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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Economic Development Agencies in St. Louis

I have always wondered about Economic Development Agencies. Lately there appears to be great turmoil at the Regional Chamber directed toward its’ President Joe Regan. All I know about that is what I read in the newspapers The Post had an extensive story about it today. What is curious to me is that apparently Mr. Regan’s alleged abusive behavior was also evident in his previous job in Louisville. Why did they hire him? Did they check his background?

More important, what do these agencies accomplish? They provide huge salaries to their staff, but what are the certifiable outcomes? What have been their legislative accomplishments in Jefferson City? I am going to write more about this topic in the future with data to back me up. I would like to hear of your experiences with these organizations

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Boys Hope/Girls Hope

This is another article in a series about individuals and groups doing great work in St. Louis.

Boys Hope- Girls Hope is a non profit that takes a boarding educational experience for inner city kids who are in at risk social situations but academically talented. The facility is housed in Richmond Heights and houses 10 male and 10 female scholars. These scholars range in grade from sixth grade to seniors in high school. They attend school at public and private schools. Many receive scholarships. The facility also provides meals, transportation, and extensive social services. Most of these students end up going to college, and about 65% graduate. Many of the alumni mentor the scholars.

In addition, Boys/Hope Girls Hope provides a non residential program which provides all the same programs except housing.

Low Income Housing Tax Credits

Low income housing tax credits are the primary source of construction and rehabilitation for affordable housing projects. The program has been around since the eighties and is an effort to get private sector involvement in the affordable housing development business. The program uses the equity generated from the sale of tax credits to create low debt on affordable housing projects, thereby supporting lower rents. (This is a vast oversimplification but sufficient for this discussion.)

The program has accomplished much but has significant limitations. It is neither efficient or effective. Let me explain.

The program is not efficient for two reasons. First it is excessively complicated, involving arcane aspects of tax law, legal issues, accounting etc. It is an extremely difficult program for a newcomer to enter. Second, and related, the administrative costs are extremely high. Too much of the money does not go directly to housing but lines the pockets of developers, consultants, syndicators, accountants, attorneys, etc.

Second, the program is relatively ineffective. It does not house the low income people who need it the most. Someone must be able to pay a decent rent to afford the program. Homeless or very low income people cannot participate.

Politically this is not the best time to address the need for a new affordable housing program but the community needs it. The National Affordable Housing Trust Fund is a start but its resources are limited for now. We need a simpler more efficient and effective affordable housing program.

Used of CDBG Funds in St. Louis

The Community Development Block Grant is a program devised by HUD to provide flexible funds to community to meet broad based urban development needs. Cities of over 50,000 people receive the funds on a categorical basis based upon poverty etc. St. Louis is of course one of these cities receiving funds by formula. The use of the funds is to address community development, housing, economic development in a way that the local community plans. The city receives an allocation of millions of dollars a year. The amount has declined but is substantial.

The city has misused much of this funding. Instead of concentrating funding on the areas of greatest need, the funds are divided equally among the 28 wards. This of course waters down the effect and provides the aldermen a slush fund for pet projects, which may have nothing to do with broader priorities of the city. When I worked for the St.Louis Housing Authority we needed city wide targeting of block grant funds to get $28 million from HUD for the Darst-Webbe demolition and redevelopment. This commitment was tough to get. Funds have been used to over rehab houses in very poor locations, or to create non profits which accomplish little. HUD shares in the blame because they have lacked the courage to challenge the city on these policies. I intend to do some detailed reporting on this subject in the future.

Mentoring

I have volunteered as a mentor to young boys on several occasions. In all cases both the mentor and I have found it to be a positive experience 

In a previous post I have commented on the  positive outcomes at St. DLouis city Academy resulting from strong parental involvement. Mentoring can at least be a partial solution to help kids not fortunate enough to have parents or other family members available.  This also applies to prevention if criminal behavior 

I am calling for mentoring programs for all at risk children and families. Much if this can be accomplished by extensive volunteer efforts. Organizations such as Big Brothers/Big Sisters already Dinan outstanding job. Funding will also be necessary. It will be funding very well spent 

Mortgage Interest Deduction

The mortgage interest deduction on federal income tax is by far the biggest housing subsidy available. It far surpasses Section 8, LIHTC, or other forms of subsidy. The major problem with this subsidy is because it primarily benefits higher income households. That is because a tax deduction only benefits households who itemize and those with a more substantial tax burden. Most of the benefit of this deduction goes to households earning over $200,000 a year. This program hurts central cities more than suburbs for the following reasons:

1. As stated before, less expensive houses provide less of a deduction to affluent purchasers. The present system actually provides incentives for middle and upper middle income households to buy more expensive homes which are generally located in suburbs.

2. Renters who are more common in the central city receive not subsidy at all.

The National Low Income Housing Coalition has a United for Homes campaign which attempts to rectify the housing tax deduction issue. The policy they advocated would limit deductions to $500000 of interest, and provide a 15% tax credit to households which would much more adequately address the needs of lower income homeowners. The billions in cost savings would be used to subsidize new affordable housing. Check out the website Unitedforhomes.org

Metrolink 2

An article in the paper said Metrolink ridership is down. Not a surprise. What is a surprise is that this decline is part of a national trend 

Academia and Urban Development

This is a serious question. Does anyone know of any programs or techniques developed in the academic world that has been beneficial to your work? I do not? Nor does a friend of mine who is a student at the Kennedy School. The closest I see is inclusionary zoning which is a good idea but will never work because it is political poison. My friend states that most of the policies that he sees are geared to an eastern United States environment which is not practical in the midwest

Jerry Schlicter

This is the second in my series about local good guys. Jerry is a personal injury attorney who has been quite successful. He is now going after employer based 401-k accounts for overly high administrative fees and too low rates of return

Jerry has accomplished two major things for the city of St Louis and State of Missouri. First he took the lead in getting the State historic Tax Credit program approved. This program has resulted in the preservation of thousands of historical buildings and the generation of the investment of Hugh sums of money in our communities.

Second he started and chairs the St Louis Arch Grants which provide startup funds for promising new businesses. 

What impressed me the most about Jerry is that both these endeavors do not benefit him directly. He is just a civic minded citizen

Government Merger

I applaud the efforts of leaders in our community who are advocating a city/county merger. It is hard for me to imagine how we could be hurt by such an effort. We are wasting billions of dollars structured the way we are 

Equally important is the merger of the various municipalities and taxing authorities in our region. Some of these communities exist primarily off ticket revenue. This level of disfunction has increased the likelihood of racial profiling. Indeed African Americans have been hurt most by this structute. It troubles me that African American communities have resisted change

Short of complete merger how about a combining of functions. Unified police,fire, and recreation departments come to mind 

I am reminded of the adage, no system is do broken someone doesn’t like it the way it is

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