Ferguson doesn’t get much revenue from the Fortune 500 companies in town

Many suburban communities give tax breaks to corporations so that they locate in their community. Ferguson, Missouri is one such case where Emerson Electronics and other businesses don’t pay as much as they might in local taxes:

In 2014, the assessed valuation of real and personal property on Emerson’s entire 152-acre, seven-building campus was roughly $15 million. That value has gone up and down over the last five years as Emerson has sold off some buildings and built others, but it has not exceeded $15 million in the period since the data center was completed. So what happened to that brand-new $50 million dollar building?…

For tax purposes, Emerson’s Ferguson campus is appraised according to its “fair market value.” That means a $50 million dollar solar-powered data center is only worth what another firm would be willing to pay for it. “Our location in Ferguson affects the fair market value of the entire campus,” Polzin explained. By this reasoning, the condition of West Florissant Avenue explains the low valuation of the company’s headquarters.In fact, the opposite is true: The rock-bottom assessment value of the Ferguson campus helps ensure that West Florissant Avenue remains in its current condition, year after year. It severely limits the tax money Emerson contributes to the Ferguson-Florissant district’s struggling schools (Michael Brown graduated from nearby Normandy High School, a nearly 100 percent African American school that has been operating without state accreditation for the last two years), and to the government of St. Louis County more generally. On the 25 parcels Emerson owns all around St. Louis County, it pays the county $1.3m in property taxes. Ferguson itself receives far less. Even after a 2013 property tax increase (from $0.65 to the state-maximum $1 per $100 of assessed value), Ferguson received an estimated $68,000 in property taxes from the corporate headquarters that occupies 152 acres of its tax base—not even enough to pay the municipal judge and his clerk to hand out the fines and sign the arrest warrants.

St. Louis County doesn’t just assess Emerson a low market value. It then divides that number in three—so its final property value, for tax purposes, ends up being one third of its already low appraised value. In some states, Ferguson would be able to offset this write-down by raising its own percentage tax rate. Voters would even be able to decide which services needed the most help and raise property taxes for specific reasons. But Missouri sets a limit for such levies: $1 per $100 of property. As Joseph Pulitzer wrote of St. Louis during the first Gilded Age, “millions and millions of property in this city escape all taxation.”…

Emerson Electric isn’t the only business on Ferguson’s West Florissant Avenue. The street is also home to a number of big box stores including a Home Depot, a Walmart, and a Sam’s Club, located at the city’s northern limit. These companies all came to town in 1997 through something called tax increment financing—known (to the extent it’s known at all) by the acronym TIF. Along with low appraisals and tax abatements, TIF districts are one of Missouri’s principal tools for encouraging new development.

The conclusion here is that these tax policies reproduce the economic inequalities in Ferguson. Hence, the community has to find alternative sources of revenue, such as targeting motorists.

Here is where this gets trickier: if Ferguson didn’t offer these deals, could it have attracted these businesses? If many suburbs participate in the game of tax breaks, wouldn’t someone else offer good tax breaks? Where race matters here is that communities like Ferguson – lower income, transitioning from white to black over recent decades – have to offer even better tax breaks to compete. But, for all of these communities, it is a race to the bottom as a better deal to attract a corporation means less revenue for the city. Still, local politicians can sell the jobs created or the prestige generated. But, as this article points out, the jobs and prestige may not help much in the long run.

What you might need here is a metropolitan wide policy against such tax breaks or TIF districts to reduce the competition. Or, perhaps some tax revenue sharing program where sales tax and property tax dollars are partly redistributed to reflect who shops at or works at these facilities (they all don’t come from the community in which the firm is located). Yet, such policies require a lot of political will and again encounter the problem of race as communities, especially wealthier ones, will not want to share their revenues with others.

Perhaps the drop in property values in Ferguson could prompt change

The fallout from last year’s events in Ferguson, Missouri continues including this look at the changes in property values:

For the city’s 2014 budget, approximately 20 percent of the city’s revenue came from the city’s courts, and 17 percent came through property taxes. But after a Department of Justice report found the courts were profiting off racial discrimination, the State of Missouri took over to implement reforms. Couple that with rapidly falling property values (which are used to calculate owed taxes) and it seems like key parts of the city’s business plan are falling out from under it…

The average selling price of a home in the city has been on a steady decline since the shooting of Brown last August, according to housing data compiled from MARIS, an information and statistics service for real estate agents. Prior to Brown’s death, the average home sold in 2014 was selling for $66,764. For the last three and a half months of the year, the average home sold for $36,168, a 46 percent decrease.

The trend has continued on through this year, with the average home selling for only $22,951 so far in 2015. Another negative indicator: in the eight and a half months leading up to Brown’s death, the average residential square foot in 2014 was selling for $45.82. In the eight and a half months since Brown’s passing, the average residential square foot in the city has sold for $24.11. That’s about a 47 percent downtick in one of real estate’s core indicators.

In the suburbs, where quality of life (including factors like crime, the quality of the houses, performance of the local schools) is paramount in (1) influencing housing values and buying and selling real estate and (2) building a tax base through attracting businesses and organizations, infamy is not a good thing. But, given the patterns of local treatment of people by police in the area, it is hard to see how this wouldn’t affect housing values and the tax base. When given options across the suburbs of St. Louis, how many homeowners or companies would choose to move to Ferguson? And, if we’re honest, hitting suburbanites where it really matters – property values and their tax base (the double whammy of housing and land values going down while property taxes may need to increase to close the gap) – may be what is needed to prompt change.

More protesters taking to the highways

Protesters around the world have moved to highways where they very visibly stop traffic:

In L.A., some of those demonstrators were arrested after shutting down traffic in both directions on the 101 Freeway. Another group of protesters flummoxed traffic downtown by laying down in the intersection of Cesar Chavez Boulevard and Grand Avenue.

They were not alone. Protesters took to I-95 in Providence. Highway 55 in Minneapolis. I-75 in Cincinnati. I-980 in Oakland. I-44 in St. Louis. I-35 in Dallas. And the Lincoln Tunnel and the West Side Highway in New York.

Across the nation, many of the protests that continue to simmer have moved from parks, plazas and civic centers to freeways and highways. The ongoing protests reflect national outrage following a grand jury decision that has vexed critics, to say nothing of the many black lives cut short in police shootings. Yet the move to the highways is something else: an evolution in the language and strategy of civil disobedience.

This isn’t just an American phenomenon:

It was late in September that protesters first took a major freeway in Hong Kong’s financial district. The protests gained critical mass more than a month after Brown’s death in Ferguson. When Hong Kong demonstrators clashed with police, they appeared to adopt the “Hands Up, Don’t Shoot” posture made familiar after weeks of protests in Ferguson.

This updates a post from a month ago about protestors blocking traffic in Atlanta. As noted before, this raises some interesting questions about public spaces and traffic safety. American drivers tend to like wide roads with more lanes because they think this will help them get places faster. (This is not the case on highly congested highways where simply adding lanes tend to increase the number of cars on the roads. Width does seem to matter on more normal streets where width tends to give drivers the impression they have some margin of error to go faster.) Highways tend to be some of the most empty places we have: no pedestrians, no bicycles, almost no one out of their car unless something has gone wrong. Yet, protesters blocking traffic can draw the attention of a lot of people at once both on the roads and from aerial shots that show the power even a relatively small number of people can have.

Is protesting on a highway as symbolic as some of the protests in shopping malls in the St. Louis areas? Does cutting off America’s transportation “arteries” make the same point as protesting in temples of capitalism? I’m not sure but it certainly is more unusual given the typical functions of highways.

When American protestors take to the highway

Americans like their highways free of obstructions. So, what happened recently when a group of protestors blocked one of Atlanta’s main highways at rush hour?

That was what made the images of last week’s protest on the road known as the Atlanta Downtown Connector so jarring. A few dozen individuals, including members of the group Southerners on New Ground, walked out onto that roadway and laid down a banner reading “#BlackLivesMatter.” This was one of several actions around the country protesting police violence and mass incarceration, and expressing solidarity with those who have been demonstrating in Ferguson, Missouri, over the killing of black teenager Michael Brown by white policeman Darren Wilson…

The protesters blocked traffic on I-75/85, one of Atlanta’s major commuter routes, for only a short time, but they managed to get the attention of the drivers who rely on that route before the police cleared them from the roadway without making any arrests…

Reaction to the protest was decidedly mixed among Atlantans, with some people going on Twitter to criticize the action with comments such as, “I support the protests in #Ferguson, but why are they shutting down a highway in Atlanta so that BLACK folks can’t get home from work?” and “Look, I get standing in solidarity w/ #Ferguson, but #Atlanta traffic is already bad. So yeah, if you’re stuck in that, I’m POd w/ you.”

Blocking city streets has been an urban protest tactic since there were urban protests…

Blocking major roads in the United States, however, is much more rare. Most notably, the Selma to Montgomery marches that were pivotal in the Civil Rights movement of the 1960s used U.S. Route 80, a move that was upheld in a ruling by Federal District Court Judge Frank M. Johnson, Jr. His opinion was deeply controversial at the time: “The law is clear that the right to petition one’s government for the redress of grievances may be exercised in large groups,” said the judge, “and these rights may be exercised by marching, even along public highways.”

While this summary doesn’t give many details, I would be really interested to hear how the police handled this. Any pedestrian activity, let alone an intentional protest, on a major highway would often be viewed as a concern. At the same time, this is a good way to get the attention of a lot of people for the unusual location of the protest.

The article ends on a note that such protests help make highways less removed from normal life. This is due to a long American history of generally wanting their roads to be for automobile travel. This means bicycling, walking on nearby sidewalks, slow vehicles, and any other impediments (including natural ones) are often scorned. Such thoughts and policies helped lawmakers and politicians ram highways through major cities and urban neighborhoods in the mid-1900s. In contrast, our cities don’t have as many public pedestrian spaces like many European or other global cities which are full of plazas, parks, and wide sidewalks.

 

As a suburb, Ferguson is not that unusual

The particular events in Ferguson, Missouri may have been particular but its social context is not that unusual:

Ferguson’s version of the story has several layers. Many of the aviation companies that were once a source of good jobs have shut down or moved away, leaving behind limited employment opportunities, especially for workers without a college degree. The tax base has shriveled, leaving the city dependent on fines and fees — including traffic tickets — for a disproportionate share of its funding. According to the city’s 2014 budget, Ferguson expected to take in $2.7 million in fines and fees in fiscal 2014 — 14 percent of the city’s revenue, up from 8 percent five years earlier.

The recession added to the challenges. Parts of the city were hit hard by the foreclosure crisis; of the 10 Missouri zip codes with the most seriously delinquent mortgages, four are at least partly in Ferguson and three others are in other North County communities. That has turned formerly owner-occupied homes into rentals, often with absentee investors as landlords. The number of Ferguson residents living in poverty has doubled since 2000; its poverty rate, at 24 percent, is one and a half times the national mark.

In all of that, Ferguson is typical of inner-ring suburbs around the country. It isn’t even a particularly extreme example. Ferguson’s schools are struggling, but unlike some surrounding districts, they retain their accreditation. Its foreclosure rate is high by Missouri standards, but is nowhere close to those in Florida, Nevada and Arizona, states that were at the center of the housing crisis. North County has lost much of its manufacturing base, but retains several large employers, including a multinational manufacturer, Emerson Electric Co., and a fast-growing prescription drug provider, Express Scripts.

Ferguson’s experience with poverty is especially typical. St. Louis’s suburbs now have more people living in poverty than St. Louis itself, a pattern repeated across the country. Concentrated poverty of the kind found in southeastern Ferguson is also becoming more common in the suburbs. According to researchers at the Brookings Institution, the number of suburban neighborhoods with poverty rates above 20 percent has more than doubled since 2000.

casselman.ferguson.0826-chart

A familiar story: deindustrialization and a loss of manufacturing jobs, a declining tax base, changing demographics, plenty of suburbanites living in poverty. And a pressing question: what can be done to reverse the fortunes of such communities? These sorts of inner-ring suburbs are not going to be the first choice of many gentrifiers and it can be difficult to switch economic emphases. One possible solution proposed by some is metropolitanization, sharing taxes more across communities in a metropolitan area. However, this requires buy-in from wealthier suburbs who often reject the notion that should provide help to less well-off suburbs.

It will be interesting to return to Ferguson in 5, 10, 20 years to see what has happened. While the shooting of Michael Brown led to a lot of attention, it won’t necessarily alter the course of the community.

The social networks of white Americans are 93% white

In trying to explain why white Americans don’t see racial issues in Ferguson, Missouri, one writer points to this: white Americans tend to interact largely with other white Americans.

Drawing on techniques from social network analysis, PRRI’s 2013 American Values Survey asked respondents to identify as many as seven people with whom they had discussed important matters in the six months prior to the survey. The results reveal just how segregated white social circles are.

Overall, the social networks of whites are a remarkable 93 percent white. White American social networks are only one percent black, one percent Hispanic, one percent Asian or Pacific Islander, one percent mixed race, and one percent other race. In fact, fully three-quarters (75 percent) of whites have entirely white social networks without any minority presence. This level of social-network racial homogeneity among whites is significantly higher than among black Americans (65 percent) or Hispanic Americans (46 percent)…

For most white Americans, #hoodies and #handsupdontshoot and the images that have accompanied these hashtags on social media may feel alien and off-putting given their communal contexts and social networks.

If perplexed whites want help understanding the present unrest in Ferguson, nearly all will need to travel well beyond their current social circles.

This is a good use of social network data. We know that who people interact with and who they are connected to matters. Want more evidence in a pretty easy read? Read Connected, which I have my Introduction to Sociology students read. If I remember correctly, that book addresses all sorts of areas where social networks matter – health, economics, politics, emotions, etc. – but doesn’t address race. Yet, this all makes sense with what we know about how easy it can be for whites to ignore race in America since they aren’t always personally confronted with race or live in places where race is consistently a social issue. And, interacting with people you know like family or coworkers or neighbors matters a lot more than getting more impersonal information from the media which some whites argue is always talking about race.

One other thought: social networks are also related to where people live. Given the propensity of white Americans to move to places that are largely white, residential segregation plays into this.

Rapidly growing suburban poverty illustrated in Ferguson, Missouri

Communities like Ferguson, Missouri illustrate growing rates of poverty in many American suburbs:

In Ferguson, Missouri, a community of 21,000 where the poverty rate doubled since 2000, the dynamic has bred animosity over racial segregation and economic inequality. Protests over the police killing of an unarmed black teenager on Aug. 9 have drawn international attention to the St. Louis suburb’s growing underclass…

Such challenges aren’t unique to Ferguson, according to a Brookings Institution report July 31 that found the poor population growing twice as fast in U.S. suburbs as in city centers. From Miami to Denver, resurgent downtowns have blossomed even as their recession-weary outskirts struggle with soaring poverty in what amounts to a paradigm shift…

Ferguson, once a majority white community that’s now about two-thirds black, highlights that dynamic. Coinciding with the decline in white population is a rapid rise in poverty since 2000, a period that includes the 18-month recession that ended in June 2009…

“Looking at the neighborhood poverty rates, it’s striking how much has changed over a decade,” Kneebone said. “In Ferguson in 2000, none of the neighborhoods had hit that 20 percent poverty rate. By the end of the 2000s, almost every census tract met or exceeded that poverty rate. That’s a really rapid change in a really short time.”

As the Brookings Institution has pointed out and nicely summarized, there are now more people in poverty in suburbs than cities. Of course, just as in cities, the poor in suburbs aren’t evenly distributed across neighborhoods or communities. The demographic shift in Ferguson is common: a community adjacent to or close to the big city – an inner-ring suburb – that offers more low-skill jobs or cheaper housing experiences an influx of non-white residents. In response, whites in the community leave, just as they tended to do in urban neighborhoods during “white flight” in the decades after World War II. The transition period can be tough: these suburban communities aren’t prepared to provide public services, whites remain in powerful local positions even as they represent a smaller percent of the residents, and less wealthy residents can contribute to a declining tax base. All the while, wealthy suburban communities can isolate themselves through zoning, restricting bike lanes, limiting affordable housing, and other means.

In other words, police violence is still limited in most suburbs but the growing issues of class and race are only going to continue to grow in many suburban communities.