. . . because much of the content relates both to Washington, D.C., and "outside the beltway" -- the heartland, specifically Iowa -- and because after going from Iowa to Washington via Texas and California I subsequently returned, From DC 2 Iowa.
Showing posts with label economic development. Show all posts
Showing posts with label economic development. Show all posts
"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.
(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.").
# # #
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.
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.
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. . . .
There are 13 categories of reasons why TIFs are usually, if not always, a bad idea that do significant harm to business, government, elected public officials -- and, of course, taxpayers. [Photo credit: Benjamin Roberts/Iowa City Press-Citizen]
One of those categories is the subject of this two-story presentation: how TIFs can tie the hands of the governmental unit that creates them (and otherwise exact high "opportunity costs"), lower its credit rating for government bonds, deprive neighboring governmental units of needed tax revenues, and related consequences.
Here is a summary presentation of another 12 categories of reasons why they should be avoided:
TIFs are not necessary for Iowa City and surrounding communities. We're not exactly going through a depression, with store fronts boarded up, unemployment around 40%, or other justifications for early New Deal-type programs.
Their "opportunity costs" are enormous for local property taxpayers and local governments. County Supervisor Rod Sullivan estimates they are currently taking some $700 million worth of business property off the tax rolls. That means both more taxes for the rest of us and cuts in needed programs.
TIFs tilt the playing field, are unfair to business, and cause imbalance in the free market. Why the business community doesn't rise up in righteous wrath over TIFs has always amazed me. It's tough enough out there in that free market jungle, what with competition from the likes of Wal-Mart and comparably advantaged businesses, government regulations that sometimes seem a wee bit irrational, and the unforeseeable challenges. It just seems so fundamentally unfair that, on top of all that, a business person should have to compete with someone who is handed the kind of competitive advantage represented by a TIF or other government subsidy. Talk about a "level playing field"! TIFs really upset a smoothly working free market -- and to no one's real advantage except for the lucky recipient of the taxpayers' largess.
There's no evidence that Iowa City's economy and development won't continue to expand at a satisfactory rate driven by nothing more than the forces of the marketplace -- entrepreneurs, investors, venture capitalists, banks and other loaning institutions.
TIFs (and other shifts of taxpayers' money to for-profit enterprises) don't work. Governor Vilsack offered Maytag $100 million in taxpayers' money not to leave Newton. It went to Michigan anyway. Should he have offered $200 million? I don't think so.
Business comes to an area for other reasons than TIFs: available skilled workforce, transportation, communications, and other infrastructure elements -- plus "quality of life" assets such as schools, parks, libraries, theaters, trails, entertainment venues, restaurants, and natural settings such as mountains, beaches, woods, rivers and lakes. (A business that came to an Iowa Mississippi River town recently explained that it didn't choose the location because of state subsidies, it chose the location because it needed access to barge transportation on the river.)
Transferring taxpayers' money to for-profit ventures in the name of "free private enterprise" carries so much hypocrisy that City Councilors who talk that way ought to hide in the shadows with their shame. Where's the ideological purity of these "greed is good," privatization, "let the marketplace do it all" pro-business advocates when they're holding out (or filling) a tin cup? Business proposals that make sense have no trouble getting funding; owners, investors, venture capitalists, and creditors are looking for places to put their money and will respond to well-crafted business plans. Free private enterprise ventures can make sense for a community. So can socialist ventures such as roads, schools, libraries and parks. However, the more they are kept distinct the better it is for both.
If free private enterprise can't fund a project with private sector money, that just might be a sign that it's not a very good place to be putting the public's money either.
How can one possibly judge with accuracy whether, if the TIF were not available, the project would not go ahead? When free public money is available to a for-profit venture the temptation to become a tough negotiator, and to just slightly misrepresent the facts, is overwhelming. And there's virtually no way to test the blackmail.
The TIF-granters' record ain't great. For the most part, the public officials handing out our tax dollars to the wealthy are more professionally skilled at keeping constituents (and campaign contributors) happy, getting re-elected, and moving up to higher office, than they are at evaluating business proposals. There is a long list of TIFed (or otherwise publicly subsidized) private projects that have gone belly up, or failed to meet their promised construction schedules, or goals for new employees at designated pay levels.
Will we lose some businesses if we don't offer TIFs? Maybe. Let other towns give away their taxpayers' money. We don't need to play their game. As one of the top-rated towns in the nation by any one of a number of measures we'll get our share of new businesses without offering TIFs. Have a little self-confidence. Vilsack's $100 million couldn't keep Maytag here. A firm that likes San Diego's climate, or port access to the Pacific Ocean, probably isn't going to come to Iowa City for a TIF. A firm that believes it needs a location giving it rapid access to the O'Hare airport in Chicago (whether for moving persons or cargo) probably can't be talked into using the Iowa City-Cedar Rapids "Eastern Iowa Airport" no matter how big the TIF.
Step up to the plate councilors and business community. If City Council members, or members of the business community, think we need more economic growth and development than the marketplace can provide on its own there's nothing to stop them taking up a collection or offering personal economic incentives to new businesses. Iowa City's banks could offer new businesses, or proposals for business expansion, reduced-rate loans. The business community could create its own venture capital fund to invest in, or loan to, business developments they thought worthy. And I'm sure they'd be more than happy to accept every dollar from a City councilor who would like to help out.
Reconsidering the Proposition That "All TIFs Are Evil"
Is it possible that describing all TIFs as "evil" is a bit of a stretch -- depending on your sense of evil? Would "all TIFs are outrageous" be a little more restrained?
Is it even possible, like being "just a little bit pregnant," that there are some very modest, or at least very precise, uses of TIFs that make sense for everyone?
Never before has that possibility come from my lips. But recent conversations with experienced and knowledgeable, independent individuals whose wisdom and judgment I value -- and who are opposed to TIFs in general -- have caused me to rethink it. I'm not convinced, mind you; I don't yet have enough information to even reject the idea, let alone accept it; all I'm saying is that my mind is open to considering the possibility.
So far, the conversations have been relatively superficial (only because we haven't had the time to pursue the issue in greater depth).
The general idea, if I understand it, is that TIFs can sometimes produce a public benefit in a for-profit venture that, but for the TIF, would not exist. I haven't yet been given specific examples, but my guess would be this might include such things as a greater set-back creating more open, green space, or intermixed low income housing, or more parking spaces.
The theory might be that this is but piggybacking a public goal on top of a private undertaking -- a public goal that would otherwise require the governmental unit to undertake the entire cost of the project. This would thus be somewhat akin to the government contracting with a private trash pickup service, or a private road builder to fill potholes -- public money may be going to help enrich a for-profit business, but that money is purchasing a public benefit that would otherwise have cost more.
(Note the emphasis on public benefit. Public schools, libraries, parks, and trails may help attract business to a community; after the business arrives, its employees will benefit. The point is, so will everyone else in the community. On the other hand, providing TIFs and subsidies, water and sewer lines to a new manufacturing plant -- or roads traveled almost exclusively only by the plant's employees -- do not have as direct a benefit to every taxpayer and citizen in the community.)
My first reaction to this argument is one of the 12 categories above: "How can one possibly judge with accuracy whether, if the TIF were not available, the project would not go ahead?" It may be no government intervention of any kind is required to get the benefit.
Second, if there were a way of definitively proving that is not the case, state, county and municipal governments have rather substantial regulatory power in the form of statutes, ordinances, agency regulations, fire and building codes, and zoning. So far as I know, it is not common for governments to subsidize, or provide tax breaks, to gain the public good of building materials and electric wiring less likely to burst into flame, restaurants' kitchens less likely to house rats and cockroaches, or rental housing fit for healthy living.
At a minimum, when governments are in pursuit of the public good in for-profit enterprise, I would like to see them totally exhaust all other possibilities for bringing about the end they desire before paying for it with taxpayers' money in the form of TIFs, other tax forgiveness, subsidies, and cash payments.
One of my trusted advisers tells me that, while my rule would certainly be preferable, it is often impossible to get the votes of legislators or city council members for that approach. I am quite willing to have conversations about political reality and corruption, but it does not seem to me that such considerations bear upon the inherent virtues and vices of TIFs as such. And I'd like to get the theoretical understanding of TIFs straight first, before getting into debate about necessary political compromises.
Third, so if (a) a desirable public benefit can be identified that is viewed by the public as a top priority, and (b) it can somehow be proven beyond a reasonable doubt that the marketplace won't create it without taxpayer money, and (c) the governmental unit has no legislative or regulatory way to insist on the benefit without paying for it, and (d) it doesn't make sense for the governmental unit to undertake the entire benefit-producing project on its own (government planned, constructed, managed and operated), then (d) before pledging any public money to the project (TIF or other tax forgiveness, subsidy or cash) what I am looking for is some predictable, analytical,check list of questions, benefit-cost, structured way to evaluate which projects clearly do, and do not, qualify for public financing, and why.
A somewhat analogous approach, in an entirely different context, is what's called "the Powell doctrine," the questions one needs to address before concluding that involving the military in a matter of our foreign relations will be more constructive than destructive of our national interests. See, e.g., "War in Libya, the Unanswered Questions," March 23, 2011.
So that's it for now. I've yet to see a TIF I thought made sense, a TIF for which none of the 13 categories of objections was applicable. I am impressed with the overwhelming majority of my fellow citizens (who have expressed views in comments on the Press-Citizen stories and other TIF projects earlier) who seem to share not only my general conclusions, but the precise arguments (categories) I have put forth. My mind is open to considering data and arguments regarding a small category of exceptions. But I have yet to see the standards that would be used to qualify those applications.
Champions' Wins Can Be Taxpayers' Losses; Lessons for Iowa (bought to you by FromDC2Iowa.blogspot.com*)
There is at least one significant way in which Super Bowls are far less super than the claims in its super boosters' hype.
Sunday's [Feb. 6, 2011] game between the Pittsburgh Steelers and the community-owned Green Bay Packers was by many measures a truly "super" bowl game. It was a great game to watch; which a record 111 million did in front of TV screens and an almost-record 110 thousand did in the Texas-sized and styled super stadium in Arlington. Whether the TV commercials will have a super impact on increasing sales remains to be seen, but they produced some super laughs for the audience, potential super awards for the creators, and at $3 million for each 30 seconds some super revenue for the broadcasters.
The two-year-old Dallas Cowboys' stadium used for the event, Cowboys owner Jerry Jones' three-million-square-foot "Palace in Dallas," the world's largest domed stadium, cost $1.15 billion to build -- of which the taxpayers of Arlington contributed $325 million.
However, its likely impact on the economy of Arlington, Texas (and its Dallas-Ft.Worth environs), is going to be far less super than Super Bowl boosters and promoters routinely claim when their billionaire owners approach local taxpayers, hat in hand, begging for their equivalent of public housing.
With no pro teams in Iowa, and open stadiums during Iowa winters, it's unlikely there will ever be a Super Bowl game played in an Iowa town. Nonetheless, there are still lessons here for Iowans -- for the Iowa City City Council's love affair with the corporate benefits from local taxpayers called "TIFs," and Governor Branstad's apparent belief that transferring taxpayers' money to the bottom line of for-profit corporations (and campaign contributors) is ideologically consistent with "free private enterprise" and an efficient way to "create jobs."
The Super Bowl host committee commissioned a report that says the region will see a $611-million windfall as a result of Sunday’s game. . . . Robert Baade, a sports economist at Lake Forest College, . . . says host committees forget to factor in things like tourists and convention goers who are crowded out during mega-events like the Super Bowl, money that goes home with the players, team owners, and national hotel chains, and costs the city bears in clean-up and safety. 'If you move that decimal point one place to the left, you’re much closer to reality,' Baade says. '[T]he $60 million figure is likely to be far more representative of what we’ll see.' And, Baade says, the real figure might be closer to $30 million. . . . [Do pro teams and Super Bowls bring new businesses to town?] Professor Baade says, corporate sponsors and business executives have much more tangible things to think about . . .. '[T]hey’re going to consider things like: "Is there a skilled labor force?," Baade said. ' . . . the tax environment . . . the school system. . . . [O]ther factors . . . are far, far more important for the bottom line than a Super Bowl or even the presence of a pro sports team.'
The $600 million benefit claimed this year is 50% more than last year's NFL estimate of $400 million -- when economists found the League's math equally flawed.
"'All they do is add and multiply,' [University of South Florida economist Phil] Porter said. 'They never subtract and divide.' . . .
Economists say the NFL-sponsored studies look at the 'gross' spending by Super Bowl visitors but not the 'net' effect.
Some tourists, economists say, may intend to visit South Florida for vacation, but will avoid the area because of the Super Bowl. Also, with Super Bowl attendees spending much of their money with national hotel and rental-car chains, most of the influx is going to corporations headquartered elsewhere, such as Hilton, Marriott, Hertz and Avis.
'The airfare being spent on American Airlines isn't ending up in Miami,' said Craig Depken of the University of North Carolina-Charlotte. 'A lot of it is being repatriated to Dallas.' . . .
'I'm estimating north of $400 million,' said Rodney Barreto, chairman of the host committee. 'This is a huge event.' . . .
But independent economists have tossed the challenge flag and demanded a closer look at what they consider the puffery behind the big game's economic effect.
'If you can move the decimal point one digit to the left, you would get a more realistic estimate,' said Andrew Zimbalist, a prominent sports economist at Smith College. 'If they were arguing $40 million, I would say that's a realistic impact; $400 million is not.'
Victor Matheson, an economist at the College of the Holy Cross, said Super Bowls generate a boost of $30 million to $90 million.
'Absolutely, you'll take it,' he said. 'But on the other hand, it's one-quarter to one-tenth of the figure the NFL is publicizing.'
Economists from the University of Chicago, the University of North Carolina-Charlotte and the University of South Florida have reached similar conclusions.
Phil Porter of the University of South Florida sees a link between the NFL's optimistic economic impact estimates and team owners' lobbying for public money for stadiums.
'The NFL is not in the business of giving us $400 million every year,' Porter said. 'They're in the business of telling us they're giving us $400 million every year so we'll give them things.' . . .
[I]t's unclear when the Super Bowl and Pro Bowl will come back to South Florida. NFL executives say the Super Bowl might not return for an 11th visit without $250 million in improvements to the Miami Gardens facility now known as Sun Life Stadium."
For years I wrote in a similar vein about Senator Grassley's belief that spending $50 million of federal taxpayers' money on an indoor rainforest in an Iowa cornfield could somehow pass the laugh test and make any economic sense. See, e.g., the entire Web site I devoted to the subject: "Earthpark."
More recently I've addressed the triumph of boosterism over economic analysis in some blog entries and Press-Citizen columns.
Nicholas Johnson, "Making 'Shop Locally' a Meaningful Suggestion," Iowa City Press-Citizen, December 3, 2010, p. A9, embeded in "Downtowns' Future: 'Shop Locally' Column & Dialogue; Making "Shop Locally" a Meaningful Suggestion," December 7, 2010 ("[T]he Press-Citizen Editorial Board is urging us to 'shop locally.' But what does 'buy local' mean? [Money spent here doesn't necessarily stay here.] To analyze in detail what happens to each portion of the dollars we spend in Johnson County establishments would require more data and degrees in economics than most of us would ever have or want. . . . [But without it, 'buy locally'] is just a rousing bumper sticker of a slogan, and, as Tom Joad says to the filling station attendant in Grapes of Wrath: 'You're jus' singin' a kinda song.'").
"The $100 Million Hawkeyes' Football Team; Hawks: "How Do I Love Thee? Let Me Count the Dollars," August 28, 2010 ("The Iowa City/Coralville Area Convention and Visitors Bureau says the Hawkeyes' Football Team is about to bring $100 million to Johnson County this fall. . . . Really? $100 million? . . . [T]he only sales that can fairly be attributed to football would be those above and beyond those that would have occurred without a football game. What is the average Iowa City/Coralville revenue for . . . weekends from September through November -- excluding the weekends when there are home football games? What is the average during weekends when there are football games? It is that difference, that 'incremental increase,' that is relevant. Otherwise you're counting revenue that would have gone to local businesses even without the games. Second, how much of that incremental income would never have been earned 'but for' the football game, and how much is merely 'time-shifting'? . . . [Coralridge Mall shoppers who do not attend football games may have] contributed to increased retail income when there was a football game in town, that's true; but they have not contributed more income to merchants for the year in question than they would have contributed anyway without that coincidence. It's not 'but-for' incremental income.").
Nicholas Johnson, "Flying Video Screens, Stories and Tourism," Iowa City Press-Citizen, August 30, 2008, p. A15, embedded in "Tell Me a Story; The Stories Project," August 30, 2008 ("[A]n Iowa City monument to stories is certainly more appealing than 'a rain forest in a cornfield' -- the earlier proposal for Coralville. But good ideas are a dime a dozen. The challenge? Finding the next dime. Something rain forest promoters never found. Whether Stories makes sense requires the same analysis to which I subjected the rain forest. . . . In fairness, Stories’ promoters acknowledge their details aren’t nailed down – ‘"flying video screens" and holographic projections,' school, bookstore, restaurant? But it’s hard to be 'for' or 'against' a thing not knowing what the 'thing' is – the rain forest’s persistent problem. ('It’s a floor wax, it’s a desert topping; it’s whatever they want it to be.') So all I can offer is an all-purpose sampling of issues for any attraction.").
"Chicago Wins Olympics Bid; Why Chicago Won the Olympics Bid," October 5, 2009 ("The fact is that, most of the time, winning an Olympics bid, like many other efforts at local boosterism, turns out to be a Pyrrhic victory. . . . [M]ost community cheerleaders, like modern day George Babbitts [Sinclair Lewis, Babbitt (1922)], with confidence and pride in their town truly believe that their idea -- whether an indoor rain forest, the world's largest ball of string, or hosting an Olympic event -- really will 'put their city on the map,' while bringing tourists and their tourists' dollars to town. Who needs a business plan when 'everyone knows' what a great idea it is? . . . All too often the construction money can't be found, or the project is built but it turns out that 'build it and they will come' only works in the movies. Or enough public debt is incurred that it is, with the declining revenues that could have been predicted but weren't, the death knell for the project and then -- like paying for a dead horse -- takes years, if ever, to pay off. But there is no effort at community promotion for which there is a greater disparity between the promised economic benefits and the ultimate disappointment than Olympic venues.").
For more on our excessive focus on sports reaching from pro to college to high school to junior high and elementary schools, see "Fandom; Super Bowl, Super Mystery," January 30, 2011.
And for more on use of taxpayers' money for campaign contributors, see Nicholas Johnson, "Branstad and Public Transparency," Iowa City Press-Citizen, January 5, 2011, p. A7, embedded in "Governor Branstad's 'Transparency;' Making 'Transparency' in Government Meaningful," January 5, 2011. Accord, see Donnelle Eller, "Study Questions Branstad's Economic Proposal,"Des Moines Register, February 2, 2011 ("States that have switched to public-private partnerships like the one Iowa Gov. Terry Branstad has proposed have experienced misuse of taxpayer money, excessive executive bonuses and questionable awards, a national group [Good Jobs First, a Washington, D.C., research group] says. . . . [S]tates like Iowa that are considering public-private partnerships should focus on improving existing economic development efforts rather than seek to create agencies. 'Turning economic development over to public-private partnerships is fool's gold,' said Greg LeRoy, Good Jobs First executive director. 'What really matters is business basics: strategic public investments in skills, infrastructure and innovation - not privatized smokestack chasing.'"). See the similar observation of sports economist Robert Baade in the first major blocked quote in this blog entry, "Professor Baade says, corporate sponsors and business executives have much more tangible things to think about . . .. '[T]hey’re going to consider things like: "Is there a skilled labor force?,"' Baade said. ' . . . the tax environment . . . the school system.'"
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* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Making "Shop Locally" a Meaningful Suggestion (bought to you by FromDC2Iowa.blogspot.com*)
Note: A couple of weeks ago, Nicholas Johnson, "'Buy Locally'? Good Luck," November 24, 2010, appeared here as a blog entry. Friday a version appeared in the Iowa City Press-Citizen as an op ed column. Although the Press-Citizen has a readership multiples of that of this blog, because the blog has readers throughout this and other countries that are not Press-Citizen readers, and the subject is one of interest to many communities, business people, and city planners elsewhere, I thought it worth reproducing here.
Moreover, it produced a significant (by Press-Citizen's standards) number of comments about the column in the newspaper's online edition. So some of my online responses to those comments are also included in this blog entry, below, following the column.
"Downtowns" in communities all around the world used to be city centers -- a place where citizens gathered to shop, meet, chat and eat. Increasingly, for a variety of reasons, as cities grow in size suburban shopping malls have assumed many of those functions.
Can old downtowns apply a fresh coat of paint and once again become the "malls" of their metropolitan areas? "Shop locally" campaigns are an effort in that direction. They encourage citizen shoppers to assume a patriotic obligation to shop downtown even though the products cost more than in the big box stories, the stores are not clustered in one place, and the absence of parking (or its provision in expensive parking "ramps") makes the experience less convenient and pleasant.
I argue (in one of the comments) that downtowns need to reinvent themselves, rather than try to recreate the economic and social role they played 80 years ago.
But even if a "shop locally" campaign is thought wise, we need to know what we're talking about. How much of the money we spend in local stores actually stays, and circulates, throughout the local economy? What do we need to do to keep more of it in our home towns?
# # #
Making 'Shop Locally' a Meaningful Suggestion Nicholas Johnson Iowa City Press-Citizen December 3, 2010, p. A9
Many local businesses become profitable, "go into the black," the day after Thanksgiving ("Black Friday"). If it weren't for our purchases from Thanksgiving through the end of the year, many wouldn't be around in 2011.
So the Press-Citizen Editorial Board is urging us to "shop locally."
But what does "buy local" mean?
To analyze in detail what happens to each portion of the dollars we spend in Johnson County establishments would require more data and degrees in economics than most of us would ever have or want.
• Raw materials. We cannot control the portion of what we pay that goes for raw materials, or where they come from -- such as iron or aluminum ore. (China controls over 90 percent of the rare earth minerals in cell phones and electronic products.) An exception would be locally produced foods at our farmers markets. (Although even farmers may import seeds or fertilizer.)
• Manufacturing. What portion of what we pay for products "bought locally" goes to manufacturers in the U.S., let alone Iowa City? Almost none, except for local artists and artisans -- who may use brushes and metals from elsewhere.
• Packaging, transportation and warehousing. What portion goes for packing and shipping? The worker who made your cold cereal box earned a larger share of what you paid than the farmer who grew the grain -- and neither of them lives here. That's true for most of the packaged products we "buy locally."
• Rent and utilities. A portion of what's embedded in the price we pay are things like rent and utilities. Last I knew MidAmerican Energy was owned in significant part by Warren Buffet. Mediacom is owned by some guy in New York. The portion of our "local purchase" that we, or a local business, promptly sends out of state does little for our local economy.
• Franchises; national chains. How large a portion of the price of anything at Best Buy stays in Coralville, rather than going to corporate headquarters? Why, and by how much, is that better than an online Best Buy purchase? How large a portion of our "buy local" money do other "local businesses" send to the remote corporate headquarters of national chain restaurants, retail outlets and motels?
• "Local" owners. Whether a stand-alone business, or a franchise, how "local" is the owner or manager? Do they spend the profits here -- or invest in a distant mutual fund? Or have they long since retired to Arizona or Florida, and spend there?
• Workers' pay and benefits. Finally, how much of what you're spending when you "buy local" is actually ending up in the pockets of the workers in that establishment? Does the owner pay a "livable wage"? If you want your money to circulate as fast as possible locally, giving more of it to local workers is the answer.
There also can be other-than-economic benefits of "buy local," in quality, environmentally, socially and healthier foods.
So, what should the Press-Citizen Editorial Board do if it's really serious about its "shop locally" campaign?
Get real. Get specific. Give us the information we need to fall in step, intelligently and meaningfully, behind its drum major. Do the research and give us the answers to the dozens of questions, such as, "what's the difference, in terms of what stays in the local economy, between buying a hamburger at Hamburg Inn No. 2 and at McDonalds?" Tell us how much of our merchants' rent money leaves town.
If the Press-Citizen would give us the tools -- the precision tools -- we need, I and a lot of other local citizens would be willing to do the job.
Without the tools, "shop locally" is just a rousing bumper sticker of a slogan, and, as Tom Joad says to the filling station attendant in "Grapes of Wrath": "You're jus' singin' a kinda song." _______________ Nicholas Johnson, a former FCC commissioner, teaches at the University of Iowa College of Law and maintains www.nicholasjohnson.org and FromDC2Iowa.blogspot.com.
# # #
The Dialog
Note: Out of respect for the anonymous authors, their comments have not been reproduced here in full, nor have their identities been revealed when known. When my response does not clearly identify the points they made, they have been summarized in brackets. The dates and times are automatically inserted by the Press-Citizen when the comment is posted.
[1] Random responses:
1. dowell. (a) "It isn't where all the materials come from." Right. My point was an appeal for precision. When you give a local merchant $1000 for a product you haven't put $1000 into the local economy. So, how much does stay here? (b) "Makes shopping seem more fun." Agreed. As I say, "There also can be other-than-economic benefits of 'buy local'"
2. Nospinatall. "Shop geographically local [supports] local employment [and] our local economy." Absolutely. As I wrote, "If you want your money to circulate . . . locally, giving more of it to local workers is the answer."
3. haddonm. I like your three categories of "buy local" (and agree with your 1, 2, 3 ordering). ["1. Buying something produced locally from a person who is a local. . . . 2. Buying from a locally owned business that is not a franchise. . . . 3. Buying from a locally based owner operating a franchise. . . .."]
4. mariaconz. ["A lot of local employers don't pay a livable wage to their employees . . .."] Right. As I note, local owners' profits, if "invest[ed] in a distant mutual fund," don't do much for the Johnson County economy. Failure to provide workers the adequate pay that WOULD recirculate here is short sighted.
Thanks all, for reading column and for comments.
12/3/2010 11:25:20 AM
[2] My 10% "local bonus" rule.
Back in the days before computers, I could buy from afar with a catalog or newspaper ad, 800 number, credit card, and shipping. The prices were often less for me retail than local merchants could buy wholesale. My rule of thumb was a willingness to pay up to 10% more for a product locally than I could get it for elsewhere just to keep the money here. More than that I was unwilling to do.
Now, you see, I'm wondering how much of that money DID stay here.
This also raises another issue. With our easy access to a market that is now global, rather than limited to Eastern Iowa, it puts an even greater responsibility on our local merchants, of whatever stripe, to put extra effort into buying wisely for us -- with the maximum possible quality at the lowest possible cost. They have as much responsibility to "offer locally" as we have to "buy locally." 12/3/2010 11:32:04 AM
[3] "this_guy" (12/3/2010 3:23:23 PM) wonders "why the burden falls on the Press-Citizen to define and describe . . . what it means to 'shop locally' . . ." -- as I've suggested in this column.
Of course the local Chamber should contribute data. So could the Iowa Policy Project, League of Women Voters, College of Business, City planners, and numerous other citizens.
But the P-C believes in and practices "civic journalism" ("Attempting to situate newspapers and journalists as active participants in community life, rather than as detached spectators. Making a newspaper a forum for discussion of community issues." Wikipedia.org; and see Pew Center for Civic Journalism.)
Yesterday's (Dec. 4) example: Josh O'Leary's lengthy, excellent p. 1 spread ("Making Plans South of Town; Planners Outline Long-Term Expansion Goals for Iowa City").
I don't think the P-C considers civic journalism a "burden." But "this_guy" is right: it falls on all of us, not just the P-C's few remaining reporters.
12/5/2010 5:37:34 AM
[4] (1) of a multi-part reply to elliottb (12/3/2010 5:17:04 PM), capitalist-pig, OutlawThunder, haddonm, iowabridges, this_guy (12/4/2010 2:17:15 PM), elliottb (12/4/2010 4:43:24 PM), and haddonm (12/4/2010 6:01:51 PM):
All seem to recognize the fact that retail shoppers have moved from city centers to malls. haddonm considers his doing so worthy of confession. capitalist-pig says it's ideologically impure not to do so. Price seems to be a major motivation, but elliottb notes as well "one-stop shopping with much greater selection and . . . easy visible access to parking." haddonm wants to know "what would cause anyone living in Iowa City to drive to said mall," while iowabridges explains he's "not in the downtown area very often."
So urban sprawl, suburbanization, and Interstate highways combine to make increasing numbers of Americans closer to malls than downtown areas. There are limits to buy local.
The answer? Downtowns have to reinvent themselves (as ours is beginning to do).
12/5/2010 6:30:30 AM
[5] (2) of multi-part reply:
But 2010-11 is just a moment in time. Let's put this in a timeline perspective.
In the 1830s there was less trade in Johnson County. Folks grew and made much of what they needed. By the 1850s and '60s the RRs changed some of that. Recall Iowa doesn't just have 99 counties; each of those counties is filled with townships and small towns -- Lone Tree, Kalona, Hills and Joetown. They were the malls of their day.
By the 1930s and '40s, with the automobile and better roads, downtown Iowa City had become Johnson County's "mall" with the "one-stop shopping . . . selection . . . and easy visible parking" elliottb mentions. There were no parking meters or multi-level ramps. You parked in front of the stores; "double-parking" briefly if necessary. Downtown offered the 1930s version of the variety in today's Coral Ridge Mall -- barber shops, multiple movie theaters, Sears, Woolworths, hardware and clothing stores. IC had its impact on small town merchants.
12/5/2010 6:35:01 AM
[6] (3) of multi-part reply:
Today, of course, the world's people, including Americans, have access to a global mall that impacts on far more than our downtown. When downtown Iowa City was Johnson County's mall, the 140 million people living in the U.S. were American manufacturers' customer base. Competition was between American companies. Americans held jobs making stuff for other Americans.
No longer.
We're borrowing from China to buy products manufactured in China (and to provide tax breaks for the rich).
Creativity, coming up with "the next big thing" that works economically for America -- and for Iowa City's downtown -- is our challenge. Fortunately for us, the American communities best positioned to respond to that challenge born of necessity are college communities.
Because well up on that list is Iowa City.
Let's get on with it. 12/5/2010 6:41:11 AM
_______________
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
Here are some excerpts, followed by some of my own analysis from two years ago:
Iowa voters have seen much evidence of the Iowa gambling industry's power over legislators in recent years.
In 2007, the Legislature and the governor agreed to dry up the requirement that gambling facilities with riverboat casino licenses locate their gaming floors over water. . . .
In 2008, the Iowa Legislature exempted the gambling floor of casinos from the state smoking ban. . . .
And now the casino industry is looking to gain even more of a foothold into Iowa politics. The Iowa Racing and Gaming Commission is scheduled to meet this week to consider increasing the number -- and most likely the influence -- of casinos in the state. . . .
[W]e hope the commission recognizes there simply is no need for the state to increase its addiction to gambling dollars.
Gambling too often becomes the fool's gold of economic growth. If Iowa really wants to grow its small towns and increase tax revenues, then lawmakers need to continue to support businesses and industries that help create new wealth and new opportunities. . . .
I would take issue with that last suggestion -- as I have in numerous blog entries. The best way to "support businesses and industries" with taxpayers' money is not the "support" that goes directly to the bottom line of a for-profit enterprise. It is to make a public investment in infrastructure (e.g., roads, broadband, schools, libraries, community colleges, parks and trails, etc.) that can help attract business to the state while sharing the benefits of that investment with every Iowan.
Aside from that, I think the editorial is right on point.
The problem, of course, was the initial decision to get into the gambling business. It was, after all, a business that was originally prohibited by the Iowa Legislature in the same chapter of the Iowa Code that prohibited prostitution. Once we have established 20 in-state casinos, as we have -- like the 50 bars within walking distance of the campus in Iowa City -- the net effect of prohibiting any more (while certainly better than adding to the number) is to increase the "medallion value," the oligopolistic profits, of an industry effectively protected from competition.
Here are some earlier thoughts of mine regarding the wisdom behind the hope that Iowans might, somehow, gamble their way into economic prosperity:
1. It doesn't "create jobs" or "improve Iowa's economy" to move jobs and revenue from one county to another. Politicians and business persons alike proudly assert that every new business in Iowa is creating jobs, and improving the economy. They claim too much. Riverside's figures make the point. So did the Coral Ridge Mall. (I don't have the figures for the latter off the top of my head, but it's fairly close to say that it grossed about $100 million in retail sales its first year -- while the surrounding counties lost something like $90 million in retail sales.) I'm not suggesting this is an argument for, or against, starting up new businesses; but it is a caveat regarding the claims of the economic benefits they bring. It turns out it's true, once again, in this instance. The Riverside gambling casino didn't bring an additional $7 million profit into the state; it simply shifted much of it from its competitors to itself.
2. Gambling isn't value added manufacturing or services. Gambling is something in the nature of a self-imposed tax -- indeed, a significant proportion of what's left behind by each visitor is literally a tax going to the State and other governmental units. True economic development for Iowa requires (a) making something from our natural resources (e.g., wind generated electricity; food; ethanol and biodiesel), (b) value added manufacturing (e.g., making something from raw materials or parts that can be sold for much more than the cost of what goes into it, as numerous small and large manufacturers are doing throughout the state), or (c) value added services (e.g., individuals with the ability to create value by fixing broken equipment, or transforming a dream into an architectural plan). Jobs are created, and money changes hands, when casinos are built or expanded (such as the Mesquaki $111 million expansion project). But once they're built their primary function is to suck money out of the state's economy, not put more back into it.
3. It's not clear how much gambling is enough; conflicts of interest drive public policy. . . . When the Iowa Racing and Gaming Commission evaluates applications for additional casinos, how much will its decisions be shaped by the present casinos' desire to prevent any additional competition, and how much by -- if it is in fact our purpose to promote Iowans' gambling as vigorously as we can -- the desire to make casinos ever more conveniently located for old, and potential new, gamblers?
4. Gambling casinos are primarily taking advantage of Iowans. Of course, casinos located on Iowa's borders will attract gamblers from the bordering states -- unless they have a closer casino located in-state. But for the most part, it is Iowans who are leaving their money behind in these establishments. How much of that money is flowing to out of state owners, managers, and mortgage holders? Do we know? What we do know is that we can't gamble ourselves into economic prosperity.
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source, even if I have to embed it myself. -- Nicholas Johnson
The School Board and Superintendent want to demolish Roosevelt Elementary. I disagree.
(Disclosure: Although I did not attend Roosevelt myself, and am neither a Roosevelt parent nor a "Myrtle Orchard Neighborhood" resident, I do live in the adjacent "Melrose Neighborhood," which also looks to Roosevelt as its "neighborhood school.")
From 1998 to 2001 I served as a member of the Iowa City Community School District School Board.
Since that time, while I have of course maintained an interest in K-12 education generally, in this country and beyond, and in our District in particular, I have mostly maintained a respectful silence with regard to the actions of my successors.
Having served on the Board I have some sympathy for those holding the job of which I once said, "well, it may not pay anything, but at least you get a lot of grief." It's not my desire to add to that grief.
But the District's recent decision (something between an "inclination" and what some insiders report as being "a done deal") to tear down Roosevelt Elementary School caused me to attend a public meeting last Saturday, March 7, and to publish this blog entry today. (Some of the Board's overall planning can be found in its Iowa City Community School District, "Strategic Facilities Improvement Plan," 96 pp., undated (a pdf file).)
One of the features of Saturday's gathering was small group meetings at which we were to list what we considered to be the "pros" and "cons" of the Roosevelt demolition. The group I was in noted the following (that is, this is not necessarily my personal list):
Pros: the proposal brought the community together to talk about K-12 education in general and socio-economic issues in particular (the disparity between schools regarding the percentages of "free-and-reduced lunch" (i.e., low income) students).
Cons:
Student safety and walking distance. Many Roosevelt students would need to walk farther and along more dangerous routes (e.g., busy street crossings) to reach a different school. They will be farther from downtown cultural events.
Parental participation. Parental participation in schools enhances their children's education -- some say it is the single most important factor. Parental participation is increased when parents, as well as students, can easily walk to school. This is especially true for many of the low income parents whose children attend Roosevelt, parents who may not even have cars. Increased distance will tend to further remove these parents from connection with their children's activities and education.
Insufficient system-wide planning, public participation, and diversity balance. Diversity balance requires redrawing all school boundaries throughout the District, not just those for two or three schools. (One obvious way to minimize the disruption this would cause, thereby making it more politically feasible, would be to announce the new boundary-drawing principles (and resulting boundaries as of now) -- but withhold their implementation for six or seven years, thereby removing any impact whatsoever on children now in school. For more on this approach, see my earlier writing on boundaries, linked at the bottom of this blog entry. Obviously, had this suggestion been followed when I was on the Board those boundaries, with more boundary flexibility for the Board and Administration, would now be in place.)
To plan a new school (Crossings), knowing that it will be 40% low income (the District average is 28%) seems contrary to the Board's professed goal of improving balance. The Board needs to plan for construction of new schools beyond five years. It needs to provide for more public participation on the front end of this planning.
Uneconomic. With new schools costing millions, to renovate Roosevelt for $900,000 is a cheap price to pay for a "new" school. The "substitute Roosevelt" at the "Crossings" location may be subject to the same kind of cost overruns suffered by the Van Allen school -- making renovation of Roosevelt an even better bargain. Especially given present economic conditions it seems wasteful in the extreme to choose this time to demolish a neighborhood school only to have to spend millions on another school to replace it. Moreover, the additional cost of the demolition itself is not inconsequential and will either be an added cost to the District, if it intends to use the property for some other purpose, or a reduction in the selling price of the property if it is sold to developers who must bear that cost.
Flexibility in renovation costs. The study of Roosevelt renovation costs identifies levels of priority in tasks. Shive Hattery, "Roosevelt Elementary School Assessment," February 13, 2008 (a pdf file). If only the highest priority renovations are made the costs could be even less than the $900,000 referred to above. Lower priority renovations could be done later, in better economic times, while still permitting the building to be used. On the other hand, if every possible change and improvement is made, and additions to the building are constructed, obviously the costs could range upward of $5 or 6 million. Thus, while there is tremendous flexibility in the potential costs of whatever might be done with Roosevelt, they will be by any measure far less than the cost of a new school.
Failure to consider wide range of options; e.g., possibility of Roosevelt-Horn linkage such as K-3 in one school and 4-6 in the other (as both schools are relatively close). The small group making this list felt that the Board had not done an adequate or creative job of considering all the options that would include the preservation of Roosevelt. At the present time low income students are bussed past Horn on their way to Roosevelt! The result is that Roosevelt has one of the highest percentages of low income students (54%) and Horn has one of the lowest (12%).(See, Iowa City Community School District, "Frequently Asked Questions #1; Proposed Strategic Facility Improvement Plan and Roosevelt/Weber/Horn/Kirkwood Recommendation," March 4, 2009, "8. What will be the socioeconomic and racial balance among the schools?") If the Board honestly wants to improve District diversity an obvious answer would be to bus those students to Horn, thereby improving the ratios at both schools.
Removal of family resource center. Roosevelt provides a Family Resource Center for a student population in need of one. It would be lost (or at least there is no clear plan for providing one) for these students following Roosevelt's demolition.
Transition problems. There would be a two-year delay getting benefits to current Roosevelt students.
Finally -- and I deliberately list it "finally" here, because while it involves values that indirectly impact on people of all ages currently a part of the "Roosevelt family," this concern of the Myrtle-Orchard Neighborhood residents in our small group is not "educational" in the narrow sense --
The adverse impact on the "Melrose-Orchard" and "Melrose" neighborhoods. There is reason to believe that if Roosevelt is abandoned by the ICCSD its nine-acre plot would be acquired by developers who would fill it with condos, apartment buildings, or stand-alone homes. This would be a double whammy for two Iowa City neighborhoods that are already fragile. (Melrose Neighborhood is subject to constant invasion by the University from the north.)
A "neighborhood" is in many ways defined by the existence of its "neighborhood school" (rather than the other way around). For a neighborhood to lose its neighborhood school is an enormous whammy to its identity. This is only made worse when developers are permitted to take over an open, green, distinctive location and structure and turn it into more of the same-old, same-old that has already caused a loss of the neighborhood's "character." (There is, for example, a nature trail through a wooded ravine on the Roosevelt property, a kind of park, used by neighborhood residents as well as Roosevelt children.)
__________
The above are points made by members of the small group I attended -- points I agree with for the most part, but were for the most part not my contributions.
There were many more points made by reporters for other groups that will, hopefully, soon be transcribed and available on the District's Web site.
To them I would add a couple more.
School size. It is somewhat bizarre that one of the arguments put forward by the Board for demolishing Roosevelt is its "small class size," given that smaller class (and school) size is universally heralded as a desirable goal even for high schools (a range of 600-800 students), let alone elementary schools (300 students). A part of the plan is to expand Horn Elementary -- necessitated in part because of the proposed demolition of Roosevelt. But that is simply the worst of all possible worlds -- losing the desirable school and class size of Roosevelt, while making worse the school size of Horn. (On the other hand, especially given the two empty classrooms at Horn, this is just another reason for dropping off some of the low income students at Horn rather than bussing them by Horn on their way to Roosevelt, see "Failure to consider wide range of options," above.)
Other schools, other neighborhoods. Roosevelt, built in the early 1930s, is certainly not Iowa City's oldest school. If it is to be demolished should we assume those other older schools, which also need remodeling, will be torn down as well? In that case, all the concerns about Roosevelt -- and the impact on its neighborhood/s -- will only be multiplied many times over. And, if they are not to be torn down, what is the rationale for choosing only Roosevelt? Is it possible that schools in more affluent neighborhoods, such as Lincoln, populated by influential parents, have been better maintained over the years than a school like Roosevelt, with its less affluent and influential parents?
Broken SILO promises. Promises were made by the School Board at the time of the District citizens' vote to increase their taxes to provide the District SILO funds for new schools. In addition to new school construction, the vote passed in large measure (one can safely assume) because of promises that the money would be used to refurbish and remodel the older neighborhood schools.
On February 2, 2007, an op ed column "by Iowa City School Board" appeared in the Press-Citizen explaining "How to Spend SILO Funds." It expressly stated:
The district estimates more than $147 million in priority infrastructure projects over the next 10 years. SILO funds would enable us to make improvements to our buildings that serve our students. There are inequities between buildings constructed in 2005 and those built in preceding decades (some dating to 1917). Those inequities include cost efficiency, handicapped accessibility, gyms and science labs, climate controls, air conditioning, air quality, lighting and overall learning environment. Repair, maintenance and accessibility needs have been deferred for many years because we have lacked the necessary funds. If the SILO sales tax is approved, the district will over time be able to improve the learning environments of our students. (emphasis supplied)
There was no mention of the demolition of Roosevelt -- or any other school for that matter -- indeed, quite the contrary. It is troubling that the Board would now fail to honor the representations, relied upon by voters, made by the Board in its effort to obtain the passage of the SILO referendum a mere two years ago.
Development. I hate to even mention this, and I'm certainly not asserting any wrongdoing, but it can't go without comment.
This plan hits a double for local developers.
The Cardinal Road/Crossing development (which, in my opinion, should have been retained by the City/County as greenbelt land in the first place) will receive an enormous economic boost by the sales force being able to tell potential home buyers that their children will be able to attend, within walking distance, one of Iowa City's newest, and most modern schools. That's worth a lot in an escalation in home prices, and presumably is one explanation for the developer's "generous" offer to make the land for the school available "free."
Moreover, the demolition of Roosevelt opens up for the same, or other, developers the opportunity to buy, develop and sell off one of the most prime pieces of land on the West side of town.
I'm not suggesting Roosevelt's demolition, and the new Camp Cardinal ("Crossings") school, are being proposed to enrich a developer -- let alone anything worse. But when public entities (in this case, a school board) are involved in creating millions of dollars of private profit (for, in this case, developers), while destroying a neighborhood school, dealing a heavy blow to two neighborhoods, and throwing the burden on the backs of the children and parents least able to represent themselves, it does deserve a very, very close look.
Economic downturn impact on Camp Cardinal development. Finally, it should be noted that the Camp Cardinal housing development was planned before the recent economic downturn. Home sales are never a slam dunk in the best of times. And these are not the best of times. Some consideration needs to be given to the possibility/probability that the "Crossings" school might end up finding itself to be a "neighborhood school" without a neighborhood.
* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson
The Johnson County Board of Supervisors has put a conservation bond issue proposal on the November 4 ballot.
I've been asked, now repeatedly, whether I think it makes economic sense for Johnson County's property taxpayers.
The short answer is "yes;" the longer answer continues below.
There are over 100 organizations, and thousands of individuals, whose recreational activities involve the use of Eastern Iowa's land and water. Iowa ranks near the bottom of the 50 states in public land. So many of them have been having to contribute their own land, money and efforts to improving Iowa's status.
But that's not the way our nation, and the other 49 states, have gone about creating this fundamental public asset over the last 200 years. They view this as a public function, appropriate for public expenditure.
Now Johnson County voters are being given the opportunity to join the rest of the nation. We get to vote on whether we want to invest $1 million a year over the next 20 years for the acquisition of private land voluntarily offered for sale. (This is not an "eminent domain" undertaking.)
Readers' comments. I welcome "comments" about my blog entries, and often benefit from their constructive criticism. But I don't use the blog to carry on an ongoing debate. I figure I have my say in the blog, and those making comments should be permitted their say unchallenged, leaving it to readers to sort it all out. So all comments except for overt advertising are retained on the blog.
But a recent anonymous comment directly asks for a response, and involves the conservation ballot issue:
Anonymous said...
People have been watching your blog for some type of analysis of the conservation vote coming up, the one where you and your wife sit on the board? You know, an analysis of the budget, the business plan, etc. The detailed plans about what happens to the land after purchase and who pays for it...the answering of questions related to conflict of interest...why we are expected to give away $20,000,000 without no more information that a one-page flyer and the exact one-page website???
We have come to expect greater thought on matters pertaining to our tax dollars. We expect more of you, Nick. How would a banker analyze your request for tax dollars? How should the general public? How can one vote on something with no details? Is it a desert topping or what?
10/22/2008 10:37:00 AM
I decided this was one comment that really did require a response, which I prepared over the weekend and intended to use today. Yesterday, he or she was back again, and after quoting from the "Missions and Metrics" blog entry of October 24, added a comment including this excerpt:
. . . These are the same issues being demanded regarding the $20 million conservation vote. All based on a one-page business plan? Give me a break Nick. By ignorning the issue you are agreeing with every argument the opponents of this handout have.
10/27/2008 11:33:00 AM
While I rather suspect that "Anonymous" is opposed to the bond issue, and will remain so regardless of what I write, it makes more sense to give him/her the benefit of the doubt and treat the comment as a serious inquiry.
Comparing Apples and Automobiles. While the implied economic questions can be and will be addressed (whether or not to the satisfaction of the author of the comment is another matter), there are some basics to address first.
1. Public money, private projects. Most of my concerns about public finance, expressed in newspaper columns and blog entries, have involved the transfer of taxpayers' money to private individuals and the bottom lines of for-profit corporations: the recent $700 billion bank bailout; earmarks such as the $50 million from Senator Grassley for the indoor rain forest proposal from Ted Townsend, Governor Ray, and Dave Oman; a vast array of other "corporate welfare" subsidies and programs; and locally the equivalent forms of gifts from the City Council to businesses in the form of TIFs and direct expenditures.
Such spending (rule by joint corporate-government authority is central to the classic definition of "fascism") should raise serious ideological problems for "free private enterprise" and "marketplace" advocates. But if it is going to be done anyway, I've argued, then claims such as those of projected ticket sale revenues, as for the rain forest or Stories Project, need to be subjected to the kind of analysis the author of the comment expresses as, "How would a banker analyze your request for tax dollars?"
2. Public money, public projects. By contrast, public projects, serving public purposes, that come from public bodies -- especially those funded with bond issues voted on by taxpayers -- are an entirely different matter.
That doesn't mean they should be exempt from economic analysis, only that comparing the issues they raise to those of typical corporate welfare projects is like comparing apples to automobiles.
When local school district residents voted a $40 million bond issue for more schools I had laid before them an alternative that would have eliminated the need for the $40 million. But enough voters were sufficiently uncomfortable with what the alternative involved (a modification of the high schools' senior year, and a different system for assigning elementary students to schools) that they thought the $40 million well worth it. And that was fine with me.
Taxpayers have as much right to make an additional contribution to new schools, or more conservation land, as they have to increase their tithe to their house of worship. (And yes, I understand that, unlike the voluntary tithe, once 60% or more of the voters vote for a bond for something those who voted against the proposal will also have to pay their fair share of the property tax used to pay it off.)
There's an enormous difference between, on the one hand, four individuals (Grassley, Ray, Townsend, Oman) deciding to spend $50 million of federal taxpayers' money on a private project in Iowa (their indoor rain forest idea), without meaningful consideration (if any) by the other 99 of the 100 senators, any of the 435 of the members of the House, or the White House staff, and no vote of Iowa's (let alone the nation's) taxpayers; and, on the other hand, the citizens of Johnson County voting to spend $1 million a year for the acquisition of additional public land for conservation and recreation in Johnson County.
Unlike transferring taxpayers' money to for-profit corporations, there are basic community functions and infrastructure that have historically been well within the role of state and local government.
Of course, public expenditures on public projects should be undertaken with as much administrative and managerial expertise, efficiency, and attention to alternatives and cost control as possible.
But there is relatively little debate that public projects can appropriately be undertaken by government -- at some time, in some way, to some degree. I would include in this category our public library, schools, roads, bridges, sewer system, and water plant.
Clearly, public parks and forests; wetlands, lakes and rivers; recreation areas and trails, have been seen to be an appropriate public purpose, and expenditure, since the time of the Boston Common in 1634.
3. "Our Land, Water and Future" and the conservation bond. Is the conservation bond proposal another example of for-profit corporations or wealthy campaign contributors trying to enrich themselves with taxpayer money? No.
This is clearly not only a "public money, public project" proposal, but one that originated with the Johnson County Conservation Board, with the approval of the Johnson County Board of Supervisors.
I had earlier been researching, writing about, and had created a Web site for "greenbelts," and had made efforts to contact the Conservation Board, although unsuccessful in doing so. Frankly, I had not thought about a bond issue, had not a clue the Conservation Board was thinking about such a thing, and was stunned (though pleased) when I first heard that a bond issue was in the works.
The comment indicates that my wife and I are on the "board" of "Our Land, Water and Future." In fact, the organization is sufficiently informal that it does not have a "board" as such, only a "steering committee" more or less make up of everyone who came to the first meeting, along with a couple of "co-chairs."
Certainly the organization did not exist prior to the notice of the bond issue, and thus neither it, nor to the best of my knowledge any of its supporters -- unlike the rain forest project's promoters -- could have been instigators of the conservation bond idea.
The closer analogy would be to the "Yes! for Kids" group, organized after the school bond proposal was put forward and made up of those who thought it a good idea.
The conservation bond details. How much detail can a voter reasonably expect from a bond issue proposal? It's one of the questions put by my anonymous comment writer.
Another Anonymous person (not me, obviously) actually responded with a comment of his or her own on this point, quoting the ballot language:
Shall [a] the County of Johnson, State of Iowa, [b] be authorized to acquire and develop lands [c] with public access provided, [d] to be managed by the Johnson County Conservation Board, [e] in order to protect the water quality in rivers, lakes and streams; protect forests to improve air quality; protect natural areas and wildlife habitat from development, and provide for parks and trails, [f] at a cost not exceeding $20,000,000 and [g] issue its general obligation bonds [h] in an amount not exceeding $20,000,000 for that purpose, [i] to be repaid in not more than 20 years? [j] All expenditures will be subject to an annual independent audit. [letters added]
This is about as detailed as you're likely to get from any comparable proposal.
Bonds to build schools don't indicate where the schools are going to be, the precise land and building costs for each, what the architectural plans are, the schools square footage and number of classrooms, how many students will attend, what neighborhood areas they'll come from, who the teachers will be, or where the bus routes will run.
And of course, like schools, it would be both difficult and unwise to identify precise parcels at this point because it would drive up the cost of those parcels for the public, and because it cannot be known, today, precisely what land will become available for voluntary sale, and thought to be most appropriate to the conservation purposes, 5, 10 or 15 years from now.
So what is the economic value of this proposed conservation bond? A part of our "apples to automobiles" problem involves the calculation of the economic value of public projects. It's not that it can't be done, and I'm about to show how it can be.
But you can't measure the "economic" return on a community's investment in libraries, schools -- or parks -- with the same approach you'd use to evaluate the investors' return on their investment in a hotel or shopping mall. Public libraries and schools were never created with the expectation of the "profits" they would spin off. The economic return they provide benefits not only those personally involved, but the community as a whole -- from the enhanced education and information possessed by the citizens, entrepreneurs, workers, and public officials in that community.
Similarly, there is no universally agreed upon single measure of the value of conservation, but these approaches may help:
(a) It's what the Mastercard advertisements call "priceless." What's it worth to you, today, to know that your grandchildren will have access to land in addition to that which is located in a suburban development of homes, or under the parking lots of super malls? What's it worth to you to take a bike ride along a trail through the woods and along a stream? Or to cross-country ski that same trail on a new winter's snow? To spot a rare bird in a forest? To play a game of ultimate Frisbee? To go fishing or hunting with one of your children? To camp overnight along a river?
(b) Economists say it's not "priceless"; they attempt to put a value on it. They say that, at a minimum, recreational land is worth what you are willing to pay to enjoy such pleasures: the mileage cost of driving your car there; the cost of the boat and motor; the outdoor clothes; the sporting, hunting and fishing equipment; the mountain bicycle -- possibly even an RV. In fact, this understates the value; I suspect most of us don't think about the dollar value of such pleasures, and if we did would value them far higher than our mere out-of-pocket expenses -- indeed, if the benefit from the cost was only a wash we probably wouldn't buy the stuff in the first place. And, of course, what's a "cost" (and a "value") to you is a "profit" to some local merchant. So, while I haven't run the numbers, it seems reasonable to assume that there's at least a $20 million return over 20 years from this analysis alone.
(c) Cost avoidance. What did the most recent flood cost us? I don't know the total, but I do recall a University of Iowa estimate of, was it $250 million? It was something over $200 million. And that's just one institution's loss from one flood -- over ten times the cost of the bond!
Greenways and wetlands; prairies, pastures and recreational lands in floodplains; and buffers of filters along rivers can both reduce the number and severity of floods and virtually eliminate the damage to homes and businesses. Cost avoidance alone makes the bond one of Johnson County taxpayers' best investments.
(d) Matching funds. I don't emphasize the proponents' suggestion that the $20 million can and will be "matched" with state, federal and private funds (though I have no reason to doubt them). It may be. But I haven't seen the details on that, so I'm not including it here. Obviously, however, if our $20 million ends up producing $80 million that would be another very positive economic return in the equation.
(e) "Return on investment." From the time of the Boston Common until now, America -- indeed the world -- has had a serious commitment to public lands. And for many good reasons, not the least of which is "return on investment."
"Now is not the time," say some of the bond issue's opponents. But do you know when is the absolute worst time to acquire public land? Next year. Conditions are never better than right now, whenever "right now" and "next year" may be.
It was not easy for the New York legislature to buck the political opposition 150 years ago and come up with the $50,000,000 then necessary to buy what is today Central Park in New York City. But do you know what its value is today? Some 10,000 times that much: $500 billion dollars!
Over the years, from the Boston Common and Central Park, through our vast system of national and state parks and forests today, Americans have seen that kind of return on their investment. Some 23-76% of the land in our 12 western-most states is public land. The National Forest Service alone holds 8% of all the land in America, about 193 million acres.
Imagine what our little $20 million investment will be worth 150 years from now!
(f) We know of the contribution of public lands to Iowa's ability to hold our graduates here, and encourage the immigration of others -- and the economic value that must represent, even if it cannot be measured accurately.
But even more significant, and more difficult to measure, is the contribution of conservation to the continuation of life itself. A reliable water table. Clean water in lakes and streams. The wildlife that help keep both plant and animal life in balance. The retention of our topsoil. The forests that help keep our carbon footprint and greenhouse gases in check. Healthy air to breathe. We cannot continue to take and take and never give back and expect to survive. Survival; that's truly "priceless."
Opposition to all public expenditure. There is a political/economic philosophy held by some that we should eliminate virtually all public expenditures for public purposes and "privatize" most of those functions: schools, jails, libraries, water, trash pickup, and turn the Interstate system into toll roads; give Disney the national parks. (Even these individuals might be able to concede that there's something different about meeting conservation needs essential to continued human life that have not, and will not, be satisfied with "marketplace forces.")
But unless you agree with that approach to government (or, rather, doing away with government) there is no reason to take seriously the arguments of those who do hold that view when they oppose the conservation bond. They are not really arguing against the wisdom of the conservation bond as such -- any more than they argue against schools, libraries and jails as such -- so much as they are arguing against any and all public projects.
(There are also, of course, arguments that it would be more fair and just to provide public funding for public projects with an appropriately progressive income tax rather than property tax, but that, too, is no more program-specific as an argument -- nor likely to be adopted -- than doing away with all public projects.)
As I began, "There are over 100 organizations, and thousands of individuals, whose recreational activities involve the use of Iowa's land and water." My thanks go out to all of them, as diverse in purpose as they may be, for what they have done with their own time and money -- most recently pulling trash out of the Iowa River. Rachel Gallegos, "Difference Makers; Volunteers Help with Iowa River Cleanup," Iowa City Press-Citizen, October 26, 2008 (available as, Rachel Gallegos, "More than 100 attend 'Make a Difference Day,'"Iowa City Press-Citizen, October 25, 2008).
"Flipping the ballot" and voting "Yes" for the conservation bond issue is a way we can all work together to further multiply their efforts -- while, in my humble opinion, getting one of the best returns on an investment of public money we're ever likely to enjoy.
