I had an interesting lunchtime conversation today with an old friend of mine. For sake of the converation, let's call him Don B. He's a typical D.C.-area resident, a transient from the Southwest who came to the city to pursue a government job at a cabinet agency. These days, he spends his time at a rather anonymous trade association, waiting for an opportunity to leave town when the right job comes along.
It wasn't long after we sat down together today, that he asked me what I thought about the impending arrival of the Expos next season. I told him about my doubts concerning the whole enterprise, and he provided some of his own thoughts he's culled from a career in city planning/urban development.
"The three biggest myths in urban development concern lotteries, casino gambling and stadium construction," he said. "After some hard experiences, we've found that lotteries and casino gambling are actually revenue neutral [the studies I found actually claim a negative impact -- EMc], while publicly-financed stadiums have always wound up to be a drain on the local economy."
Don's fiance is from Pittsburgh, where an effort to build not one, but two new stadiums has turned out to be a disaster. "They went through all that trouble to build those two stadiums (Heinz Field and PNC Park), and it hasn't generated any new revenue at all. In fact, the city has just about been ruined financially," he said.
"But hey, they kept the teams," he sighed as he shook his head.
"I wonder what impact $400 million in tax cuts would have had over 30 years?" I replied.
He smiled, nodded, and continued. "Ever go to Cleveland, and see what the neighborhood looks like around their stadiums? Nobody hangs around there after games, and nobody is going to hang around Anacostia after baseball games either," Don added.
'There's only one reason why these stadium deals get done, and that's to make sure the Mayor gets re-elected. Otherwise, it's a disaster every other way you look at it."
These things can work either way. Cincinnatians were upset when Paul Brown Stadium was built, citing overruns, lavish features, and pressing urban needs. The candidate for treasurer who ran on an anti-stadium platform was defeated in a landslide though, and under the new Bengals’ coach, the spending is no longer an issue. And the MCI Center and Camden Yards did bring needed businesses/revenue.
Staples Center may be sparking something too — not much, but a little. But that was private money! (Though the city helped with eminent domain stuff.) Also, it was part of Anschutz’s plan — guess who owns a lot of the land around Staples?
Here’s another wrinkle – the tax proposed to finance this stadium is targeted at large businesses. Guess what happens when large businesses face new large taxes…? They move away!
Watch the real estate market in the surrounding suburbs inflate even more than now, as businesses and their employees leave the city in large numbers.
Bad move, DC…
As the “old time friend” Mr. Eric was refering to at lunch (and I’m totally honored, plus I think he now owes me royalties) my “revenue neutral” statement was based on my experince with the fiscal impacts of casino and lottery revenue on the State budgets. Studies I have seen, including conversations with gaming experts, indicate that State legislatures, ater experiencing a windfall in revenue, will spend up to the new revenue levels. Meaning – they find ways to spend all the new cash and revert back to a balanced, or neutral, budget. This usually happens 4-5 fiscal years into the new revenue upswing. State legislatures also tend not to spend revenue on budget positive items, in may cases they are paying down previous debt or using new funds on pet projects.
You really want to boost DC’s economy Mr. Mayor? Build new and affordable urban housing, improve the transportation system, put cops on the street, and attract business back to DC with a fair tax and business plan. Otherwise…forgetaboutit, see you at the game.