McKee’s Northside Regeneration Moving Forward

As you’ve likely heard by now, last week the Missouri Supreme Court overturned a 2010 ruling that Paul McKee’s Northside Regeneration development plans were too vague for TIF financing:

After over 3 years of litigation, developer Paul McKee’s controversial Northside Regeneration Project is being allowed to proceed.  On Tuesday the Missouri Supreme Court reversed a lower court decision blocking McKee’s use of so-called “Tax Increment Financing,” (TIF) for the development. (St. Louis Public Radio)

I’ve never been thrilled about how McKee handled property acquisition and maintenance, but I recognize the city’s total absence of planning and working toward a common vision left an opening for private interests without public input.

The project area is large but it’s a fraction of the city as a whole. There are many other parts of the city, north & south, dealing with continued population decline, increases in vacant buildings, and other signs of decay. Where’s the people upset the city isn’t doing anything to solicit public input in the rest of the city? Transportation, housing, jobs, education, etc are all being ignored.

The Jaco report just had Paul & Midge McKee on taking about their project, see the video here.

One of the biggest issues is the massive TIF (tax increment financing) package for the project. What needs to be understood is the pros and cons of the TIF tool. When a municipality invests in new infrastructure in stable and up & coming areas few tend to object since people see the value of improving desirable locations. Conversely, this means declining areas don’t see improvements in public infrastructure (sidewalks, roads, sewers, lighting, etc).  Both are self-fulfilling in that rebuilding public infrastructure in the sable/improving areas further helps these areas while the lack of infrastructure investment in others accelerates decline in others.

Begin replacing sidewalks & lighting in sparsely populated declining neighborhoods and people will quickly question the return on that investment.  This is where the TIF tool come in, a private developer agrees to invest in a blighted area and pay much more in property taxes than the municipality currently collects but only in part of that tazx is used to pay off bonds used to rebuild the public infrastructure the municipality can’t afford to rebuild otherwise.

The developer needs the new infrastructure to attract investors/buyers/tenants but the municipality can’t rebuild the infrastructure without a way to pay for it. The municipality can’t risk existing revenues to pay off bonds to rebuild the infrastructure so that means new revenue must be used.  Sales taxes are a bad source for these revenues

• Residential & office development don’t pay sales taxes
• Sales taxes would take too long to accrue
• Our sales tax rate is already sky high

This leaves property taxes as a source of revenue. To simplify things say the property is paying $100/year in property taxes but after redevelopment the property taxes will now be $200/year. With the TIF the municipality/school district would still collect the $100 it always did, $5o (increment) would go to pay off infrastructure bonds and the remaining $50 would go to the municipality/school district. Do nothing get $100/year or do the project and get $150/year.

The actual numbers will be different but you get the point: public infrastructure gets rebuilt, building happens, more taxes are collected than if nothing happened. This is a simplified view and there are cons such as favoritism for the developer(s), risk of pushing out good people, etc.

My concern is St. Louis won’t require good urbanism such as strong pedestrian connections. The infrastructure needs to be rebuilt and TIF is the best way to do that, but we need to have a say on characteristics of the final development.

— Steve Patterson

Poll: How Should Missouri Treat Marijuana?

Views on marijuana use are changing rapidly, all age groups have shown dramatic increases in support for legalizing it:

Fully 65% of Millennials –born since 1980 and now between 18 and 32 – favor legalizing the use of marijuana, up from just 36% in 2008. Yet there also has been a striking change in long-term attitudes among older generations, particularly Baby Boomers.

Half (50%) of Boomers now favor legalizing marijuana, among the highest percentages ever. In 1978, 47% of Boomers favored legalizing marijuana, but support plummeted during the 1980s, reaching a low of 17% in 1990. Since 1994, however, the percentage of Boomers favoring marijuana legalization has doubled, from 24% to 50%.

Generation X, born between 1965 and 1980, came of age in the 1990s when there was widespread opposition to legalizing marijuana. Support for marijuana legalization among Gen X also has risen dramatically – from just 28% in 1994 to 42% a decade later and 54% currently.

The Silent Generation continues to be less supportive of marijuana legalization than younger age cohorts. But the percentage of Silents who favor legalization has nearly doubled –from 17% to 32% – since 2002. (Pew Research for People & Press) 

Below is the visual view of the above information.

Right now no state bordering Missouri allows for medical or recreational use, but Illinois may soon have medical marijuana:

The sponsor of a measure that would legalize marijuana for people like Bauer says he plans to call the plan for a vote no later than next week.

Representative Lou Lang, a Democrat from Skokie, says his plan has the strictest regulations in the country.

Patients would only be allowed to purchase the marijuana from qualified vendors, who could only purchase from certified growers. (WUIS)

Would a neighboring state prompt a change in Jefferson City? Probably not.

The poll question this week asks how Missouri should treat marijuana, the existing illegal is one of the choices in the poll. My thoughts on Wednesday April 24th.

— Steve Patterson

Readers Overwhelmingly Opposed To Proposed Utility Surcharge

Readers very clearly oppose bills in the Missouri senate & house that would permit a utility surcharge, read specifics in the prior post. Here are the results of the poll:

Q: Support or oppose proposed electric utility infrastructure surcharge?

1. Oppose 48 [77.42%]
2. Support 10 [16.13%]
3. Unsure/no opinion 3 [4.84%]
4. Other: 1 [1.61%] – “support only if used for utility network, not plants”

You can lookup your Missouri state legislators here to let them know how you feel.

– Steve Patterson

Poll: Oppose or Support Proposed Electric Utility Infrastructure Surcharge?

Most likely you’ve seen recent TV commercials talking about utility surcharges and regulations. These are sponsored by groups on opposite sides of Missouri Senate Bill 207 (link):

SCS/SB 207 – Currently, gas corporations may file a petition with the Public Service Commission for rate adjustments to recover costs incurred for infrastructure replacement projects. This act allows electrical corporations to follow a similar process to recover costs for infrastructure replacement projects. The types of costs that can be recovered include certain work on electric plants, certain capital projects undertaken to comply with environmental or safety regulations, and costs of facilities relocation due to public works projects.

This act details the process that an electric corporation and the Public Service Commission must follow in reviewing applications for infrastructure system replacement surcharges. If surcharges are approved by the Public Service Commission, this act requires electric corporations to submit to the Commission a reconciliation noting the differences between infrastructure system replacement revenues and appropriate pretax revenues. Additionally, this act modifies the amount of revenues that may be produced from an infrastructure system replacement from no less than one million dollars or half of 1% of the corporation’s base revenue and no more than 10% of the corporation’s base revenue. While the electric corporation is collecting an infrastructure system replacement surcharge, they may only adjust the rate two times every twelve months. If an electric corporation files a petition or change to an infrastructure system replacement surcharge, it shall not be considered an increase in the electric corporation’s base rate.

In other words:

The measure would let Missouri’s three investor-owned electric companies — Ameren Missouri, KCP&L and Empire District Electric — put the cost of replacing infrastructure on customer’s bills without first needing to get approval from the Public Service Commission. (St. Louis Business Journal)

Supportive viewpoint:

Under current law utility companies have to go through the Public Service Commission to increase rates to pay for infrastructure and other additional expenses. This process can take months. They said this bill fixes that regulatory lag and allows utility companies to invest faster while interest rates are low. Supporters said this will give the companies better credit ratings, which could make utilities cheaper in the long run and make infrastructure projects more attractive to investors. (KMOX)

Opposition viewpoint:

The Fair Energy Rate Action Fund, an opponent of the legislation, said the changes are not near enough to protect consumers. Executive Director Chris Roepe said the proposed expiration date is lengthy, the cap still would allow for significant costs and proving a case to get the refund would be difficult.

 “It’s still a really terrible bill for Missouri businesses and families,” Roepe said. (Southeast Missourian)

Who is the Fair Energy Rate Action Fund?

FERAF is a diverse coalition comprised by consumer protection groups. Members of FERAF include:

• AARP
• Missouri Association for Social Welfare
• Consumers Council of Missouri
• Missouri Association of Retailers
• Ford Motor Company
• Noranda Aluminum

The utilities have Missourians for a Balanced Energy Future with 19 co-chairs!

The poll this week seeks to find out how readers feel about this issue. The poll is on the right sidebar, mobile users need to switch to the desktop layout to vote in the poll.

— Steve Patterson

Readers Leaning Toward Approval of 3/16th of a Cent Arch/Parks Sales Tax

Next Tuesday voters in St. Louis City and St. Louis County will be asked to approve a 3/16th of a cent sales tax increase that will expire in 20 years. The poll results here are not scientific, only reflecting the views of a small segment of the electorate. Early on the “no” votes outnumbered the “yes” votes 2-1, but slowly throughout the week the yes votes gained momentum but not enough to clear 50%.

Q: Do you support Prop P on the April 2nd ballot? Prop P=3/16th of a cent sales tax for Arch/parks

1. Yes 75 [46.3%]
2. No 59 [36.42%]
3. Undecided 14 [8.64%]
4. Not a voter in STL City/County 6 [3.7%]
5. Unsure/No Opinion 4 [2.47%]
6. Other: 4 [2.47%]

The four (4) other answers were:

1. Probably, but not enthused about itAdd as a poll answer
2. No, would much rather see the 3/16 cent sales tax go to lowering Lambert”s debt
3. It’s strange that St. Louis must put so much money into a park it doesn’t own…
4. Yes, but would greatly prefer revenue to be raised by property taxes .

The Post-Dispatch favors the tax increase:

You add 4.225 percent state tax rate to local rates to get the combined sales tax. The base city sales tax is 4.266 percent, slightly higher in some special taxing areas. The base combined state and local sales in St. Louis city is 8.491 percent, 25th highest among those 107 metro areas. If Prop P passes, the base rate will rise to about 8.51 cents. That’s barely noticeable unless you buy a $20,000 car, when it will cost you another $37.50 in sales taxes. (Editorial: Yes on Prop P. Arch-parks-trails tax fixes old problems, creates new opportunities)

I’m still undecided, but leaning toward “yes.”

– Steve Patterson