University City, Missouri, is on the verge of a terrible decision: a redevelopment deal that would displace dozens of homes and minority-owned businesses in its unofficial “Chinatown” for big-box retail subsidized through tax-increment financing.
Viewing entries in
Mistakes A Town Makes
The structural problem in our road building system is that we’ve based these large financial decisions on faulty premises and inaccurate estimations. We’ve justified and enabled the subsidizing of less efficient forms of development through the aid of cost-benefit analysis. The 494 /169 interchange looks great on paper at first glance. It’s going to create jobs, handle more traffic, help the economy, and save time.
Strong Towns member blogs from around the country spotlight examples of how misguided development policy undermines a community's interests. Suburban ruins in California; deadly stroads in Pennsylvania; the faulty argument in favor of keeping an urban freeway in Dallas; doing the math on land use in suburban St. Louis; asking whether local government is serving its poorest constituents in Cedar Rapids; and calling out official corruption in Sarasota.
We have been working on a project in my hometown called A Better Brainerd for most of this year. I've occasionally shared updates when they were relevant to this broader audience and today is example of that.
Last night there was a city council meeting here in my home town and the budget was discussed extenively. I wasn't there so I'm reactig to the press reports, but you'll get a sense here how one small town (13,500) has allowed debt and the aspiration for quick and easy growth to put it in a real bind.
Today in the Brainerd Daily Dispatch there was report of a very interesting exchange at last night's council meeting. It started with a logical question about the city's debt, a topic we've written about here before.
Matthew Seymour of Brainerd wanted to know more details on the city’s debt and how the city planned to handle the increased debt.
“This is a huge part of the budget and I’m more worried about the debt (than the increase in 2014 taxes),” said Seymour.
Us too. Debt makes us very fragile and while the state seems flush with cash for the moment, that huge percentage of our budget that relies on St. Paul's ongoing generosity should make all Brainerd residents and business owners nervous.
Here was the response.
[Brainerd finance director Connie] Hillman said part of the reason why the debt is higher is because the city has not sold all of its industrial park properties. Once the properties start to sell the city will make money, she said.
City Administrator Theresa Goble said the city also hasn’t received all the money through its Beaver Dam Road and Riverside Drive improvement projects. Goble said once more people are hooked up to city services that the money will come in.
Let's first examine this notion that the city is going to ever "make money" once these properties sell. How does anyone know? Seriously, nobody has ever done the math to see if these properties will generate more revenue over the long term than they create in costs for the city. This math has never been done. There is no target number for sale price, land valuation or fee revenue that has been done. We have no clue if we will ever make money because nobody has ever figured out what that would take.
When the city finance director says "make money" that really means "cash flow," which is a far, far cry from being financially solvent over the long term. Is the tax base of these properties going to be sufficient to cover the cost of maintaining and servicing them over the long term? Nobody knows, but there is good reason to believe that, even if the lots sell, it won't even be close.
And that "if" is a BIG if. The city used borrowed money to gamble on new growth in the industrial park. There are currently 21 lots sitting empty with infrastructure in place just waiting. "Shovel ready," as they say in the business. City taxpayers are covering that gambling debt until there is some cash flow revenue from the sale of those lots.
Empty developments with full utilities off of Beaver Dam Road. Even if they build out, the tax base will never be there to maintain all of this.The same thing has happened with the Beaver Dam Road and Riverside Drive expansions. We have acres and acres of vacant property where the city, again with the use of public debt, is the gambling partner on speculative development. I think city officials would argue that these looked like sound investments until the housing market downturn but, unfortunately, even if these developments had built out as hoped, there was no wealth to be had for the city. We're not doing the math.
These are bad decisions we can't undo and so it does us little good to rehash them unless we can use the experience to draw some lessons. Here are two.
First, we shouldn't be considering another multi-million dollar expansion of the sewer and water systems out to the airport, even if the bulk of the cost for the initial installation is going to be covered by state debt, not local debt. We've shown that we are not very good at gambling on future growth (the reality is that no city is -- some are just luckier than others). If we've learned anything, it should be to shun these so-called "transformative" investments.
Second, there are other alternatives to the big gambling project and we should be pursuing those vigorously. In October, we released a report called Neighborhoods First that showed how we can implement the city council's stated priority of neighborhood investment by using an incremental approach. We outlined eight low risk, high return projects in the Northeast neighborhood that the city can do today. We also offered to train the staff and city officials (at no cost to the city) on how to incorporate this approach into their annual capital improvements and budgeting process.
We need to be honest with ourselves and acknowledge that our approach is not working, that we aren't ever going to "make money" in our current approach. We need a new mindset, one that plays to the city's strengths. We can improve the lives and fortunes of our residents and business owners and create real wealth and prosperity within this community, but only when we stop gambling and start investing incrementally in our core neighborhoods.
Wesley J. Riddle is an attorney and public-policy consultant, and founder and co-executive director of Roots Memphis Farm Academy, a sustainable urban farming incubator. This is reprinted here with his permission.
In 2005, the Brookings Institution published a study warning public officials that the convention center market had become overheated and was no longer capable of delivering on economic development expectations.
The report concluded that the convention marketplace is not growing, but has been in decline for decades, while the amount of total convention center space existing in the United States has expanded dramatically, nearly doubling during the same time period.
The increased competition among cities, and the resulting efforts to outspend each other to lure the most attractive conventions, was referred to illustratively as an “arms race,” to describe its hypercompetitive nature and propensity for producing casualties of war.
It is into this quagmire of city-versus-city public spending that the Memphis City Council proposes to drag the city of Memphis.
The council’s Economic Development and Tourism Committee recently gave preliminary approval to a committee that will study building a new convention center or expanding Memphis’ current convention center facilities.
The convention facilities of St. Louis and Nashville were described with particular envy. Some council members’ jealousy is misplaced, however. Caught up in the arms race, St. Louis’ convention center hotel has fallen victim to foreclosure, and just recently Nashville levied an additional tax on its downtown to pay conventions to use their brand-new, $600 million facility.
The story is the same across the country. Convention hotels in cities such as Baltimore, Austin and Phoenix are performing poorly, while the expansion race continues in Dallas, Detroit, Indianapolis and Orlando, where public officials chase those same coveted, but shrinking, convention dollars touted by our council and Memphis Convention and Visitors Bureau officials.
Even Chicago has seen its convention business steadily decline, despite constant expansion efforts and the nation’s third-busiest passenger airport.
The supply of large conventions simply does not exist on a scale large enough to meet the demand.
Memphis is not wealthy enough to win an economic development race to the bottom — funded with public money, in which each job “created” goes to the highest bidder while private interests dictate the terms.
As the 45th-largest metro economy in the nation, we have fewer resources available than most of the cities we would be competing against and certainly not enough for it to be a weapon of choice. Inevitably, we will be outspent, as we run up against the harsh reality of limited borrowing power and a declining credit rating before larger, wealthier cities do.
We need not look far for better ways to create actual growth and genuine prosperity. Tourism is a vibrant and vital part of our economy. Convention centers, however, come with the often-overlooked burden that the real estate they occupy does not produce revenue.
To the extent it can be determined that Memphis is maintaining underutilized and obsolete convention center space, a better study would examine the feasibility of redeveloping the area of Front and Main streets north of Poplar in a way that strengthens, rather than weakens, the public’s balance sheet.
Let us use the resources we have to create a more vibrant block of a walkable Downtown that connects with other public investments in the Pinch District, the new Bass Pro Shops superstore at The Pyramid, and Civic Center Plaza.
Doing so will cost less money in the short term, produce more revenue in the long term and make the north end of Downtown a more people- and tourism-friendly destination.
The race for beautiful, vibrant, people-scaled places is one that can’t be lost and won’t end in obsolescence.