The Outstater
Build it and They Will Come — Maybe
MY CITY has been operating with a “build it and they will come” strategy for a couple of decades now. The thing is we have no independent verification that people are actually coming — or coming in greater numbers than otherwise — so we’re not sure why we built any of it.
Nonetheless, our downtown boasts multiple supposed “destination” projects, built regardless of market signals, most of them boosted by government favor and all of them requiring huge amounts of rebar and concrete.
To understand how all of this is working out, you must go back to the start. Many years ago our county and city fathers were sold the idea of a “food and beverage” tax. The rationale was that those businesses near our outdated coliseum should help pay for its renovation. It was only fair, you see, because they were benefitting from the customers the coliseum brought to town.
The tax proved so popular with developers and government types that it was used as the fiscal strategy for reworking the entire downtown — hotels, a sports stadium, a convention center, a river walk, assorted shopping and residential complexes, the third reworking of an old entertainment district and a wealth of parking garages. Recently, it was suggested the tax should be increased to fund even larger economic-development schemes, ahem, ideas.
Does any of this make sense? We won’t know for 20 years or so until the notes and bonds come due. The inexpert opinion is that there isn’t the amount of commercial traffic that you would expect from such expansion.
The profit figures, if any and for whom, are kept close to the vest of the various quasi-private development groups. Nobody is keeping track of the public money that is being either leveraged or spent outright. Self-serving and self-dealing seem to be the rule. We are expected to trust a commercial real estate firm, for example, to give us critical statistics on downtown office vacancies, if that tells you anything.
But we can go back to the strategy’s inception for a clue. This week, the last of the large chain restaurants adjacent to the renovated coliseum closed. Yes, those were precisely the businesses that we were told could shoulder that initial food-and-beverage tax.
How could this be?
The economist Thomas Sowell has an answer: “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”
Much of the development, you see, is financed up front. That is, a politically incentivized developer makes some or all of the return on his investment at the signing. Again, no need for independent market-testing. The distant owners of our baseball stadium, for instance, do not live or die by the turn-stiles. Nor will they go broke if maintenance costs increase dramatically. Our city has agreed to help make good on all of that.
And many of the public officials involved have retired, some to warmer climates. You could say they built it and they went.— tcl
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