depending on what amount of local funding a school district receives. The more local funds a school receives, the less it will get from the state.

Under that formula, the districts noted, per-pupil spending could range widely, from $4,704 in the Diamond R-IV School District to $15,251 in the Gorin R-III School District.

Furthermore, because the school a child attends is generally determined by where that child lives, the districts argued that children from poor families will attend school in districts that raise revenues from low-value properties, while children from wealthy families will attend school in districts that have much higher property values.

Some districts do have a larger property base to gather revenues from. According to DESE records, the Ladue School District has $426,264 in assessed valuation per student to draw taxes from, while the Cooter School District has less than $21,000.

However, the court said in its opinion, written by Judge Mary Russel, the obligation of the state is to set aside at least 25 percent of its revenues for schools, but not to ensure that the money is allocated fairly.

“There is no constitutional basis for implying an equal per-pupil spending requirement,” Russel wrote.

Judge Michael Wolff, who concurred with the main points of the Supreme Court’s opinion, wrote an opinion dissenting with a specific portion, noting that property assessment practices may hamstring school districts from raising funds.

“Due to the lack of uniformity in the assessment system, the assessed valuation of property in certain counties is disproportionately low,” he wrote.

In those cases, Wolff wrote, school districts are unable to raise as much money as they could with the same tax on properly assessed land, and are likely to be stuck with the amount of money the state has deemed is an “adequate” amount of per-pupil funding.

“Put another way,” he wrote, “counties where property assessments fall well below market value are rewarded with increased state funding for schools.”

TAXPAYER INTERVENTION

In an unusual move, a lower Missouri trial court that allowed three private citizens* to intervene on the behalf of the state. The bulk of their argument, one not made by the state, was that per-pupil spending had no correlation with student academic performance.

Although the other court allowed this private intervention, the Missouri Supreme Court wrote that it should not have. According to the opinion, the intervenors had no interest in the case other than as general taxpayers, and didn’t show that the state was doing a poor job of defending itself.

If any taxpayer with a non-specific interest in a case could join it as an intervenor, the court wrote, “[that] would open the floodgates to allow all Missouri taxpayers to seek intervention in the State’s defense of constitutional and statutory challenges. No public policy is served by allowing intervention premised on a taxpayer’s mere interest in the subject matter of a suit.”

* Of the three taxpayers who privately intervened in the school finance case, two are currently board members of the Show-Me Institute and one is a former board member.

By Audrey Spalding
Show-Me Institute

As the Post-Dispatch reports today, some of the state’s public pension programs are becoming extremely costly. According to the article, this year the cost of the Missouri State Employees Retirement System (MOSERS) will be $375 million, and will likely increase another $85 million for next year.

MOSERS is the retirement system for most of the state’s employees, including judges and elected officials. Upon retirement, former state employees covered under the program receive pension payments commonly based on years of service, not on what the employees paid into the system. As the Post-Dispatch reports, some state employees are drawing pension payments of more than $100,000 per year.

As large as MOSERS is, it doesn’t include all of the state’s employees. Notably, the pension program that provides retirement payments for Missouri public school teachers is also very large and has been suffering during the current economic recession.

The Public School Retirement System (PSRS) is a fund that provides retirement payments to school district employees. Unlike MOSERS, each employee pays a set percentage of their salary into the system for their retirement.

As of the 2009–2010 school year, the contribution percentage comes to a total of 27 percent — quite high in comparison to private retirement payments. School districts and teachers split the payment equally, meaning that each teacher pays in 13.5 percent of his or her salary, while the school district picks up the remainder.

According to a newsletter from the state’s major teacher union, the Missouri National Education Association (MNEA), the total assets held by PSRS in June 2009 were $21.5 billion, down $5.8 billion since January 2009.

PSRS asset values have been falling for the past two years. From October 2007 through march 2009, PSRS investments suffered a loss of 30.3 percent in value, according to Steve Yokum, executive director of the retirement program.

By Audrey Spalding
Show-Me Institute

The director of the White House’s National Drug Control Policy office, Gil Kerlikowske, announced the launch of a federal anti-methamphetamine advertising campaign today during a press conference in City Hall.

Mayor Francis Slay, Attorney General Chris Koster, Rep. Russ Carnahan (D-Mo.), and 35th Circuit Court Drug Commissioner Phillip Britt all spoke to show their support for the initiative.

“We have to have a national policy to attack this across the board,” said Carnahan.

The campaign, which consists of print, radio, television, and Internet advertisements, is targeted at young adults in 16 states, including Missouri, that have high rates of methamphetamine use. In Missouri, according to the National Survey on Drug Use and Health, 2.5 percent of adults aged 18–25 had used the drug during the past year, a rate nearly 50 percent larger than the national average.

“We know that we can’t arrest and we can’t incarcerate our way out of this problem,” said Col. James Keathley, superintendent of the Missouri Highway Patrol. He said it’s also important to focus efforts on education and addiction treatment.

The cost of this ad campaign will be $100 million, according to the 2009 budget of the National Drug Control Policy Office, and will play out during the months of September, October, and November. If members of Congress deem the ad campaign effective, Kerlikowske said, it may be continued. He also said that education and treatment is certainly cheaper than prosecuting offenders.

“Treatment is about one half the cost of incarceration,” Kerlikowske said.

The television and print advertisements for the campaign mostly center on what people lose when they become addicts. Images of children are used throughout many of the print advertisements.

“I even missed the birth of my son,” the male voice in one television advertisement says. “Meth took it all away.”

ANOTHER ALTERNATIVE
During the press conference, there was some talk of how Missouri could crack down on its methamphetamine problem. As he spoke unprompted at the podium, Koster made a pitch for requiring a prescription for medicine that contains drugs used in meth production. He said that there is an increasing consensus that ephedrine should be “taken off of shelves and put behind the counter so that only a prescription can get them.”

Both ephedrine and pseudoephedrine are used in many nasal decongestant medicines that can be purchased at pharmacies without a prescription.
Koster made his opinion clear. “It is time to put ephedrine-based drugs behind prescriptions,” he said.

Later, a Post-Dispatch reporter asked Kerlikowske whether he supported a prescription requirement.

He noted that Oregon had passed a law that requires prescriptions for common cold medicines that contain pseudoephedrine. The law went into effect in July 2006.

“In my opinion,” said Kerlikowske, “we have seen some success in Oregon.”
Oregon’s rate of methamphetamine use is actually greater than Missouri’s.

According to the same National Survey on Drug use and Health, 1.2 percent of Oregonians older than 12 used methamphetamine during the past year, while only 0.8 percent of Missourians did.

Robert Rose, a software engineer in Oregon, blogged about the law in 2007.

“[I]n addition to the long wait I had to endure, I was also hit with sticker-shock at what the drugs cost,” Rose wrote. “40 [tablets] of Sudafed that used to cost less than $2 over the counter [now] costs $25 by prescription with NO REFILLS.”

By Audrey Spalding
Show-Me Institute

In the Missouri Constitution, Article 1, Section 29, there is an extraordinarily pesky “s.” In the case of a recent teacher union suit against the Springfield School District, there likely wouldn’t have been a lawsuit and trial if it weren’t for that letter.

In its entirety, Section 29 reads, “That employees shall have the right to organize and to bargain collectively through representatives of their own choosing.” For the Missouri National Education Association (MNEA), the state affiliate of the national teacher union, that “s” is problematic, because it leaves some ambiguity as to whether teachers can choose multiple unions to represent them in salary and work condition negotiations with school districts.

There are, in fact, a number of Missouri school districts that bring at least two representative groups to the table when it comes time for negotiations. The Bayless School District, also facing a lawsuit from its district’s MNEA affiliate, allows any number of representatives to take part in negotiations. The Brentwood School District, which is not facing a lawsuit, has a similar multiple representation process.

Earlier, Article 1, Section 29, wasn’t an issue, because it had been interpreted that the clause only applied to private employees. However, the Missouri Supreme Court ruled in 2007 that the clause does in fact apply to public- and private-sector employees.

The MNEA and its district affiliates seem to be pushing that ruling to the conclusion that teachers have a right to collective bargaining with exclusive representation.

THE TRIAL
On Thursday, the second lawsuit filed on behalf of a school district affiliate of the MNEA to test this issue went to trial before Missouri Circuit Court Judge Michael Cordonnier. The trial lasted for more than six hours, but a verdict has not yet been reached. The lawyers have until Wednesday to file post-trial briefs, and a decision will be made at some point after that.

At issue in the case of Springfield National Education Association v. the Springfield School District is whether a school district can first hold a vote for teachers to decide whether they want single, multiple or no bargaining representation, and then, if the teachers want representation, hold a vote for the election of representative(s).

The school district’s defense of this policy is that it leaves the decision to the teachers.

“Giving the teachers the most flexibility and choice was the intent of the policy,” said Gerald Lee, president of the Springfield Board of Education, while testifying as a witness.

Ransom Ellis, III, the attorney for the school district, said that the SNEA was in fact attempting to whittle down the options available to teachers with its lawsuit.

“The choice here is the choice of the employees,” he said, “not the choice of the employer and not the choice of the union. We’re not mandating that they have multiple, we’re simply allowing the option.”

But the Springfield National Education Association (SNEA) argued that allowing the choice between single, multiple, or no representation would undermine the collective bargaining process.

“Why go through that hurdle when that’s not collective bargaining,” said Sally Barker, attorney for the SNEA. “It’s really a confusing and false choice.”

Furthermore, she argued, collective bargaining has been historically understood as referring to exclusive representation.

“It is clear the words ‘bargain collectively’ mean on the behalf of one unit by a sole representative,” said Barker.

Collective bargaining, Barker said, is “not to serve the employer’s interest by rule of divide and conquer and fragment. It is certainly not to serve minority organizations.”

Barker was referring to the Missouri State Teachers Association (MSTA), the MNEA’s main rival for membership across the state. The MSTA has historically supported non-exclusive bargaining, and does not lobby on political issues, as the MNEA’s national affiliate does. The two groups don’t agree on a number of issues.

The MSTA is the third party in the Springfield case, and is intervening on behalf of the school district.

Kent Brown, the attorney for the MSTA, focused most of his arguments on how teachers that didn’t want SNEA’s representation could have a voice in the negotiation process.

“How does a bargaining unit represent both the majority and the minority when there are issues on which those groups are diametrically opposed?” asked Brown.

Judge Cordonnier stayed silent throughout the three lawyers’ arguments and questioning of witnesses. But, during  Barker’s final arguments, he questioned her at length.

“It’s not inherently undemocratic to have two organizations negotiate at the same time,” Cordonnier said.

But it would be practically impossible, Barker said. “It’s impossible for these groups to agree on anything,” she said.

The judge also noted that in the Missouri Supreme Court Case that ruled that Article 1, Section 29, applied to public
employees, the high court noted that the term “collectively bargain” was ambiguous.

If those two words had such an agreed-upon meaning, Cordonnier asked, “Why would our Supreme Court not have said so?”

“Frankly,” Barker said, “because I think it was presumed.”

By Audrey Spalding
Show-Me Institute

On Wednesday night, more than 60 people gathered in the basement of the Zion Lutheran Church in north Saint Louis to hear developer Paul McKee and Alderman April Ford-Griffin explain a proposed $8 billion redevelopment of Saint Louis’ north side. There were some familiar faces from recent meetings hosted by a community group critical of the redevelopment, but most did not overlap. Two policemen attended the presentation, as well.

Before the presentation could really begin, Ford-Griffin noticed a journalist sitting in the front row of metal folding chairs that had been set out for the evening. He had a microphone and was unwinding its cord. Ford-Griffin stooped down to speak with him.

After about two minutes of exchange, the journalist got up and left. Later, McKee explained after asking a girl to stop taping the presentation that people are “not comfortable” when the news media record their questions and voiced opinion.

Thus began the two-hour-long meeting, which consisted of a slide show followed by a heated question-and-answer session.

The slide show, co-hosted by McKee and William Laskowsky, chief development officer of the redevelopment company, included statistics showing how far the north side had fallen in comparison to national education and income averages, as well as outlining the geographic boundaries of the proposed project and pointing out which types of stimulus money, tax increment financing (TIF), and other tax credits for which the project was eligible.

That government assistance, McKee said, is necessary because of the systemic deterioration of the north side.

“The infrastructure is more than 100 years old,” he said, “and most of it is shot.”

Generally, the presentation tried to assuage fears that eminent domain would be used to force people to give up their property, and that the current north side community would be uprooted to make way for more affluent residents.

“We are not about displacement,” said McKee. “We are not about eminent domain residential.” Furthermore, he claimed the project would likely benefit current residents, stating that “everything around what we’ve done has grown in value. Sometimes 10 times as much.”

Ford-Griffin was on the defensive as well. She said that the actions of some — likely referring to the North Side Community Benefits Alliance, a group pushing for more inclusion in the redevelopment process — were creating “hysteria in the community.”

“There will be no eminent domain on residences and churches,” she said. While she spoke, several audience members muttered about her chances at reelection.

In the TIF application that the redevelopment company submitted to the Saint Louis TIF board of commissioners on May 29, the company noted it could use eminent domain to acquire properties from uncooperative owners, though sparingly.

McKee’s and Ford-Griffin’s statements on Thursday were based on an updated TIF application that has not yet been made public.

A man who identified himself as Terry Chapman stood up to ask a question and referred to the more than 2,400 properties the redevelopment company had listed on its application as “properties or parcels needed for proposed redevelopment.”

“On that list is my yard,” he said. “Are you going to take my yard?”

McKee promised he wouldn’t, again referring to the not-yet-public revamped TIF application.

“The list has been modified,” said Laskowsky.

Ford-Griffin, when pressed by NSCBA member and certified public accountant Keith Marquard, said that the updated TIF application would be available to the public on Sept. 9, two weeks before the TIF commission would meet to consider the redevelopment company’s proposal and application for more than $410 million in TIF funds.

A building put up for sale by the Saint Louis Development Corporation as a “featured” property, at 455-457 Walsh St. The LRA acquired the property from Anheuser Busch in 2008. The building is priced at $16,000. Photo from Saint Louis Image Library

By Audrey Spalding
Show-Me Institute

In the city of Saint Louis, the largest property owner by far is a  government agency that holds vacant and abandoned buildings and property. The agency holds more than 9,500 properties, at least 10 times as many as owned by the city government itself.

If knitted together, the 9,587 properties would come to a total of 1.7 square miles of vacant lots and buildings. But only half of those properties are up for sale, though at especially low prices. The rest are being held for some greater purpose — likely as a part of a future developer’s real estate project.

The city agency that holds this land is the Saint Louis Development Corporation’s (SLDC) real estate department. The department acquires properties through three different agencies, the Land Reutilization Authority (LRA), the Land Clearance for Redevelopment Authority (LCRA), and the Planned Industrial Expansion Authority (PIEA). Each year, a total of about 225 properties are sold from the pool owned by LRA, LCRA, and PIEA.

The LRA in particular has been mentioned in the press and at recent north Saint Louis community meetings as an organization that often lets its properties go unmaintained. Another complaint made at past community meetings is that sometimes the LRA won’t sell property to area residents, preferring to hold the land for an ambitious developer.

At least 1,300 of those vacant lots and buildings held by the SLDC — not listed for sale — are part of a proposed $8 billion redevelopment project in north Saint Louis, put forward by developer Paul McKee and his redevelopment company, NorthSide Regeneration LLC. The project has come under a good amount of public scrutiny because the redevelopment company is asking the city of Saint Louis for $410 million in Tax Increment Finance funds (TIF), and because of the project’s large scale.

Some of the 1,300 properties listed for acquisition by the company have been held by the LRA for more than a decade. For example, a vacant lot at 2618 Sullivan Avenue, assessed at $1,500, has been held by the LRA since at least 1997, as far back as city property records are available.

A vacant lot at 1349 Leffingwell, assessed at $170, has also been held by the LRA since at least 1997. In fact, the vast majority of properties picked at random from a spreadsheet of to-be-acquired NorthSide properties listed as owned by the LRA had been held by that agency for at least the past 12 years.

According to a written statement from the SLDC in response to an interview request, “… if the properties are suitable for large-scale development, the agencies hold those properties for such major developments and do not sell them piecemeal to individuals.”

At a recent meeting of the North Side Community Benefits Alliance, a group that formed out of members’ concerns that the company will use eminent domain liberally, will remake the area with no regard to current residents’ needs, and has been letting properties it already owns go to waste, a man said he had tried to buy a LRA-owned lot near his home and had been refused.

The SLDC does take into consideration whether a prospective buyer has the means to improve the property, according to the agency’s statement. If the SLDC deems that person does not have the resources, it won’t sell the property to them.

“It is no favor to sell someone a vacant building that they will not be able to rehabilitate,” said the SLDC in its statement.

A couple hundred protesters showed up on Saturday to protest health care reform outside of Sen. Claire McCaskill’s office. At one point, Gateway Pundit blogger Jim Hoft asked the crowd, “Are we getting paid to be here today?”

A few “billionaires” showed up to encourage the anti-health care reform protesters. Early on, the group chanted “keep us rich,” and “vote in Trump.” Later, one said, “we’re filthy rich in a kind of clean way.”

Sen. Claire McCaskill has scheduled a number of health care forums in the coming week: On Aug. 24, McCaskill will hold forums in Hannibal, Moberly and Kansas City. On Aug. 26, she will hold forums in the central part of the state in Warrensburg and Jefferson City. On Aug. 31, she will hold forums in Springfield and West Plains.

Audrey Spalding
Show-Me Institute

This week, Sen. Claire McCaskill will hold seven health care forums across the state. If her forum in Hillsboro is any indication, the forums will be well attended, a little loud, and won’t get out of hand.

Saturday, before those health care forums, a number of events were held outside of state elected officials’ offices to protest the proposed public option and the general expansion of government.

Those worried that the recent health care protests are threatening or violent should have seen what happened outside McCaskill’s office on Saturday. The most confrontational moment involved Kool-Aid.

Protesters against the reform stood on one traffic meridian, holding “Don’t tread on me” flags and signs proclaiming things like “Hands off my health care.” A large number of people had shown up, possibly as many as 500. The closest any crowd members came to being threatening was a woman who yelled anti–health care statements loud enough that she began to go hoarse.

John Stoeffler, a veteran, retiree, and weekly columnist for the Post-Dispatch’s Suburban Journal for south Saint Louis, said this was his first protest.

“I’m a columnist,” he said. “I figured I should get down here and see what it’s all about.” Stoeffler wore a T-shirt with a photo of the capitol and the caption, “Ahoy Americans thar be pirates in Washington.”

He said he was neither a Republican nor a Democrat, but was concerned with excessive government spending. The public option proposed wouldn’t be legitimate competition for insurance companies, he said, because the government isn’t concerned with making a profit.

“Government spells profit D-E-F-I-C-I-T,” Stoeffler said.

Stoeffler currently is on Medicare, but said that in the past he had owned a business and paid for his employees’ insurance.

On the adjacent traffic meridian, a much smaller crowd had shown up in top hats, bow ties, heels, and sequins. The self-proclaimed “billionaires for health care” were in character, claiming they favored making health care available only to those who could afford it.

“I’m supporting my fellow billionaires,” said a woman who identified herself as Laurie Ann, decked out in a sequined top, black skirt, and pink scarf. “We’re trying to help our little people help us keep what we’ve got.”

When asked if she had health insurance, she replied, “Health insurance? I own the damn company. I don’t have to struggle. Struggle is so … ugly.”

Midway through the protest, there was a confrontation between the groups. One man from the anti-reform group took what he had labeled as “100% Obama KoolAid” and offered it to the tongue-in-cheek “billionaires.”

“No, no, that’s okay,” said a bow-tied and bearded man. “We’re so rich, we’re never thirsty.”

Show-Me Institute Intern Caitlin Hartsell attended the Saturday protest at Rep. Russ Carnahan’s office on Manchester (this article’s front-page photo is from that protest). She reports that it stayed peaceful as well.

The North Side Community Benefits Alliance (NSCBA) has little more than a month to convince the north Saint Louis community, not to mention the rest of the city and the Saint Louis Board of Aldermen, that a proposed $8 billion redevelopment of the area is untenable at best.

At worst, NSCBA members have said, the proposed redevelopment is designed to uproot the current residents of the north side and replace them with more affluent residents, at the city’s expense.

The north side developer, Paul McKee, will present his application for $410 million in tax increment financing (TIF) from the city on September 23. That day, the NSCBA hopes to get a large turnout of redevelopment critics to speak publicly against the measure.

Their strategy to build opposition to the redevelopment and persuade activists to turn out at the hearing places a focus on eminent domain, a process by which the government can take property from its owner for “public improvement.

On Thursday, the NSCBA hosted a forum at Shining Light Pentecostal Church to discuss the nature of eminent domain and how it has been used in the past. Nearly 70 people attended to hear speeches by NSCBA leaders and guest anti–eminent domain activists Jim Roos, known for painting the large “End Eminent Domain Abuse” mural that is visible from eastbound Highway 44,  and Christina Walsh, the Institute for Justice’s director of activism and coalitions.

Eminent domain has become more controversial in recent years as its use by government officials has expanded from acquiring land for things like roads to taking land from some in order to give it to others who say they can put that land to a better use.

“What can’t be replaced by something bigger and newer?” said Walsh, who came from Washington D.C. to attend the meeting. “We could replace the Mayor of Saint Louis’ house with something bigger and newer.”

In the case of the north side development, more than 2,400 properties are listed as those the redevelopment company needs to acquire for its $8 billion project. The church at which Thursday’s forum was held is on that list. In fact, at least 10 other churches, including the Grace Baptist Church on Cass Avenue, less than a mile away from Shining Light Pentecostal, are also on the list.

“Who can ever think that someone would propose to take this lovely church?” asked Romona Taylor Williams, NSCBA board member. “It’s a …” she stopped short, then continued. “It’s not right,” she said.

Though eminent domain is an issue, the use of it may be limited to a small number of residents.

Within the TIF application submitted by NorthSide Regeneration LLC, the redevelopment company noted that it would use eminent domain to acquire less than 5 percent of the total redevelopment area’s acreage from owners who still live on their north side properties and are unwilling to sell.

Although Sen. Claire McCaskill has kept her promise of not awarding earmarks, other Missouri politicians have doled out hundreds of millions of dollars during the past year without public debate and review.

Within the U.S. House of Representatives, the nine Missouri members earmarked a total of more than $125 million during the 2009 fiscal year for projects they sponsored alone. Sen. Kit Bond, who is not running for reelection, earmarked projects totaling $120 million. Only six other senators earmarked a larger total on their own.

It is now extremely easy to see how much money politicians are giving out under the guise of earmarks. Missourians who want to know exactly who is getting these funds can find the information online. A new database, made available by the Center for Responsive Politics and Taxpayers for Common Sense, has compiled earmarks awarded by senators and House members for the fiscal years 2008 and 2009.

In a written statement earlier this year, McCaskill said that a major fault with the practice of earmarking is that it takes money from a more competitive funding process.

“Most earmarks just skim money off of other programs — competitive grants for law enforcement, locally decided projects for roads and bridges — and redirects it to projects that are chosen by one criterion: someone in Congress wants to fund them.”

The Sunlight Foundation, a nonprofit organization that works to promote government transparency, explains earmarks more bluntly. “Because earmarks are hard to identify, some members use them to secretly award their biggest campaign contributors or, in the infamous case of former Rep. Randy “Duke” Cunningham, to exchange them for bribes.”

One of the properties the 11 Jackson County school districts allege is undervalued. According to the lawsuit, the property, at 1100 N. Noland Rd., in Independence, was purchased for $355,000 in 2007, nearly $100,000 more than its 2008 assessed value.

By Audrey Spalding
Show-Me Institute

On Friday, a Jackson County judge ruled that Missouri school districts, faced with lower property tax revenues, cannot sue for higher property assessments.

In the current climate of declining real estate values, the ruling is significant. For the 11 Jackson County school districts that banded together to file a lawsuit against the Jackson County assessor, the ruling means that they will face a combined revenue loss of $35 million for the 2009–2010 school year alone.

On the other hand, Jackson County residents, who have already received their 2009 assessments, won’t see an unexpected increase in their property taxes.

“Most homeowners saw their property values lowered with this year’s reassessment,” said Brian Johnson of the Jackson County Assessment Department in a written statement. “… It’s no secret property values have dropped nationwide and our county has been no exception.”

The districts’ lawsuit alleged that the Jackson County assessor has been consistently undervaluing properties over the years. According to their lawsuit, property assessments submitted for 2009 are far too low compared to nearby property sales in recent years.

For example, a property just a few miles away from the courthouse (pictured above) was listed in the districts’ lawsuit because its 2009 assessed value was 125 percent lower than the price it was purchased at in June 2008. Nearly 50 properties with assessments at least 10 percent below recent sales values were listed in the districts’ lawsuit.

“They are so far from the sales price that they cannot be justified,” said Steve Mauer, the lawyer for the districts.

What the districts wanted was for the Jackson County assessor to rescind the 2009 assessments and apply the 2008 assessments, which Mauer said are “real numbers that we know have been approved.”

Of course, the 2008 numbers reflect higher property values from a better economic time. If the districts had gotten their wish, property taxes for Jackson County residents would have gone up — for some, a significant amount.

The judge, Michael Manners, didn’t have an easy decision before him. From the plaintiffs, he had Independence School District Superintendent Jim Hinson testifying that his district would be short more than $2 million if the 2009 assessments were allowed to stand, and, because of the Hancock Amendment, would not be able to recoup the losses if property values began to increase in later years.

From the defendants, Manners had the promise of an immediate demand for the authority to issue a $54 million bond from the county assessor’s office if he granted the school district’s request, and the specter of some people in the coming year forced to pay taxes on property they had owned in 2008, but had sold by 2009.

The hearing Manners held on Thursday was simply to determine whether the 16th Circuit Court had the authority to hear the case, and whether it would issue a temporary restraining order against the county assessor. But what normally takes little time in court stretched into nearly four hours of arguments about the tax collecting process, whether schools were overspending, the overall direction of the economy, and the fairness of districts doling out raises during a severe recession.

Though Manners wrote Friday that the circuit court could hear the case, he wrote that school districts don’t have the authority to sue the assessor’s office for assessments that are too low. That authority, he wrote, was determined by a previous Missouri court case in 1975, in which the St. Francois County School District sued a county administrative board for undervaluing real estate. The district lost because, the court said, only property owners have the right to appeal an assessment.

Charlene Wright, a lawyer for the county assessor characterized the lawsuit as a money grab. “They want a $54 million tax increase,” she said during the Thursday hearing. “And they want this court to help them do that.”

“They have the ability to go back to voters,” she said. “If they want that money, they can go back to the people and ask for a vote.”

The situation that the Jackson County school districts are in is not unique. Many Missouri districts are seeing less-than-rosy property assessment values this year. For example, Saint Louis County school districts saw a 9-percent decline in commercial assessed valuation in less than six months.

Whether school districts will make that move for more funds remains to be seen. Many districts wait until April to put tax levy increase proposals up for vote, though they also have earlier ballot options, in November and February.

By Abhi Sivasailam and Audrey Spalding
Show-Me Institute

On July 27, governors from eight Midwestern states met in Chicago to sign a memorandum committing to develop a strong high-speed rail corridor in the Midwest. Missouri Gov. Jay Nixon was among the signatories.

In recent months, Nixon has called for high-speed rail projects for the state: one in Missouri, for rail between Saint Louis and Kansas City, and the other stretching from Saint Louis to Chicago. At a June press conference held with Illinois Gov. Pat Quinn, Nixon and Quinn promised that trains traveling between Chicago and Saint Louis could reach speeds of more than 100 miles per hour.

But trains traveling the route between Kansas City and Saint Louis would travel much slower. According to the state’s preliminary application for federal funding, those trains would travel an average of 55 mph after improvements, a 5-mph increase from the current average speed.

On Aug. 24, the Missouri Department of Transportation (MoDOT) will submit its final application for federal stimulus money to upgrade the existing Amtrak route between Saint Louis and Kansas City. The state is not asking to build a new route.

“It would cost something like multiple billions to get a high-speed rail system between Saint Louis to Kansas City — you would basically have to start over,” said James Noble, an engineering associate professor at the University of Missouri–Columbia who was commissioned by MoDOT to evaluate high-speed rail projects.

Instead, according to its preliminary application, MoDOT is seeking to make siding and crossing grade upgrades, and install a passenger communication system, among other improvements, (see a map of those here) for a total cost of $151,350,000. Most of that cost, $124 million of it, would be paid by the federal government out of American Recovery and Reinvestment Act funds (ARRA), if the project is approved.

The remainder would be paid by Missouri and Union Pacific Railroad, with the state paying about $15 million.

Currently, trains running between Kansas City and Saint Louis run at an average of 50 mph — slower than any posted speed limit on highway I-70, which links the two cities.

In order for passenger trains to reach a maximum speed of 110 mph on the route between Kansas City and Saint Louis, a large portion of the track would need to be rebuilt as a double track, Union Pacific spokesman Mark Davis said.

“I don’t think anyone is seriously thinking of higher than 90 between Kansas City and Saint Louis,” said Randal O’Toole, a senior fellow at the Cato Institute, who studies transportation issues.

COSTS
Amtrak currently runs a sizable deficit. In September 2008, Amtrak posted a net loss of nearly $119.9 million. According to O’Toole, Amtrak lost about $51 for every passenger that took the train from Kansas City to Saint Louis during the same month.

O’Toole said he had calculated a per-passenger loss for each Amtrak route, based on figures released in Amtrak’s monthly performance reports. For most short distance routes, he said, losses run anywhere from $10 to $95 dollars per passenger.

Although Amtrak consistently posts losses, it can afford to continue to run trains because of state funding.

“The legislature allocates money every year to keep Amtrak here,” said Lisa Lamons, railroad operations manager at MoDOT. “If we didn’t get that money from the legislature, Amtrak wouldn’t be here.”

Amtrak operates the trains that run from Kansas City to Saint Louis, but Union Pacific, a private rail company that makes its money from transporting freight, owns the entire route, according to Lamons. “Which is pretty common in the western United States,” she said.

Because Union Pacific owns the tracks, it decides when and where to make infrastructure improvements, which are intended to improve its bottom line, not improve passenger train travel speeds.

“Most or all of the improvements were geared toward freight train improvements,” Lamons said. Though occasionally, she noted, some improvements designed to help freight traffic end up helping speed up passenger train travel as well.

“The idea behind these proposals was trying to address benefit for both Union Pacific and Amtrak,” Noble said.

But if needed infrastructure for passenger rail travel isn’t being built, MoDOT can’t use its operating budget to fund the construction. According to Rodney Massman, MoDOT’s administrator of railroads and high-speed intercity passenger rail application contact, MoDOT isn’t authorized to make railroad infrastructure improvements.

“One thing is right now we don’t have any kind of fund for actual rail improvements,” he said. “MoDOT is still funded like a highway agency. Most of those road funds can only be spent for roads.”

“We’ve never had a budget for infrastructure improvements until last year,” Lamons said.

In this case, although MoDOT has offered a contribution of nearly $15 million toward rail improvements, the money is not coming from MoDOT’s own funds. “It’s coming from two sources,” said Massman. “One is a federal program where money can only be spent on rail highway crossings. The other is a state program for the same thing.”

Although the federal government and state governors interested in a slice of the $8 billion high-speed rail funding pie label the improvements as one-time costs, that’s not strictly true.

According to O’Toole, an often-overlooked portion of the cost of railroads is the rebuilding cost. It’s not an annual expense, he said. However, “Every 30 years you’d have to go in and completely redo it. Rebuild fences, rebuild extensions … Technically, that’s an operating cost — not a capital cost. All you’re doing is make sure what you’ve got stays there.”

According to Noble, there would be some other small maintenance costs.
“The maintenance costs for sidings are minimal,” he said. “The only place you’re going to see maintenance costs along the line is from Jefferson City to Saint Louis. Those rails will see costs from running along the river and carrying heavy coal trains.”

GAINS FOR MISSOURI
The real gains for Missouri are not in increasing speed, but may be in getting trains to arrive on time. According to the preliminary application, only 18.6 percent of trains running between Kansas City and Saint Louis arrived on time during the federal fiscal year of 2008.

There isn’t an overwhelming number of train passengers causing the large delay — O’Toole estimates that Missouri train travel averages 54 miles per year per Missouri resident — but instead, a large amount of freight traffic.
Noble’s 2007 study, commissioned by MoDOT, attributed the majority of train delays to freight train interference (FTI) at more than 53 percent.

Passenger train interference (PTI) was cited as the cause in only 9.7 percent of delays.

Massman and Lamons confirmed that very few trains arrived on time during 2008, but said that with the economic recession, freight traffic has dropped dramatically — it’s about half of what it was, according to Massman — freeing up more track space for passenger trains.

“Since January, it’s been above 90 percent pretty much every month,” said Massman.

The late-train problem will likely resurface as the economy recovers, bringing back the need for some of the infrastructure improvements MoDOT is proposing. “Railroads are very resilient and very enterprising, and they’re going to grab a lot of freight traffic,” O’Toole said. “Most recently, they’ve been carrying 40 percent of freight. They bounce back as fast as the economy, and a little faster in some cases.”

MoDOT estimated on its application that with the listed improvements, 80 percent of Amtrak trains would arrive on time, a large jump from pre-recession performance.

Abhi Sivasailam, a student at the University of Missouri–Columbia, is an intern at the Show-Me Institute.