Backgrounder: Regional Cities Plans

January 4, 2016

by Jason Arp

“This is how Liberty dies . . . with thunderous applause.” — Padmé Amidala (Natalie Portman), “Revenge of the Sith”

The excitement over Indiana’s recently announced Regional Cities awards reminds me of the scene in the 2005 Star Wars in which the Galactic Republic is dissolved and is replaced with an emperor. All in attendance responded in a joyous ovation.

The public is being asked to put its faith in an elaborate multi-year plan to create a Regional Development Authority (RDA) much like the one that has been in place in northwest Indiana since 2005. The RDA will be run by an appointed board that cannot be removed by local officials or the public. It has borrowing authority and will have taxing authority to repay what it borrows.

The RDA in northwest Indiana has spent nearly $700 million in 10 years in Gary, Hammond and other lake communities. We have not seen any evidence that it has been successful at anything but commandeering private businesses and public funds and institutions to do centrally planned projects.

Even so, there has been no real discussion. The public has been told that we have some sort of $42-million jackpot to spend on wonderful things. What hasn’t been made clear is that with the award comes an obligation not only to match that $42 million with taxpayer and private money but a separate eight-year commitment to a portfolio of $1.4 billion in projects to be authorized, financed and managed by the RDA.

In other words, we have agreed to have an appointed, bureaucratic, authoritarian regime take over a good portion of the Indiana economy in exchange for a 3 percent downpayment-assistance grant from the state. And this bureaucracy will be fully armed with taxation and eminent domain capability.

Let’s take a closer look at the “private investment” involved in all of this. What we are likely to see is that many of the projects will be owned by or leased to private companies that have made no more than a 60 percent investment in a particular project. So, in return for what is a relatively risk-free investment, the investor will receive nearly all the returns (remember that so many of our eco-devo contracts guarantee profits to private investors, such as the hotel at a famous ballpark in Fort Wayne).

Another example can be found in the financials of the much-applauded City-Scape Flats project. There, the city of Fort Wayne puts up $7 million for a 173-car garage attached to a $20-million, 163-unit apartment complex. The only difference will be the scale: We’re now talking about a billion dollars more of this sort of “investment.”

Not only will developers that are not members of the in-crowd be unable to participate in the official projects but they may be crowded out of the market entirely; prime land will be earmarked by the RDA, bank funds will be tied up in RDA projects, land prices may make other development by truly private ventures cost-prohibitive.

In the end, the RDA will have discouraged actual entrepreneurship, innovation and free enterprise and replaced it with some sort of unaccountable directorate.

Jason Arp is a Fort Wayne City Councilman.



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