Tuesday, November 29, 2011

TIF Impact Statements

November 29,, 2011, 9:50 a.m.

The Questions We Should Insist Officials Ask First

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Making a 'Prudent TIF' More Than an Oxymoron
Nicholas Johnson
Iowa City Press-Citizen
November 29, 2011, p. A7

Our recently elected Iowa City Council members have said that TIFs should be used “prudently.”

TIFs, you’ll recall, are one of the many shell-and-pea games available to elected officials for transferring taxpayers’ money to the bottom line of for-profit businesses.

Telling officials always to TIF “prudently” has proved as effective as liquor companies’ TV commercials, urging University of Iowa binge-drinking students always to “drink responsibly.”

TIFs, like alcohol, are addictive. TIFs, also like alcohol, are unlikely to go away.

They’ve received attention recently in these pages and elsewhere. Abuses are acknowledged. The Iowa Legislature may plug some loopholes.

Meanwhile, what can we do to minimize the increase in property taxes and decrease in public services that result from our officials’ TIF habit?

My very modest suggestion is that we at least start with TIF Impact Statements. Think environmental impact statements, or the Powell Doctrine for going to war.

The reason I support “military control of the civilians” (almost seriously) is because it is the civilians in government who respond to foreign challenges with chants of “USA! USA!” and “Nuke ’em!” Military leaders thankfully take a much more measured approach.

When he was chairman of the Joint Chiefs of Staff, Gen. Colin Powell, asked questions such as:

Is a vital national security interest threatened?

Do we have a clear attainable objective?

Have the risks and costs been fully and frankly analyzed?

Have all other non-violent policy means been fully exhausted?

Is there a plausible exit strategy?

We could have saved a couple trillion dollars of debt had the civilians done as much.

Recent attention has focused on the adverse impact of one town’s TIFs on the county, adjacent school districts and cities. (See, http://iowafiscal.org.) Those are serious harms. But they’re only one of a baker’s dozen categories of TIFs’ potential calamitous consequences. (See “The True Price of TIFs,” http://fromdc2iowa.blogspot.com/2011/10/true-price-of-tifs.html.)

What questions should officials ask (and answer) before giving away our tax money with subsidies, bailouts or TIFs to for-profit private ventures? Here are mine:

What for-profit projects have been funded by this government over the past 10 years, and how did the return (or loss) to the public from each comport with its promised benefits? What is budgeted for the next five years? How are projects’ results monitored and reported?

Why is this project needed at all?

Why does that need exceed all conventional needs for public funds? What is its opportunity cost? What will other government units lose? How much more will taxpayers pay?

Among all for-profit applicants for funds, pending and future, why is this project top priority?

Will the project potentially benefit all citizens (The Englert Theatre, for example), a small segment or primarily the recipient?

How much money is involved?

Are all other ways of funding this project with or without taxpayers’ money identified and explored? What are they? If found wanting, why?

How convincing is evidence this for-profit venture requires public funding? Why are entrepreneurs, their family and friends, venture capitalists and bankers — those who will profit from it — unwilling to invest everything needed? Is their reluctance equally applicable to public investment?

Why is it reasonable to consider the project’s business plan a virtual guarantee of financial success?

What is the “exit strategy” when it fails — the recipient doesn’t do what’s promised, skips town, there are delays in construction or bankruptcy?

What business, financial, political, social or campaign contribution relationships are there between the potential recipient of public funds and the officials dispensing them?

How much harm will befall the (unfunded) private competitors of this project from the recipient’s advantages (for example, decline in competing hotels’ occupancy)?

Even if a “prudent TIF” is not an oxymoron, the least a government can do is give us answers to these questions before giving away our money.
Nicholas Johnson, a former Iowa City Community School Board member and FCC commissioner, teaches at the University of Iowa College of Law, and maintains http://nicholasjohnson.org.

Press-Citizen online version: www.press-citizen.com/article/20111129/OPINION02/311290028/Making-prudent-TIF-more-than-an-oxymoron
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Wednesday, November 16, 2011

More Support for Going Communist Than Congress

November 16, 2011, 9:00 a.m.

"How Bad Is It?"

Johnny Carson occasionally used a call and response with his audience. If he were announcing the recent report of Congress' approval ratings, it might have gone like this:

Carson: "Congress' approval rating is really bad."

Audience (shouting in chorus): "How bad is it?"

Carson: "It is so bad that . . .."

So how bad is Congress' approval rating these days?

U.S. Senator Michael F. Bennet (D-Colo.) has pulled together some comparisons for us. (There's no direct link to his charts; so go to his Web site, http://bennet.senate.gov, and put "Congressional approval" into his Search box. The pdf will be the top choice on the list.) Others' selections from his list are going around the media and Internet, but his chart is the only place I've found with citations to the sources of this otherwise unbelievable data.

Let's start with his report that from 1997 to 2001 the percentage of Americans who approved of Congress ranged between 40 and 65%. OK?

Today it's 9%.

How does that compare with recent polls of our approval of other individuals and institutions?

The IRS that some Republican presidential candidates disapprove of so strongly that they advocate its abolition? It gets a 40% approval rating.

Lawyers get 29% approval.

President Richard Nixon, at the depth of the charges of his Watergate criminality and pending impeachment, was still approved by 24% of us.

The Wall Street and other banks that profited from bringing on the global recession headed to depression, contributed to massive unemployment and foreclosure of homes, and have engendered the anger of both Tea Party and Occupy Wall Street, still get a 23% approval rating.

How about BP during the time its negligence resulted in the deaths of its offshore drilling rig employees and an uncontrolled spill of millions of gallons of oil into the Gulf of Mexico? There were still 16% of us who approved of BP.

And finally (among my selections from Senator Bennet's list), how many Americans approve of the "U.S. going communist"? It's more than the percentage who approve of their democratically, and campaign contributor, elected members of Congress -- a stunning 11%.

I'm reminded of an exchange with a well-educated Kazakh friend when I was visiting her country a few years ago. I'd asked what America could do to help, what do the people of Kazakhstan want and need? She replied, "What we need is another Stalin."

Here was a country, a people, who had just come out from under Russian domination as a part of the Soviet Union, and she was not the only Kazakhi who yearned for some leadership, working electric and water systems, and security on the streets.

Tom Friedman picks up that theme in his column this morning.
At a time when, from India to America, democracies have never had more big decisions to make, if they want to deliver better living standards for their people, this epidemic of not deciding is a troubling trend. It means that we are abdicating more and more leadership to technocrats or supercommittees — or just letting the market and Mother Nature impose on us decisions that we cannot make ourselves. The latter rarely yields optimal outcomes. . . .

[I]n the age of Facebook and Twitter, the people are more empowered and a lot more innovation and ideas will come from the bottom up, not just the top down. That’s a good thing — in theory. But at the end of the day — whether you are a president, senator, mayor or on the steering committee of your local Occupy Wall Street — someone needs to meld those ideas into a vision of how to move forward, sculpt them into policies that can make a difference in peoples’ lives and then build a majority to deliver on them. Those are called leaders. Leaders shape polls. They don’t just read polls.
Thomas L. Friedman, "Who's the Decider?" New York Times, November 16, 2011, p. A35.

We may not want a dictator like Communist Joseph Stalin -- although as many Americans approve of Hugo Chávez as approve of our Congress (9%). But benevolent "leaders" alone aren't the answer either. When 91% of Americans disapprove of their premier democratic institution, "the people's house," the U.S. House of Representatives, America itself, as well as its democracy, are in very serious trouble.
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Tuesday, November 08, 2011

College Football Scandals Larger Lessons

This blog entry is being continuously updated from time to time as events and revelations unfold -- most recently January 27. See, e.g., these direct links to "Thursday Edition Addition," . . . and more additions thereafter, "Subsequent comments of others worth noting". There have also been some modifications and additions to the original blog entry, which follows, immediately below:

November 8, 2011, 8:00 a.m.

Football's Privileged Tip of Abuses by Powerful

It's a sad, sad story coming out of Penn State football and spread across the nation's sports pages. Mark Viera, "Two Penn State Officials Stepping Down," New York Times, November 7, 2011, p. D3. You can read the details there if you want. I have no desire or need to repeat them here, except to identify that they involve alleged sexual abuse of young boys and a grand jury indictment.

[Arrest of Coach Sandusky. Photo credit: Pennsylvania Office of Attorney General] What I want to focus on is what this case reveals, not only about higher education's administrators, but about institutional instincts and crisis management generally. See, e.g., "Crisis Communications 101," February 14, 23, 2011; and the text and links in "Strategic Communications a Failed Strategy," November 13, 2009.

The pattern is all too common. There's a scandal in a collegiate football program, often involving something that can be designated as one form or another of "sexual." Nothing is done until it hits the papers. The initial reaction is some variation of denial, with expressions of support for those responsible. As the trickle of details becomes a flood, like the 100- or 500-year floods Iowa City suffers every 10 years or so, the media continues to poke holes in the levies until the facts spread over the campus can no longer be ignored. Then come the professions of the institution's high ethical and moral standards, an "investigation" is launched, and ultimately the university president and coach are still in place, with raises on top of already more-than-adequate salaries, and a couple of others in the chain of responsibility are thrown under the bus.

Susan Harman has written an insightful column about this phenomenon in this morning's Press-Citizen describing cases at both Ohio State and the current Penn State scandal this year. "Are Big Programs Turning a Blind Eye? Sandusky Charges May Tarnish Image of Paterno, Penn St.," November 8, 2011, p. B1.

Apparently nobody at Penn State did anything about eye witness reports of these crimes -- except for reporting up the chain of command from witnesses, to coach, to athletic director, vice president for finance and business, and on to the Penn State president, Graham Spanier. [Photo credit (left): Iowa City Press-Citizen.] Allegedly, the president did not report this to law enforcement (as the law requires), say anything to his Board of Trustees, insist on firing the alleged perpetrator, or follow-up to see if the offenses continued.

What he did have to say, after the two in the middle were indicted by the grand jury for perjury, was that he predicted they both would be exonerated and that "I have known and worked daily with Tim and Gary for more than 16 years. I have complete confidence in how they handled the allegations about a former university employee." As Susan Harman put it, he was "casting aspersions on the grand jury process and the testimony of many witnesses by almost dismissively asserting his administrators' innocence." (Only after a post-media-revelation emergency meeting of the Board of Trustees was the AD put on administrative leave.)

Sometimes in Japan, and elsewhere, following an institutional embarrassment of this magnitude, the person at the top actually kills themselves because of the personal humiliation. In this country, the more common honorable response is to take the responsibility for it -- even when the top administrator has had neither participation or even knowledge of the problem -- and resign.

I would note in this context, a football example of this honorable response. Iowa's Coach Kirk Ferentz, following the embarrassing loss to Minnesota October 29, did not blame the assistant coach most responsible for Iowa's failure to anticipate Minnesota's fateful onside kick, nor did he blame any of his players. He assumed personal responsibility for the decision and 22-21 loss. "'The onside kick, I’ll take that one. Just as soon as [the kicker] started making his approach, I almost called timeout. I’m standing next to an official. I should have in retrospect, but I didn’t.'" Jordan Garretson, "Notebook: Ferentz shoulders blame for Minnesota’s onside kick," Daily Iowan, November 1, 2011.

Clearly, in spite of the multi-million-dollar revenue, the powerful conflicts of interest, the challenges to integrity, the abuses, there are college athletic programs that have not fallen victim to this process.

But my point is not even about what one university president once told me he considered the "anomaly" of big-time football within the academy. It is a point potentially applicable to almost all large institutions that, as Harman puts it, "continually protect the powerful at the expense of the vulnerable."

As she points out, "universities are not so different from banks and Wall Street financial institutions or established churches in the way they wield power and influence."

And before the day is out, we will have heard from a Republican presidential candidate, with a good deal of power behind him, also involved in "sexual" allegations. Jim Rutenberg and Michael D. Shear, "Woman Accuses Cain of Groping; He Denies Charge," New York Times, November 8, 2011, p. Al. Will it also be just yet one more, like DSK and the New York hotel maid, "Dominique's Dominos: Strauss-Kahn and Sexual Assault," July 1, 2011, of protecting "the powerful at the expense of the vulnerable"?


Thursday Edition Addition

Normally I don't "update" blog entries, even though a significant number of the hits on this blog go to entries four and five years old. It's highly unlikely anyone today, November 10, 2011, is unaware of today's status of this story, but that may not be the case years from now. So here's one of this morning's accounts:

Mark Vera, "Paterno is Finished at Penn State, and President is Out," New York Times, November 10, 2011, p. A1.

Given that I'm assuming the Board essentially "fired" both Coach Paterno and President Spanier, it's not clear to me why the disparate characterization in the headline and story: "Paterno is Finished" but President Spanier is "Out"; "Joe Paterno . . . was fired . . .. Graham B. Spanier . . . was also removed by the Board of Trustees."

Nor is it clear, with Spanier and Paterno having been fired, and both Athletic Director Tim Curley and Vice President for Finance Gary Schultz having been indicted by the grand jury for perjury, why Curley has been permitted to have merely "taken a leave of absence" and Schultz has merely "decided to step down." "Penn State Fires Joe Paterno; Decision Made Wednesday Night," Associated Press/Hawk Central, November 9, 2011.

Questions have also been raised about the retention of assistant coach Mike McQueary: "That McQueary remains on the staff is shocking. Penn State fired legendary coach Joe Paterno and president Graham Spanier on Wednesday for their failure to follow up on a 2002 report . . .. That report came from McQueary, who told a grand jury earlier this year that he saw everything." Andy Staples, "Penn State Making Progress, but Two Personnel Moves Still Remain," "Inside College Football"/Sports Illustrated, November 10, 2011. News the afternoon of the next day was that "Penn State assistant coach Mike McQueary . . . has been placed on administrative leave. . . . [T]he school said McQueary would not be present when the Nittany Lions play Nebraska on Saturday because he has received threats." Genaro C. Armas, "PSU: McQueary Put on Administrative Leave," Associated Press/rivals.com/Yahoo!, November 11, 2011.

The Times' story also quotes Spanier's statement that, "This university is a large and complex institution, and although I have always acted honorably and in the best interest of the university, the buck stops here. In this situation, I believe it is in the best interest of the university to give my successor a clear path to resolve the issues before us.”

To me, that sounds like, "I am totally blameless, always having acted honorably, and am now an innocent casualty. But because I am theoretically responsible for everything that goes on at this large and complex institution, whether I know about it or not, and I have always put the best interests of the university ahead of my own, I am voluntarily resigning."

Now I recognize that, had he said this two days ago when I first wrote this blog entry, he would have been saying precisely what I was advocating he should have said at that time. It's just that, coming after he's fired by his Board, it sounds a little disingenuous.

So where are we with this now?

1. Legally. Most of the official, media, and public concern about this sad mess has focused on (a) the harm done to the young boys, (b) the offenses by defendant and assistant coach Jerry Sandusky, and (c) the moral (as distinguished from legal) obligations of all who knew. But there are remaining legal issues and actions as well -- possibly civil as well as criminal. See, for example, the grand jury indictment linked from the top of this blog entry.

Those issues make for interesting law school faculty luncheon discussions regarding who has a responsibility, under the criminal law of various states, to report what, about whom, when, and to whom. (Indeed, what are your legal (or institutional) reporting obligations when you have something between a strong suspicion and an eye-witness account of a possible crime?) Similar questions arise under the regulations of an individual university regarding reporting requirements.

I'm not going to provide that law-review-article-depth-and-lengthy, footnoted discussion here. Those things will sort themselves out over time, and the outcomes will be reported and available to those who care.

2. Morally. The primary issues here -- and the basis for the firing of a university's president and football coach -- may well be moral and ethical rather than legal. On the hypothetical assumption they both complied with their legal obligations, what more were they morally obliged to do?

The late Senator Ted Kennedy's tribute to his brother, Robert, at a memorial service following Robert's death, included a description of him as "a good and decent man, who saw wrong and tried to right it, saw suffering and tried to heal it, saw war and tried to stop it."

The moral judgment, it seems to me, turns on whether as much will be able to be said of the five adult principals involved in this case when their memorial services are held. Did they know that wrong had been done, that suffering had resulted, and did they then try to stop it?

As Buzz Bissinger put it, "This is not a football scandal of illegal recruiting and payoffs and prostitutes. It is a national scandal involving morality, weakness of character, passing the buck, inaction, cowardice, neglect and what appears to be outright lying. If the allegations are true, head coach Joe Paterno and top-ranking university officials allowed former assistant football coach Jerry Sandusky to roam loose as a sexual predator even though there were clear indications of his abuse of children."
Buzz Bissinger, "This Is Not a Football Scandal," New York Times, November 10, 2011 (arguing that Saturday's Nebraska game, and season, should not be cancelled; from a collection of five comments worth reading that address, "Room for Debate: Should Penn State Cancel Its Season?").

If Sandusky did in fact do what he is charged with having done, I know of no one who would come to his defense. Some might prefer psychiatric treatment along with prison, but none would excuse his actions.

"The five," however, are not charged with such acts. In fact, to the extent they are charged with anything, it is non-action rather than action -- except for the two whom the grand jury has charged with perjury.

Bissinger undoubtedly has access to more information than I have. It certainly appears, based on what I've read in the press, that he is right. But my final, moral judgments of certainty are going to await more documentation of the details of non-action by "the five."

For me, much of the answer to the moral issue turns on the answer to the question another senator, Senator Howard Baker, reiterated during the Senate investigation of President Richard Nixon's involvement in the Watergate break-in: "What did the President know, and when did he know it?" What did Paterno know, and when did he know it? What did Spanier know, and when did he know it? (Coincidentally, today's news also included, Calvin Woodward and Nancy Benac, "Nixon's Long-Secret Watergate Testimony Coming Out," Associated Press/Yahoo!News, November 10, 2011.)

Paterno worked with Sandusky for decades. When did he first hear rumors, have suspicion, or actual knowledge, of Sandusky's child abuse? If he had been provided only vague information, would he have had a legitimate, reasonable basis for believing that Sandusky had been involved in only one ambiguous encounter, received treatment, and been "cured"? Was this something he'd had multiple, detailed reports about over a period of years, or something that he is now as shocked to find out about as anyone? (That lack of awareness can happen, as we occasionally hear in a story of a crime and a neighbor's response: "They were such a nice friendly family; always kept their lawn nicely trimmed; attended church every Sunday. Who would ever have thought they were terrorists building bombs in the garage?")

When the eye witness reported to Paterno, how detailed was that report, what exactly was he told?

Not incidentally, what were the university's regulations and social norms regarding the reporting of crimes and inappropriate behavior? Are administrators and faculty members merely expected to report to superiors (e.g., vice presidents, deans, or department heads)-- which Paterno apparently did by telling the AD? Or are they expected to take matters into their own hands, and make individual independent judgments in each case whether to file a police report, commit a person to a psyc ward or hospital, get them into Alcoholics Anonymous or drug rehab, or whatever else in their judgment is the most appropriate action?

Similar questions need to be asked, and answered, regarding Spanier. What precisely was he told and when? It would seem to me that his moral obligation would vary, depending on whether he was told, almost casually, during the course of a lengthy meeting, "We've got a little personnel problem in athletics with Sandusky, but the AD's taking care of it," or he was provided the shocking details of what had been witnessed.

Finally, I don't think the individual Board members are immune from this line of inquiry. Were each of them totally shocked, never having heard a whisper of the scandal, prior to the days they started holding emergency sessions? Were none of them ever told by Spanier of the problem -- the answer to which reflects on both Spanier (to the extent he knew but didn't tell) and the Board members (to the extent they were fully informed, but never acted before last evening).

If the Board members knew and did nothing, was their ultimate resolution last evening -- the peremptory firing of Spanier and Paterno, without according them a reasonable opportunity to be heard, or other due process protections -- the result of the Board's investigation of and response to the facts, or a knee jerk response to adverse publicity? Had the national media firestorm not billowed out of control might they, too, have continued to let it slide without taking action?

This was a sad story on Tuesday, and an even sadder story on Thursday. It will not quickly go away. While I have no interest in repeating here the rumors that are already beginning to fly, there may be more to be added to this blog entry over the weeks and months to come as additional, documented facts come out.

Subsequent comments of others worth noting . . .

Jon Stewart's Comedy Central "The Daily Show" offers up a four-times-a-week sharp, satiric commentary on the news that has become for many in its audience their primary source of news. Stewart found nothing funny about the Penn State scandal, but his November 10, 2011, commentary provides his own take on our relative priorities:

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Penn State Riots
Daily Show Full EpisodesPolitical Humor & Satire BlogThe Daily Show on Facebook

A University of Chicago graduate student with many ties to State College, Pennsylvania, has itemized, taken on, and scorched the failings of an entire generation, for which PSU's handling of Sandusky's crimes is simply the last straw. Thomas L. Day, "Penn State, My Final Loss of Faith," "On Faith: Guest Voices," Washington Post, November 11, 2011.

The Times Nina Bernstein has endeavored to put the Penn State events into a context of analogous mishandling by other universities. Nina Bernstein, "On Campus, a Law Enforcement System to Itself," New York Times, November 12, 2011, p. A1.

November 15 update: "Close to 10 additional suspected victims have come forward . . .. Sandusky [says] he was innocent of the charges [but] acknowledge[s], 'I shouldn't have showered with those kids.' . . . On Sunday [Nov. 13], Jack Raykovitz, the chief executive of [Second Mile] . . . resigned." Mark Vera and Jo Becker, "Ex-Coach Denies Charges Amid New Accusations," New York Times, November 15, 2011, p. B13.

November 17: For an historical itemization and account of relevant events, see Justin Sablich and Alan McLean, "Timeline: The Penn State Scandal," New York Times, November 11, 2011, and Jo Becker, "Inquiry Grew Into Concerns of a Cover-Up," New York Times, November 17, 2011, p. B11.

November 18: Frank Deford's usually insightful take on an answer to, "what happened and why?"
[T]he consensus . . . is that, first, Joe Paterno didn't want to scar the reputation of himself or his football program; and then, university executives wanted to protect the reputation of the dear old coach and his moneymaking team.

Yet I must wonder, as well, how much the culture of the particular sport involved — football — abetted the conspiracy of silence . . ..

Because of [football's] reputation of machismo — that conceit, that creed — it surely becomes painful, almost traitorous, for men who love football to accept such an abject contradiction of their sport's manliness — the very rape of a little boy by a coach. . . .

Even Paterno himself may not know what caused him to fail such a basic test of decency. But still, I cannot help but wonder that, no, it wasn't primarily because of his own reputation or because of all the money Penn State football made that stopped him from acting. No, I wonder if, above all, Coach Paterno could not bear to see shame come to his beloved game of football.
Frank Deford, "Is Football Culture The Core Of The Problem?" NPR, November 16, 2011.

Deford may have a point, but educational administrators -- university presidents -- are not the only ones among us whose good sense and ethics can be bent, and sometimes broken, with the explanation that "revenue is needed." As I have often said of that rationalization, "once 'revenue is needed' becomes your polestar, your moral compass begins to spin as if on the North Pole." Clearly, Penn State's football program generally, and Joe Paterno specifically, were responsible for millions of dollars of revenue -- not just from football tickets and TV, but from the additional grants and gifts they stimulated for educational programs.

Long before the Penn State scandal broke, the Houston Chronicle's Nick Anderson captured the impact of football's cash on university presidents in another context:

[Credit: Nick Anderson, Houston Chronicle, September 23, 2011.]

November 20: Sandusky's charity, Second Mile, is being investigated regarding what its administrators and board knew, and when they knew it, and what they did about it. Some donors are backing away. Mark Viera, Jo Becker and Pete Thamel, "Charity Founded by Accused Ex-Coach May Fold," New York Times, November 19, 2011, p. D1.

The NCAA, not exactly the first on the scene, is now considering an "investigation" that will not require any investigators in State College and appears to be little more than following the story in the papers and courts. In fairness, its "enforcement," as a private association, has been primarily focused on, and limited to, its own self-imposed rules regarding academic and recruiting integrity, sports betting, the amateur status (limitations on payment) of college athletes, and related matters. Criminal and other offenses that do not affect such matters, the field of play, and fair competition between teams, have been left to the individual universities. That may now change. Pete Thamel, "N.C.A.A. Begins Penn State Inquiry," New York Times, November 19, 2011, p. D3

Assistant Coach Mike McQueary emailed friends that he did intervene when he saw Sandusky sexually assaulting a young boy in the shower, and that he did "discuss" the matter with the "police" (with no designation of "city" or "campus" police). However, both police departments now say they have no record of his contacting them."Police: PSU's McQueary didn't report Sandusky incident to us," Associated Press/Sports Illustrated, November 16, 2011.

November 21: Economists call them "externalities." It's a concept also applicable to criminal offenses. A factory belching pollutants in excess of permitted levels is fined, creating a financial impact on its profits. But there may not be as much public recognition of the impact on asthmatics. An over-leveraged Wall Street investment banker may throw the company into bankruptcy; but his behavior may also result in a foreclosure on a homeowner in Tucson, Arizona.

And so it is that Sandusky's alleged criminal behavior could have been predicted to cause a lifetime of harm to his victims, personal shame for him, risk a decline in ticket sales, and besmirch the formerly enviable ethical record of the Nittany Lions' football program. But the full reach of the fallout can only be guessed at now: a decline in donors' contributions to academic as well as athletic programs? New legislation from the Pennsylvania legislature -- as well as other states and Congress? A decline in students' applications for admission?

Today's revelation involves the impact on sales of clothing and other Penn State-logo items -- so far an unprecedented 40% decline. This is not an insignificant market: sales of $4 billion a year for college athletic programs; $80 million for Penn State, one of the top-10 schools. Joann Loviglio, "Scandal Hurts Penn State as a School and a Brand," Associated Press, November 20, 2011.

November 23: For a moving story about one of the alleged victims, and its fallout, see Nate Schweber and Jo Becker, "For a Reported Penn State Victim, a Search for Trust," New York Times, November 23, 2011, p. B13.

And an Associated Press story reveals the day-to-day impact of the internal power of big time sports on what is otherwise an academic institution:

Vicky Triponey, Penn State's "standards and conduct" officer, whose responsibility it was to enforce discipline, resigned in 2007. She had emailed Penn State President Graham Spanier on August 12, 2005,
"[Paterno] is insistent he knows best how to discipline his players ... and their status as a student when they commit violations of our standards should NOT be our concern ... and I think he was saying we should treat football players different from other students in this regard. . . . Coach Paterno would rather we NOT inform the public when a football player is found responsible for committing a serious violation of the law and/or our student code, despite any moral or legal obligation to do so." . . .

Triponey said that throughout her tenure at Penn State there was "an ongoing debate" over who should deal with misconduct by football players.

Her 2005 email was sent the day after a heated meeting in which Paterno complained about the discipline process.

"He knew better than anyone how to discipline them. We wanted to show him the (disciplinary) data and suggest that `Well, whatever it is we're doing, it's not working.' They're getting into trouble at a greater rate than they should. We wanted to find a way to address that," she said. "The meeting ended up being a one-sided conversation with the coach talking about his frustrations, his anger, his not being happy with the way we were running the system." . . .

A review of Associated Press stories over the last decade shows at least 35 Penn State players faced internal discipline or criminal charges between 2003-09 for a variety of offenses ranging from assault to drunk driving to marijuana possession. One player was acquitted of sexual assault. . . .

[P]ressure to go easier on football players increased as her tenure went on.

"Many times, (because of) the pressure placed on us by the president or the football coach, eventually, we would end up doing sanctions that were not what another student would've got," she said. "It was much less. It was adapted to try to accommodate the concerns of the coach."
Seanna Adcox, "Ex-PSU officer questioned player treatment," Associated Press/CitizensVoice/Times-Shamrock [Wilkes-Barre, Pennsylvania], November 22, 2011.

November 28: The culture and institutional pattern continues. This blog began on November 8 describing a pattern of institutional response to those crises that involve behavior of officials ranging from the embarrassing to the criminal -- institutional cover-up, initial media reports, institutional denials (often vociferous), media confirmations, institutional professions of shock, calls for in-house investigations, apologies to the victims (whose claims were earlier dismissed), and assertions "this will never happen again" (until it does), institutional firings, normally of someone in the middle, saving the jobs of the coach and university president. There are, of course, some variations in this pattern, as we've seen at Penn State, where ultimately the coach and president were fired.

So now it's Syracuse. What was head basketball coach Jim Boeheim's response when stories emerged that his associate head coach, Bernie Fine, had sexually molested two young "ball boys" during Fine's 36 years at Boeheim's side? He said the men's charges were "a bunch of a thousand lies . . .. I believe they are looking for money. I believe they saw what happened at Penn State, and they are using ESPN to get money. That is what I believe.”

There it is: the cover-up, the early media reports, the vociferous defense (remember Penn State President's defense of the AD and VP charged with perjury?), and yesterday's media confirmations, in the form of a third man coming forward and the release of a taped phone call with Fine's wife in which she appears to be aware of his behavior. Now Fine has been peremptorily fired, the president and Boeheim still securely employed. So, next phase? Boeheim is shocked, shocked I tell you, calling for an in-house investigation, and professing an apology to victims: "I believe the university took the appropriate step tonight [firing Fine]. What is most important is that this matter be fully investigated and that anyone with information be supported to come forward so that the truth can be found. I deeply regret any statements I made that might have inhibited that from occurring or been insensitive to victims of abuse."

Isn't this just further evidence that the institutional failures accompanying big money, semi-pro athletic entertainment programs inside the academy are inevitable, systemic, and a part of the culture?

Penn State is not the "bad apple" in an otherwise flawless orchard. It is but one more example of a blight that can potentially strike any tree, and has. Pete Thamel, "Syracuse Fires Fine After New Allegations in Molestation Case," New York Times, November 28, 2011, p. D1.

December 1: "Earlier Wednesday, a new accuser who is not part of the criminal case said in a lawsuit that Sandusky threatened to harm his family to keep him quiet. The 29-year-old, identified only as John Doe, had never told anyone about the abuse he claims he suffered until Sandusky was charged last month with abusing other boys. His lawyer said he filed a complaint with law enforcement on Tuesday. He became the first plaintiff to file suit in the Penn State child sex abuse scandal a day later. . . . The lawsuit claims Sandusky abused the boy from 1992, when the boy was 10, until 1996 in encounters at the coach's State College home, in a Penn State locker room and on trips, including to a bowl game. The account echoes a grand jury's description of trips, gifts and attention lavished on other boys." Genaro C. Armas and Maryclaire Dale, "1st Penn State Abuse Suit Comes From New Accuser," Associated Press/Las Vegas Review-Journal, December 1, 2011.

December 3: "The former Penn State assistant football coach Jerry Sandusky, in his first extended interview since his indictment on sexual abuse charges last month, said Coach Joe Paterno never spoke to him about any suspected misconduct with minors. Mr. Sandusky also said the charity he worked for never restricted his access to children until he became the subject of a criminal investigation in 2008." [Photo credit: New York Times.] Jo Becker, "Center of Penn State Scandal, Sandusky Tells His Own Story," New York Times, December 3, 2011, p. A1.

December 12, 2100: One of the best overviews of, especially, the role of the "culture" surrounding the Penn State football program in permitting the continuation of Sandusky's behavior, is contained in this detailed and lengthy (3750-word) AP story: Brett J. Blackledge, Jeff Donn and Michael Rubinkam, "PSU culture explained away Sandusky," Associated Press/Yahoo.com, December 12, 2011 ("The warning signs were there for more than a decade, disturbing indicators that Penn State assistant football coach Jerry Sandusky was breaching boundaries with young boys — or maybe worse. . . . Too many, from the university president to department heads to janitors, knew of troubling behavior . . . [but] the circle of knowledge was kept very limited and very private. Year after year, Penn State missed opportunity after opportunity to stop Sandusky . . . — all part of a deep-rooted reflex to protect the sacred football program. The fact that so few say they knew is all anyone needs to know about the insular culture that surrounds Penn State — . . . a university cloaked in so much secrecy, in large part, because it is exempt from the state's open records law, and a football program that has prided itself on handling its indiscretions internally and quietly, without outside interference.").

December 17, 2011: Peter Durantine, "Penn State’s McQueary Tells Court What He Saw," New York Times, December 17, 2011, p. D1 ("A Penn State assistant football coach testified Friday that in 2002 he saw Jerry Sandusky sexually assaulting a young boy and that he reported it, in graphic detail, to Coach Joe Paterno and two senior Penn State University officials. “I described it was extremely sexual and that some kind of intercourse was going on,” the assistant coach, Mike McQueary, testified of the suspected assault by Sandusky, a longtime top assistant to Paterno.").

And see, Mary Pilon, "Scandals Test the N.C.A.A.’s Top Rules Enforcer," New York Times, December 17, 2011, p. D17 ("In terms of major scandals, this year has been one of the most calamitous in the history of college athletics. From reports in August about a University of Miami booster providing cash and prostitutes for its football players to sexual abuse allegations against Jerry Sandusky at Penn State and then against a Syracuse assistant basketball coach, fans and college officials alike have begun asking whether the big-money world of college athletics has sufficient oversight.").

December 20, 2011: Much has been written, and rightfully so, about the "culture" of college football, and, among other things, the widespread violation of, and difficulty of enforcing, NCAA rules regarding universities' administrative control of their big sports programs. In fairness, however, this might be as much a matter of institutional, or human, failing as of athletic programs' failing.

Consider a corporation's instinct to refuse to report a disaster, and then minimize its extent once reported. A police department's handling of an officer's killing an innocent civilian. The bank that never reveals a million-dollar embezzlement from inside, or a hack from outside. A military unit's characterization of homicide as mere "collateral damage." A hospital that denies the results of medical malpractice are anything more than an ordinary risk of surgery. Children who lie to their parents, parents who lie to each other, witnesses who perjure themselves on the witness stand.

These widespread examples do not make what was done in any of them right, but they do make each illustration less something uniquely associated with a given institution -- including college sports.

And so it is that we cannot express great surprise that the cover-up of Sandusky's failings by those running Second Mile were very similar to the cover-up by Penn State administrators. There is a heavy incentive, it seems, for anyone to want to avoid, or at least minimize, contributing to one's embarrassment (not to mention criminal self-incrimination). Brett J. Blackledge, Mark Scolforo and Michael Rubinkam, "Former 2nd Mile board members: We needed to know," Associated Press, December 19, 2011 ("Former board members of [Second Mile] . . . say its CEO never told them about a 2002 shower incident . . .. If they knew . . . they say they could have taken steps to better protect children a decade ago. 'Not one thing was said to us,' said Bradley P. Lunsford, a Centre County judge who served on the Second Mile board between 2001 and 2005. 'Not a damn thing.'").

December 23, 2011: How are these abusive relationships created? And even more puzzling, how are children persuaded to maintain them? One of the more instructive examinations of this form of child abuse from the perspective of the child emerges from an Associated Press interview with Bobby Davis of Syracuse. "Michael Hill, "Fine Accuser Felt He 'Owed' Coach," Associated Press, December 22, 2011.

Here's a sampling: "Bobby Davis was a basketball-crazy teen who was handed a virtual all-access pass to the world of big-time college hoops by Syracuse assistant coach Bernie Fine. . . . Davis heard halftime locker-room tirades from the legendary coach [Jim Boeheim], took shots at practice, sat courtside, hit the road and ate nice dinners. Davis, now 39 . . ., says the indebtedness he felt toward Fine made it hard to break from the man he claims molested him throughout his teens and into his late 20s. . . . 'As I got older, I understood more that Bernie had this power. You almost feel it's like a cult in a sense. You don't know how to get away . . .. And as more and more time went on, you feel indebted to him. You feel like you owe him.'"

January 12, 2012: Kevin Begos and Mark Scolford, "Penn State president to face alumni in Pittsburgh," Associated Press/Miami Herald, January 11, 2012, ("[Penn State President Rodney] Erickson is attempting to repair the school's image with alumni, faculty, staff, and students, more than two months since Sandusky was arrested, bringing with it controversy, criticism and contemplation. Some alumni have criticized the school failing to conduct a complete investigation before firing Paterno and ousting Erickson's predecessor, Graham Spanier, while decrying the school's leadership as secretive and slow to act.")

January 14, 2012: Sally Jenkins, "Joe Paterno’s first interview since the Penn State-Sandusky scandal," Washington Post, January 14, 2012, (“'I didn’t know exactly how to handle it and I was afraid to do something that might jeopardize what the university procedure was,' he [Joe Paterno] said. 'So I backed away and turned it over to some other people, people I thought would have a little
more expertise than I did. It didn’t work out that way.'”)

January 19, 2012: Pete Thamel and Mark Viera, "Penn State's Trustees Recall Painful Decision to Fire Paterno," New York Times, January 19, 2012, p. B15 ("The board, scrambling to address the child sexual abuse scandal involving the university and its football program, had already decided to remove Graham B. Spanier as president. Then, many of those present recalled this week, the tension in the room mounted. Joe Paterno’s future was next up. [John P. Surma, the chief executive of U.S. Steel and the vice chairman of Penn State University’s board of trustees] announced that an agreement appeared to have been reached to fire Paterno, too — the trustees having determined that he had failed to take adequate action when he was told that one of his longtime assistants had been seen molesting a 10-year-old boy in Paterno’s football facility. Surma, those present recalled, surveyed the other trustees — there are 32 — for their opinions and emotions before asking one last question: 'Does anyone have any objections? If you have an objection, we’re open to it.' No one in the room spoke. There was silence from the phone speakers. Paterno’s 46-year tenure as head coach of one of the country’s storied college football programs was over, and the gravity of the action began to sink in.")

January 27, 2012: Mark Viera, "Strong Words Resound at Tribute to Paterno," New York Times, January 27, 2012, p. B14, ("Phil Knight, the chairman of Nike, . . . in the memorial’s most riveting moment . . . lambasted Penn State’s board of trustees for firing Paterno . . .. 'It turns out he gave full disclosure to his superiors, information that went up the chain to the head of the campus police and the president of the school . . . The matter was in the hands of a world-class university and a president with an outstanding national reputation. Whatever the details of the investigation are, this much is clear to me: if there is a villain in this tragedy, it lies in that investigation, not in Joe Paterno.'”)

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Thursday, November 03, 2011

SSMIDs, Taxes and TIFs: The Lessons

November 3, 2011, 12:05 p.m.

Say 'No' to Tax Increases, 'Yes' to SSMIDs?!
"Most of the state’s largest cities, including Cedar Rapids, Des Moines, Davenport, Cedar Falls and Waterloo, have a SSMID. It can help a business district go as far as reinventing itself in the face of changing economic forces or simply making a few targeted improvements."
-- Editorial, The Gazette, November 1, 2011
What on earth is an "SSMID"?

It's a cash fund to benefit downtown businesses that I enthusiastically support.

"Whaaa?!" as Jon Stewart might exclaim.

It's no secret that I suffer a severe case of skepticism when it comes to federal, state, or local proposals that involve transferring taxpayers' money to the bottom line of private, for-profit businesses. See, e.g., "The True Price of TIFs," October 1, 2011, and associated links.

So what is it about SSMIDs? Do I now, at long last, "owe my soul to the company store," have I surrendered to the increasingly-powerful forces of that blend of capitalism and government called corporatism, or fascism? (Even Sarah Palin has attacked what she called "the corporatist agenda"; see "Palin Attacks 'The Corporatist Agenda,'" February 9, 2011.)

The "owe my soul" line is from the song "16 Tons," here sung by Tennessee Ernie Ford:

So why do I like SSMIDs?

First off, I find them kind of amusing. This is an age of "rugged individualism," anti-taxes, anti-government, anti-social programs. As Herman Cain has put it succinctly, "If you're not rich, it's your own fault."

So the prospect of the business community voting to increase its taxes is kind of delicious.

It is business persons recognition that there is a point to our doing things together that we cannot do alone; that there is a point of imposing on ourselves the obligation to pay for those things. It is their recognition that "the marketplace," run by disconnected individuals trying to maximize their own profit, is not enough -- even to increase individual businesses' profits, let alone to serve the best interests of all the people.

Substantively, I do like SSMIDs for the same reasons I don't like TIFs.

[Photo credit: CaddyLakGraffix.com]

(1) TIFs involve government officials using money that isn't theirs; it's the taxpayers' money, other communities' and public entities' money. It's very difficult to predict new jobs, or other public benefits from a TIF; the only thing a TIF guarantees is that one lucky business person will be personally enriched with public funds.

SSMIDs, by contrast, involve businesses' money, their money put to purposes designed to improve everyone's business. SSMIDs cost the taxpayers' nothing. In fact, to the extent the SSMID board invests wisely, thereby increasing businesses' profits and property values, SSMIDs may actually reduce taxpayers' obligations.

(2) TIFs require that public officials make decisions about private businesses in which they have personally invested nothing, and about which they may know even less. They did not qualify for public office, and get elected, because of their prior knowledge, experience, and record of business success.

The record of public officials' dispensing of subsidies, bailouts, tax breaks, and other financial incentives to private business is for the most part unknown. There often is no record, no accountability, no transparency, no follow-up to see what was or was not accomplished with the taxpayers' largess, which of the predictions of benefits proved out and which did not. See, e.g., Chris Earl, "The Push for Tax Dollar Transparency; Will People Care?" The Gazette, November 1, 2011 (as Iowa state Senator Joe Bolkcom puts it, "If we’re going to write a check to somebody for $10 million, geez, don’t you think people should know?”).

But to the extent there are records, there are plenty of examples of what, by any measure, would have to be chalked up as, at best, failure.

The decisions of SSMIDs are made by business people. My impression is that everyone is better off when that's the case -- owners, shareholders, bankers, taxpayers, and government officials. That's not to say we -- and business -- don't need or benefit from some regulation of business, to keep competition fair and vigorous, and protect consumers from the worst abuses. It's only to say that when the question is, "What's the most efficient and effective way to promote a community's downtown businesses?", the best answers are far more likely to come from business persons than from government officials.

Not incidentally, this approach also leaves the losses where they ought to fall -- on business, not taxpayers. If government officials guess wrong with a TIF, all the losses fall on taxpayers. If an SSMID board guesses wrong with, say, a promotional idea, the losses fall on business, where they ought to.

So that's a few of the reasons why I applaud Iowa City's business community for its support of a local SSMID, while remaining skeptical regarding TIFs.

As it happens, apparently not every downtown business person shares my enthusiasm. Notwithstanding the popularity of SSMIDs throughout the country, including Iowa (as the opening quote on this blog entry illustrates), they (and some of those commenting on the newspapers' stories) attack SSMID's as if this was some radical new idea that all right-thinking business people should obviously oppose.

For some, a tax is a tax is a tax. But for what is currently a large enough plurality of them to bring this SSMID into existence, they see the benefit of people working together for common ends that they cannot accomplish, individually, on their own, and the benefit of paying for the effort with a form of taxation.

Hopefully, the lesson we may all learn from this effort is that government is another example of our coming together to accomplish those things we cannot achieve on our own, and that taxes are a useful way to pay for those benefits.

Taxes are, after all -- like cash, bank loans, credit cards, and barter -- just another way of buying the stuff we need. See, e.g., "It's Not About Taxes," October 24, 2006 ("We buy from government our roads and bridges, public schools, libraries and parks, fire and police protection, judicial system and jails, and the safety of our food and drugs. To speak of 'cutting (or increasing) taxes' makes no more sense than cutting or increasing 'cash,' 'checking accounts,' or 'credit cards.' Taxes are just another form of currency we use to buy stuff.").

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Here is the entirety of the editorial with which this blog entry began, along with brief excerpts and links to some of the recent news stories about this particular SSMID.

Do-it-yourself business tool
The Gazette
November 1, 2011, p. A4

Tonight, the Iowa City Council can take the first step toward approving a tax that many downtown business owners are asking for. Asking to be taxed more may sound unusual, but there’s solid thinking behind the proposal.

The council is considering a self-supported municipal improvement district — SSMID for short. An additional $2 per $1,000 of taxable value in property taxes, starting a year from now, would give the downtown business district substantial funds for marketing, beautification and other improvements — well beyond what other business groups currently provide.

We think the proposal ties in with city leaders’ stepped-up emphasis on revitalizing downtown with a mix of more retailers, owner-occupied housing and office space. The SSMID wouldn’t raise taxes on residents or businesses not in the district. And it gives downtown owners a say in how the money should be used, via their own board.

Most of the state’s largest cities, including Cedar Rapids, Des Moines, Davenport, Cedar Falls and Waterloo, have a SSMID. It can help a business district go as far as reinventing itself in the face of changing economic forces or simply making a few targeted improvements.

Iowa City’s downtown faces tough competition from the Coralridge Mall and other nearby retailers. But it also offers distinctive flavor because of its popular Ped Mall area and the proximity of the University of Iowa. Since voters OK’d the 21-only bar rule and it took effect in June 2011, both city and UI leaders have a big stake in pushing downtown’s evolution from a predominantly alcohol-fueled entertainment district to a thriving city center with more variety.

The SSMID can be a valuable tool in the evolution. And heading into tonight’s city council public hearing and discussion, support from business owners is substantial. State law requires at least 25 percent of the property owners and 25 percent of the assessed property value in the district to sign a petition to consider a SSMID. Iowa City’s numbers are 39 percent and 49 percent respectively.

The process comes with transparency and safeguards. Three of the seven city council members will not vote because they are downtown business owners. Approval requires at least three “yes” votes on each of three readings. A protest petition can stop the plan if signed by 40 percent of owners with 40 percent of the property value.

The UI has said it will contribute another $100,000 annually, reflecting the downtown’s importance to the institution, boosting total SSMID funding to about $380,000.

The proposal comes with no guarantees of success, of course. But who better to take this calculated risk than the business owners? They understand that being proactive improves the odds for a prosperous future.

Council gives the first approval of SSMID;
Supporters hope to have it up and running by January
Mitchell Schmidt
Iowa City Press-Citizen
November 2, 2011, p. A3

The Iowa City Council has approved the first reading of an ordinance to add a self-imposed tax to many downtown businesses to raise funds aimed to benefit the central business and near northside districts.

The Self Supporting Municipal Improvement District ordinance would be a self-imposed additional taxing district that would levy a tax on the properties within the district to be used toward marketing, business retention and expansion, information management and physical improvements.

Karen Kubby, chairwoman of the Downtown Association said the district had gained enough support from the community to move forward with a recommendation and handed in an additional signature during the Tuesday council meeting that she said brought the approval rate up to 40 percent.

The SSMID, proposed by the Downtown Association and recommended by the Iowa City Planning and Zoning Commission, would impose a levy of $2 for every $1,000 of taxable income for the district’s companies — which would be coupled with an annual $100,000 contribution from the tax-exempt University of Iowa for the school’s investment in a “vital downtown,” according to a memorandum sent to City Manager Tom Markus. . . .

Gregg Hennigan, "Downtown Iowa City tax district gets initial City Council support; The levy would take effect in July 2012 and generate an estimated $282,000 a year," The Gazette, November 2, 2011, p. A3.

Asmaa Elkeurti, "City Council votes in favor of tax district in second public hearing," Daily Iowan, November 2, 2011, p. A7.

Mitchell Schmidt, "Group ready to hit ground running if SSMID is approved; Critics worry tax won't benefit everyone equally," Iowa City Press-Citizen, November 3, 2011, p. A3.

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