Socially Acceptable Ways to Decrease Housing Affordability #mpls2040

One argument from anti-Minneapolis 2040 Plan that I find strange is the argument that multi-family housing doesn’t improve affordability.

As I see it, the choice we’re facing in neighborhoods where single-family home prices have appreciated significantly is a choice between watching smaller homes and homes in disrepair be torn down and replaced with large single-family homes or similarly sized multi-family properties. The affordability difference between those choices is the cost to live in a unit of a duplex, triplex, or fourplex, vs a 2000+ square foot single-family home.

If affordability was truly a concern for the anti-Minneapolis 2040 plan, there are other things they could do to help keep our existing housing stock somewhat affordable. Here’s a quick list:

1. Ban additions.
2. Ban adding new bathrooms.
3. Ban converting from 1-car to 2-car garages.
4. Ban new appliances.
5. Ban solar panels.
6. Ban upgrading landscaping.
7. Ban adding anything stainless steel.
8. Ban adding anything granite.
9. Ban adding decks.
10. Ban adding patios.
11. Ban adding planter boxes.
12. Ban converting large bedrooms to two bedrooms.
13. Ban finishing basements.
14. Ban finishing attics.
15. Ban upgrading old windows.
16. Ban upgrading leaky toilets.
17. Ban upgrading leaky doors.
18. Ban upgrading old garage doors.
19. Ban upgrading old siding.
20. Ban new kitchen cabinets.

This list probably seems pretty ridiculous. Who would oppose changes like that? The point is that single-family homeowners who’re opposed to the Minneapolis 2040 Plan have no problem with people maintaining and upgrading their homes in ways that will increase their home’s value and decrease the home’s affordability.

However, if a property owner increases their property’s value by converting or rebuilding it to accommodate more than one household (another way to increase a property’s value within the same square feet), there is a risk that their entire neighborhood may collapse into the nearest lake or river.

Twins Stadium Financing Trends – 2018 Edition

Twins game attendance appears to be continuing on its steady decline. The 2018 projection is based on attendance keeping up with the first half of the season.

Our costs to subsidize Twins fans remain the same regardless of how many people show up, so the per ticket sold subsidies continue to grow:

It would be nice if more people would show up to our publicly subsidized sports venues once the projects become a financial reality.

Ten Thoughts on Minneapolis 2040

I’m no expert on the Minneapolis 2040 planning goals but I feel like I’ve been paying attention. I’ve read news stories, blog posts, NextDoor comments, attended community meetings and discussed this topic with friends and neighbors.

Here are a few observations based on those experiences:

1. The vast majority of people opposed to the upzoning proposals are far older and whiter than the city overall. The main issue they have is a proposal that would allow people to redevelop their single-family home into a duplex, triplex, or fourplex, as long as they stayed within the height and area restrictions currently in place for single-family development. If you’ve ever been to my house, you may or may not have noticed that the property next to mine of nearly identical size is a high/low duplex. That property would is illegal to build under current zoning. It turns out that older white people feel threatened by properties like that one.

2. If we maintain the status quo, people will still be able to remodel or tear down and redevelop single-family properties. They’ll continue to be restricted to building a single-family home, so – as we’ve seen in Linden Hills – we’ll see smaller and/or run down properties replaced with homes that maximize square footage on city lots. As a city, we’ll end up with more expensive housing stock but it won’t move the needle much on the number of city residents. Granted, there is a greater chance of a family of 4+ living in a 2,000 square foot home than a less than 1,000 square foot home so there could be some growth is residents.

3a. Affordability. Some eyeballing of projects in Longfellow and Linden Hills suggests to me that redeveloping a tear-down as a new single-family home more than doubles the property’s value. For example, a property selling for $200k or less in Longfellow will likely be worth $400K or more once redeveloped as a new, larger, home. In Linden Hills, the same math applies but with around a 50% bump for both of those figures. We do not keep neighborhoods affordable by doubling home prices one lot at a time.

3b. Affordability. If the same square footage is used to build a duplex, the property’s overall value may double but the cost to live on that property will remain near where it was before. This doubles the number of households who can afford to live on that property and in that neighborhood rather than pricing them both out.

4. Racial history. Like many cities, Minneapolis had racial covenants on many properties that made it illegal to sell your property to anyone who wasn’t white. Once that was outlawed, we switched to discriminating based on lending practices such as redlining that made it impossible for non-white people to receive government-backed financing on mortgages for properties in white neighborhoods. Once that was outlawed – and white people had spent a few generations building out neighborhoods in desirable parts of town – cities adopted zoning ordinances that banned multi-family housing. It’s the “We’re not racist. We just don’t want to live around people who don’t happen to be as wealthy as we’ve become.” system.

5. Liberals not walking the walk. I see many older white people who’re opposed to the Minneapolis 2040 plan who absolutely hate Trump, are positive that climate change is real, understand that college students are saddled with a ton more debt at graduation than previous generations, and would absolutely not consider themselves to be racist. Yet, when they have a chance to walk the walk by adopting a real-world change that could help address these issues they aren’t being proactive. They’re being vehemently reactive.

6. Population trends. I hear some people opposed to changing zoning saying that young people will regret the loss of single-family homes once they have families. What’s changed since people who’ve paid off their mortgage bought their houses?

– The average family size is declining (not rapidly, but it is)
– People are getting married later
– More people are divorced
– More people are living longer as empty nesters
– More people are living longer as widows or widowers
– More people are hamstrung with college loans
– The cost of having one infant in daycare is similar to a mortgage payment on a $250k home.

Many people like this would like to live in safe, quiet, neighborhoods, but don’t need – or can’t afford – a single-family home. These are people who’re being pushed out of neighborhoods by people opposing change (while, hypocritically, putting All Are Welcome Here signs in their yards).

I have heard from some older people who think it’s impossible to raise a child in Minneapolis without a backyard. As someone with young kids and basically no backyard, I’ve found that it’s not necessary to have a private park in a city that has so many public parks. We walk, bike, or drive to parks with different amenities, and enjoy interacting with neighbors and friends from schools. We do have some areas of town that are, sadly, underserved by parks. They also happen to be where old white people seem to be more interested in corralling renters.

Housing that allows people to save money, spend less time maintaining a yard, and on a block that’s safe for kids to bike around is a good thing.

7. Radical change? Think about this: If the most run-down home in Kenwood is torn down and replaced with a new fourplex (assuming the lot is large enough to accommodate that) what type of neighbors do you think would live there? The cost of housing in Kenwood would still be much higher than the city average so you’d end up living next to people who can afford something like $1,800 or more in monthly rent payments? Is that threatening to someone with a $4,000+ mortgage?

8. Less affluent neighborhoods. So far, most of what I’ve discussed has been from the perspective of Minneapolis’ more affluent neighborhoods from Kenwood to Longfellow, from the lakes, along the creek, to the river. What about other neighborhoods that haven’t had the same upward pricing pressure? At the other extreme would be neighborhoods with empty lots today. There are lots available in Minneapolis for under $25k in some neighborhoods. There are quite a few factors contributing to this. Quality of neighborhood schools, safety, expectations of home appreciation, and racism are some examples. But, another one is that it’s tough to justify building a single-family home on an empty lot if the home can’t sell or rent for what it costs to build. If people had the option to build something other than single-family homes on those lots, perhaps the market would find ways to develop some of them without subsidies? It would be great to see additional efforts being made to redevelop those lots – including public investments – and I definitely don’t believe that rezoning alone will solve all problems.

Granted, we would have more money to invest in neighborhoods in need of help if old white people were willing to accept a few more neighbors.

9. Affordable housing vs housing that’s affordable. I have seen some cases of people talking past each other regarding affordable housing. Here is HUD’s definition:

AFFORDABLE HOUSING: In general, housing for which the occupant(s) is/are paying no more than 30 percent of his or her income for gross housing costs, including utilities. Please note that some jurisdictions may define affordable housing based on other, locally determined criteria and that this definition is intended solely as an approximate guideline or general rule of thumb.

If a neighborhood is already unaffordable by that criteria, redeveloping a single-family home as a McMansion or duplex will likely not solve that problem. However, redeveloping the property into housing that’s cheaper than a McMansion (the only type of housing we’ll see replacing tear downs under current zoning) provides more affordable housing than a McMansion provides, and does so for more people.

10. What are the alternatives for zoned-out future residents? If we price out first-time homebuyers via exclusionary zoning they’ll still need a place to live. Some will “drive until they qualify” for a mortgage, leading to more carbon being spewed into the city as they commute in, more complaints about congestion, and more complaints about parking. These are self-inflicted wounds caused by self-described Liberals. They’re less concrete changes to see than having a new, nearly as wealthy, renter as a neighbor but they’re no less real. We can do better.

10 Thoughts on The Iron Range’s Current Challenges (and One Idea)

Here are some things I think I understand about the iron industry and its impact on Minnesota’s economy.

And, here is where this post is going: I’m all for providing government assistance to people going through tough times, but I really want to see viable long term outcomes.

So, below is my take on what I know based on what I’ve read about the challenges facing the Iron Range. It’s rather bleak. But, I do include an example near the end of one program that appears to be helping people find comparable wages in a growing and less dangerous industry.

1. International iron prices are low. That hasn’t happened overnight:

Iron Prices

2. It looks like they’ll likely stay low for a long time.

Global iron ore demand will contract over the 2020s as steel consumption growth in China peaks, according to Citigroup Inc., which reduced its long-run price forecast for the raw material by 32 percent.

The long-run estimate was cut to $55 a metric ton from $81 as the world’s major mining companies added more cheap supply, analysts including Ivan Szpakowski wrote in a report on Wednesday. From 2016 to 2018, prices may average $40, it said.

3. Aaron Brown has reported on his blog that the cost of iron production in Minnesota’s mines is in the $40-50/ton range. If that’s the case, it’s tough justify running a mine if you can’t sell what you’ve mined profitably now or possibly for years in the future.

4. Large iron mines in other parts of the world are capable of mining iron at half the cost of Minnesota’s mines. Differences in the iron that’s mined, proximity to large manufacturing countries, and huge investments in automation (replacing workers) all play a role in the cost differences.

Australia: The Low Cost Leader

The cost of producing iron ore in Australia is substantially lower than the global average due to the abundance of high-grade hematite ores (iron content of 62.5% and above) and extensive infrastructure facilities. Hematite ores (also known as ‘direct shipping ores’) can be fed directly into iron-making blast furnaces and require relatively little beneficiation. As such, production from these deposits tends to place miners at the lower quartile of the cost curve. We believe mining giants such as Rio Tinto, BHP Billiton and Fortescue Metals will continue to enjoy the lowest cost of operations and remain the largest players in the global seaborne market. While the escalation in operating cost will be a major drag on miners’ profits over the coming years, the high quality ores and geographical location of Australia will keep a lid on cash costs and places the country as one of the best places for iron ore investment.

5. Each generation of mining brings technological improvements. For example, haul trucks have gotten bigger over time, which leads to fewer drivers. I found a history of haul truck sizes on a truck manufacturer’s website in Belarus (BELAZ) and used their milestones to chart out the changes:

image (9)

6. Trucks can now drive themselves. This is from Rio Tinto’s website:

Autonomous haulage systems (AHS): We are the world’s largest owner and operator of autonomous haulage system trucks. We have 69 autonomous trucks in operation at our Pilbara sites moving high grade ore and the number of trucks is set to grow in coming years. Implementing autonomous haulage means more material can be moved efficiently and safely, creating a direct increase in productivity.

7. Drilling is becoming automated:

Automated drilling system (ADS): In 2008, our automated drilling system was successfully trialled at our West Angelas mine in preparation for deployment across our Pilbara operations over the next few years.

8. Rail hauling is becoming automated:

AutoHaul®: AutoHaul® is the world’s first fully-autonomous heavy haul, long distance railway system, a key part of our Mine of the Future™ programme. We have invested US$518 million in autonomous trains for our Pilbara rail network.

They have a 1,000+ mile rail network.

9. There are accusations that Minnesota’s mining industry is being hurt by illegal dumping (charging lower prices on international markets than domestically for iron). Rep Melin made this accusation on Twitter:

Screen Shot 2015-11-25 at 11.19.01 AM

I asked her if what’s happening is truly illegal:

Screen Shot 2015-11-25 at 11.19.54 AM

I never heard back. I don’t know if the legal definition of dumping is really happening, but assumed someone from the Iron Range making that accusation might. Dayton has asked congressional legislators to look into this, but I haven’t found statements from anyone saying, definitively, that the reason prices are low in the USA is due to foreign countries selling iron at deflated prices to the USA.

It seems like market realities of the first eight points on this list would hurt Minnesota’s mining industry with or without illegal dumping. If we can’t produce iron below market rates, we can’t produce iron. That seems to be supported by the head of the IRRRB, who told the StarTribune last week:

Mark Phillips, commissioner of the Iron Range Resources and Rehabilitation Resources, said this is the worst downturn to hit Minnesota’s taconite industry since the 1980s.

“There is just a glut of iron ore in the world,” he said. “It’s the first time in my memory where the U.S. economy is relatively healthy and that the steel and iron industry is in this bad a shape. Usually, we ride with the economy. That is the sad point about this.”

Basically, it sucks, but it’s not due to overseas evildoers but worldwide changes to both supply (increasing) and demand (decreasing).

10. Extending unemployment benefits for laid-off workers seem like a short term solution to a long term problem.

Senate Majority Leader Tom Bakk on Tuesday endorsed Dayton’s proposal, saying in a letter to the governor that he is “receptive to negotiating the parameters” to aid several hundred steelworkers who are expected to exhaust their unemployment benefits before lawmakers convene in March.

Dayton said in a news conference that “it’s a very severe situation up there,” and warned that without legislative action, several hundred steelworkers will “be subjected to that additional financial hardship, in addition to the emotional distress of not being employed.”

This is a very difficult situation. People were laid off. The reason they were laid off is due to world-wide depression in the price of the product they help product. The price of the product they produce doesn’t appear to be forecasted to rebound to anywhere near the levels needed to return the industry on the Iron Range to where it was for possibly half a decade if the analysts cited above are correct.

And, if prices actually do rebound, mines will likely return with a need for less workers per ton of iron mined than they needed in the past in order to compete with mines that are producing iron at half the cost due to higher quality mined iron and serious automation. There is simply no way that the people on unemployment will be returning to the jobs they’ve had in the past.

What can be done?

The inspiration for this post was an article I recently read about a similar situation for coal miners. “Canary in the Code Mine” is a story about a town in Kentucky that faced similar challenges to the Iron Range. In fact, their challenges may be worse for coal because iron likely has a better chance of rebounding at some point.

A guy in this community was insulted by comments by Michael Bloomberg, who funds programs to kill coal burning power plants (existing and planned). It wasn’t his opposition to coal burning power plants that really motivated the guy in Kentucky. It was a patronizing comment by Bloomberg where he said that coal miners couldn’t be retrained as coders. Long story short (it’s worth a read), the community launched coding classes to retrain miners in an industry with similar pay, but less risk of lung cancer or suffocation in a mine.

They paid people $15/hr to go through coding training. They vetted people to determine if people were logical thinkers and capable of sitting at a desk for 8 hours/day. They also trained them on how to communicate over chat with white collar nerds (their new peers). It turns out that blue collar nerds have some good ideas on programs to built that white collar nerds would never consider. Sure, an app for on-demand massages (yes, this exists) is likely a decent business, but there are some more practical things that could also be built if people with experience in blue collar industries had some coding experience to tie it all together.

This is a program that would be easily replicable anywhere. Their training was done by leveraging Lynda.com. Lynda.com, for those who aren’t familiar with it, is a great website for people interested in learning just about any piece of software or programming language. Here is what it costs:

Screen Shot 2015-11-25 at 2.54.52 PM

This article is around 89% pessimistic about the future of the Iron Range based on the economic realities of the iron mining industry and the idea that emergency extensions of unemployment benefits can solve long term problems.

I’m also trying to be optimistic since there are real ways to create new skills for motivated people interested in changing industries and covering their mortgage while potentially working from home or at new startups that pop up to solve problems using the newly developed skills.

Coding as a new opportunity undersells the transferrable skills from mining jobs to IT. Project management is a universal skill. The article linked above mentions that errors in mining can blow up the wrong side of a mountain while errors in programming are more of a fail fast and fix situation. While that’s true in some cases, there are many industries where attention to detail is absolutely critical to a project’s success. People in project management roles don’t need to know how to code, but they need to understand what’s possible in what time frames (by asking questions). Instead, they need to know how to scope out a project, manage people, ask good questions, communicate well, and try to hit deadlines.

For some Rangers, the leaving the Iron Range is going to be a more rational choice. That was the same choice made by the people who moved to the Range 100 years ago. Perhaps some laid-off workers will see the writing on the wall and see the future for their families in growing communities elsewhere? They wouldn’t be the first to make that choice. And, based on what I’ve seen with Rangers in the Twin Cities, they never fully leave The Range behind since everyone in Minnesota is within two degrees of separation of a Ranger.

Energy Policy Questions Too Hot for @LibertyTPP_MN to Handle

The Liberty Tea Party Patriots hosted a talk about energy at their monthly meeting last night. Energy is an important topic that’s certainly worthy of discussion by any group. Here’s how this group promoted their event:

Tea Party Patriots Energy Event

I’m not sure why renewables in is quotes. I suppose is someone doubted that the sun would keep shining or the wind blowing in Minnesota, that would make sense. However, there may be larger issues to discuss than our energy mix if that’s what our future looks like.

This event was hosted in Champlin, so close to the largest producer of both energy and pollution in the State of Minnesota. Xcel’s Sherco power plant. Xcel announced last month that they’re going to transition two of the three coal burning generators at the plant (the older, dirtier, of the three) to a new cleaner-burning natural gas powered generator. And add a large solar array. And, make up for some of the other energy differences with additional wind and solar.

I found the premise and setup of this event fascinating. When I hear the term “Freedom” followed by opposition to locally produced energy, I get confused. When I went through the process of researching solar panels for my home, I watched a lot of YouTube videos on DIY installations. One thing most of those videos had in common is they were done by right-wing Tea Party type individuals who consider themselves Preppers. The Survivalism crowd is full of people who prepare for doomsday scenarios. Prepper tactics include storing food, having a fall-out shelter, an arsenal, or off the grid power generation. To me, these vary in rationality, but something like solar panels can benefit a person whether or not a doomsday ever arrives, so there’s less downside than, say, having a ton of guns around the house.

Frankly, as long as a huge percentage of the state’s energy comes from a single location, we’re more susceptible to doomsday energy issues than if energy is generated in a highly distributed format (and closer to it’s end use). As a bonus, less energy is wasted in transmission. So you’d think freedom loving prepper types would be all over solar in general. However, that’s not necessarily the case. I get the impression the best ideas can suddenly become the worst if the perception is that there were Obama’s idea.

So, I thought it might be interesting to toss a few freedom-centric energy questions into the mix with the Liberty Tea Party Patriot crowd. I did this by posting to their Facebook event’s page last night (typos are all mine):

Questions for Liberty Tea Party Patriots

Since that was a public post, it started to pick up some views and likes from people I know and don’t know. I didn’t receive an immediate response from any members of the Liberty Tea Party Patriots group.

Then something odd happened.

Deleted Post on Liberty Tea Party Patriot's Event Page

Too hot to handle? It’s not like I brought up global warming. I tried to focus on the aspects of locally produced distributed energy generation that would appeal to people who claim to value freedom. The kind of stuff that right-wing Tea Party folks in Georgia used to lobby for more solar energy purchasing by their local utility.

In this case, I get the impression that any idea coming out of the Obama administration is automatically bad. And, that people living near the Sherco plant want government to protect the pollution importing, centralized power producing status quo since there are jobs in those communities tied to the that plant.

It’s a shame that people in that community don’t seem to be able to see a future where there are more energy industry related jobs installing and maintaining locally produced – distributed – micro power plants on houses, offices, and farms, but that’s where things are heading. And, as we go there. As we create a distributed power grid that’s less susceptible to catastrophic outages at huge power plants, with power produced within the communities it’s used (even on the same property in some cases) there will be no going back. We won’t one day say, “You know what, get Wyoming on the phone. Let’s go back to burning trainloads full of coal in Minnesota.” It’s the kind of thing that we already know is ridiculous, and will look only more ridiculous in hindsight.

@Twins on Pace to Set New Attendance Record

This tweet from Bob Collins reminded me to take a look at how attendance is looking at the Twins’ latest publicly financed ballpark:

Screenshot 2015-09-18 08.58.35

If we, generously, average out the first 72 home games to create a projection for the full season, things will shake out like this:

Twins Attendance by Year
*Projected by averaging first 72 games.

That puts 2015 on track for a new record by 9,939 tickets.

But, this isn’t a mathematical certainty. The Twins just need to find 10,200 more people per night than they found last night for each of the last 9 games of the 2015 regular season to avoid their continued streak of attendance declines.

Or, if the Twins sold out the next 7 games, fans could take the last two games of the year off knowing that it’s only the second worth year for attendance at the latest publicly financed ballpark. At this point, there is a mathematical lock on this being either the worst or second worst season for attendance yet.

Assuming attendance stays pretty much on track, here’s how the per ticket subsidies continue to grow.

image (55)
*Projected by averaging first 72 games.

Same costs. Fewer fans.

How @patgarofalo, @jpetersburgmn, & @vjensensenate Blocked Decreased Asthma Rates

As I write this, it’s hot outside. It’s also sunny. I have solar panels on my house that are currently generating around 15X more energy than my house is consuming since my air conditioner isn’t running. I don’t always generate 15X. There are times when I generate nothing, like overnight. But, when demand is highest, my panels are cranking.

The excess electricity generated by the panels on my roof is contributed to the grid. Electricity flowing upstream from my house likely flows downstream to meet the nearest power needs, so it’s likely consumed by other residents of my block. It doesn’t have to route all the way back to a central location. It goes up through my meter and down through other power users’ meters.

This power is being consumed during peak demand. For people who choose time of day pricing, Xcel Energy charges them 18 cents per kilowatt hour for that energy. That’s 6X more than they charge in the middle of the night when demand is far lower. Supply and demand applies to energy production/consumption, so energy contributed to the grid during peak energy demand is worth a lot.

Here’s pollution industry ALEC chair, Rep. Pat Garofolo’s, latest take on why residential solar users are freeloaders:

“Under the current system, people who have distributed generation, solar panels on the roof or their own personal windmills, they’re able to use the grid without charge and this means higher rates for other consumers,” he said. “We fixed that so it will no longer be a problem moving forward.”

Think about this.

Energy generated within a neighborhood does not rely upon this to get power from one house’s roof to nearby homes:

High tension  Power lines heading east in the direction of the Twin Cities partially shroud the Monticello Nuclear Genedrating Plant, seen in background, 1/2 mile or so  east in rural Monticello Tuesday afternoon March 6, 2012.  (Pioneer Press: John Doman)
High tension Power lines heading east in the direction of the Twin Cities partially shroud the Monticello Nuclear Genedrating Plant, seen in background, 1/2 mile or so east in rural Monticello Tuesday afternoon March 6, 2012. (Pioneer Press: John Doman)

Or this:

ericroper_1398354092_Substation7

Or this:

transformer_on_pad

Or, more train cars of imported pollution from Montana:

8094023325_5cfe96c2c1_b

Nor does it lead to more deaths from even more workers suffocating from inhaling VOCs in North Dakota so we can burn natural gas to meet peak demand.

But, Pat Garofalo says people who put solar panels on their homes are freeloaders. And, he got enough people to agree with him to change the state’s laws so power companies could charge residential solar users ridiculous fees to cover the costs of the grid their solar systems actually alleviate pressure from.

A pollution industry spokesperson, Kristi Robinson, who represents one of Minnesota’s polluting companies is apparently threatened by the one in 300 homes who have panels on their homes in Owatonna.

Robinson said another concern is that some generate far more energy than they need as a way to make money.

“They’re not offsetting anything,” she said. “They’re putting multiple small generation up side by side with no load to offset it. In the eyes of the utility, that wasn’t the intent of net metering.” With the law change, “we’re able to dial that back a little bit, where they will also be paying their fair share of the distribution system.”

This argument is insane since there is no net difference between one person with a huge roof putting a ton of panels on it compared to multiple people putting the same number of panels on their roofs in aggregate.

So, let’s assume that you live in Owatonna and are considering putting solar panels on your house. It’s about to get far more expensive for you to do it there. But, you have options. It’s time to consider moving out of Rep. Petersburg and Sen. Jensen’s house and senate districts. Move into Xcel Energy’s territory so you can generate your neighborhood’s peak electricity more affordably.

Shifting Retail Buying Patterns Doesn’t Create New Jobs

When a company worth $200 billion decides to build a warehouse on land owned by billionaires, you know there will be subsidies. Today’s example comes from Shakopee where Amazon is planning to build a distribution center on land owned by the Pohlad family.

Amazon’s very good at what they do. They know how to put stuff in boxes and get it to your door quickly and reliably better than anyone. It’s really behavior-changing for those who’ve become Prime members where you get free 2-day shipping on purchases for $99/yr.

Behavior-changing retail is great for people who appreciate the convenience. I sure do. But, let’s not pretend that it creates new jobs. When I buy paper towels on Amazon, I clearly didn’t buy them somewhere else. I still use the same amount of paper towels as I did before, so there was no net increase in sales. It’s just a shift from purchasing at one store to another.

Because of this, spending $5,000 per job to “create” 1,000 “new” jobs is really a case of spending tax dollars to accelerate a shift of Minnesota’s retail jobs to one company based in Seattle. It’s certainly good for Amazon, but I don’t see how there will be a net gain in jobs from shifting where people buy the same stuff they’re already buying from one retailer to another.

In fact, it seems possible that we’ll end up with fewer jobs in retail after this since Amazon is so efficient at what they do. For example, Target’s a very efficient company by retail standards, but Amazon has $20 billion more in sales than Target with nearly 200,000 less full time employees last year. Amazon doesn’t have many cashiers or people restocking shelves.

Here are the winners and losers from this type of subsidy.

Winners:
Amazon, due to corporate welfare benefits.
The Pohlad Family, due to corporate welfare benefits.
People who live near Shakopee who can work in Shakopee rather than commuting elsewhere.
People who think the income and wealth gaps in America aren’t large enough already.

Losers:
People around the state who get less hours at the retail store they work at today.
Taxpayers who subsidized the corporate welfare deal.
People who prefer jobs with benefits.

Neutral:
People who use Amazon, and would see the same benefits from having a local Amazon warehouse with or without corporate welfare expenditures.

We should be mature enough to not subsidize “economic development” projects in one city that have no net benefit for the state, but we’re probably not.

Math Only a Corporate #wilfare Queen Could Believe @mnunitedfc

I was hoping that MN United would somehow be different than every other professional sports franchise in our local market, but then I read stuff like this:

We will pay our fair share of tax. The entertainment/sales/food/beverage taxes the facility generates will be 5x current tax. @edkohler

If you’re a business or resident in Minneapolis and you buy a property and improve it, you’re expected to pay property taxes. That’s the deal. It’s really quite simple. But, MN United seems to think that they deserve to redefine “fairness” based on sales tax generation.

It’s as if pro sports are the only industry that competes for entertainment dollars and generates sales taxes. Why should they be subsidized while local restaurants aren’t? If we were going to subsidize an entertainment business, how about subsidizing ones that are open more than 17 days per year?

But, the bigger issue with MN United’s claims is the math. It’s the kind of math only people who mistakenly trust pro sports franchise owners can believe.

Here’s the problem with their sales tax math. It assumes that every single dollar of sales taxes generates at the soccer stadium would not have been generated anywhere else in the entire state of Minnesota if there wasn’t a publicly subsidized pro sports stadium.

It’s an utterly preposterous assumption. Put another way, they’re lying. And, people who mistakenly trust MN United’s statements are falling for it:

@edkohler @_NickRogers_ Ed, if you didn't pay property tax, would your provide 5x those taxes in sales tax? Your analogy seems flawed.

People blindly trust pro sports owners that are in the business of subsidizing their businesses rather than competing fairly for entertainment dollars in the private market.

But, what makes this situation particularly interesting is that even loyal MN United fans seem to be embarrassed by the requests to shift property tax burdens onto homeowners and local business in order to further enrich some of MN’s richest residents. This is my assumption based on the lack of response to questions like this:

@lockstockspock I noticed that you ignored this tweet, which makes me wonder why you're so concerned about handouts:

Let’s try being honest. MN United doesn’t need subsidies. The team will be here. A stadium will be built. And Minneapolis will benefit from hosting a new local business while expanding its property tax base. That’s what fairness looks like.

How Power Companies Profit from Net Metering #mnleg

One of the nice things about residential solar systems in Minnesota is that they’re eligible for net metering. You have an upstream meter and a downstream meter and are charged for electricity based on the net consumption. So, if your home uses $40 of electricity over a month but your panels produced $60, you’ll get money back from Xcel. Not $20 back, since there are base fees to cover, but you’ll still get a check.

A common beef from the pollution industry and their legislative allies against net metering goes something like this:

Residential solar users are freeloaders. They’re selling electricity to the grid at retail rates, yet benefit from being attached to the grid when they really need it.

Or, as Rep. Pat Garofalo puts it “solar is dumb“.

Granted, this argument makes sense at a high level. If the price a residential solar user receives for the energy they contribute to the grid is the same as what they take off the grid, that’s a pretty sweet deal.

But, it’s a bit more complicated than that, which is something the anti-solar crowd chooses to ignore.

Here are Xcel’s current rates for electricity (not counting base fees, taxes, etc.):

Energy Charge per kWh:
June through September…$0.08671
October through May…$0.07393

But, Xcel offers other pricing models, including Time of Day pricing where customers are charged far higher rates during peak grid times, then far less during off-peak times.

Xcel Time of Day Pricing

That’s a significant difference. They charge more than 2X as much for electricity during the day, and offer a whopping 70% discount on overnight power consumption.

Now, let’s look at what hours solar panels generate power. Here is data from the past three days from my home’s roof:

Three Days of Solar Generation

Looks like 6am – 6pm is the energy producing window. So, during those hours, my panels are a net-contributor to the grid of most of that energy. That’s when my power meter runs backwards (technically, there’s a separate upstream meter).

My family is generally out of the house well before 9am, so our morning electricity consumption would be considered off-peak by Xcel in their time of day pricing plan. We’re generally home by 5:30pm, so there is some on-peak consumption between 5:30 and 9pm, but generally nowhere near what was added to the grid throughout the day.

So, I’m selling around $3/day of electricity during peak-grid hours Xcel at $0.08671/kWh. They can then turn around and sell that electricity for more than twice what they pay me for it. Of, if time shifting makes more sense to you. They sell me back my own electricity overnight at a time when electricity is 70% cheaper than they paid me for what I generated.

I’m a net-contributor of electricity to the grid at times when the grid needs it most. I’m generating that electricity locally so it doesn’t need to be transmitted from polluting power plants or rural wind farms. I’m selling electricity for far below market rates, and I’m buying electricity for far above market rates. Yet, I’m the freeloader?

Oh, did I mention that Xcel doesn’t allow solar power generators to use Time of Day pricing? Net metering is only allowed when net metering allows Xcel to arbitrage the power they’re buying/selling to solar power generators.

My guess is that the return on my solar panel investment would be around twice as fast if I could net meter at rates available to others. Taking away this ban on market rate solar sales/purchases seems like a good way to stimulate private investments in locally produced power.