Excellent recent reporting by the Business Journal indicates that the city’s $53 million “private-public partnership” to provide the U.S. Olympic Committee with a new downtown headquarters might be in significant trouble.
This seems especially bad news for folks backing ballot issue 1A.
After all, they’re asking voters to hand City Hall a $51 million blank check between now and 2025, trusting that the jobs creation experts on City Council will wisely and efficiently “invest” it in unspecified economic development activities.
Yet this same City Hall may be bungling the single most important economic development project in recent history (even as some of the USOC jobs it promised to “save” are being eliminated).
It has to make one wonder whether this is a preview of coming attractions if 1A is approved.
I take no delight in the USOC situation. It will be a major embarrassment for the city if it all falls apart. But it also serves as a warning about the dangers that arise when city insiders begin brokering business “deals” and playing “the incentives game” with other people’s money.
And it’s not the only case that should raise red flags.
One could point back to the exciting but doomed flight of Western Pacific Airlines for an example of the city rolling out the green carpet for a company promising jobs, only to see the promises come to nothing. Next time you’re flying out of Colorado Springs, look around for the empty terminal. It’s a reminder of the risks involved in the “incentives game.”
But let’s fast forward from there.
It was 2005 when the city and the Economic Development Corp., citing the threatened loss of Western Forge to North Carolina, shelled out $200,000 in cash in order to keep those jobs here.
But Western Forge has conducted two rounds of layoffs in the last two years, demonstrating that you can pay a company to “save” jobs but you can’t keep those jobs from going away if they don’t make economic sense.
Backers of 1A insist that the city only offers “performance-based” incentives. But no one at City Hall, as far as I know, has asked Western Forge for a refund.
It’s an open question whether Intel should be counted as an incentives game success or failure. But the fact is that those jobs, too, are now gone, underscoring the limitations of any city effort to create and retain jobs – and undermining a key premise behind 1A.
Most troubling of all, perhaps, was the near-debacle involving the Frontier Airlines hangar “deal,” which had a city enterprise on the verge of financing a $40 million maintenance hangar for a bankruptcy-bound air carrier, to be paid back with a 30-year lease.
Frontier was in trouble at the time this “deal” was announced to such fanfare; a Google search would have revealed that the company’s stock price was plunging and other indicators of potential trouble were there. Yet the city forged ahead, oblivious to the warning signs, and only averted a 30-year marriage to a bankrupt company due to a delay in signing on the dotted line.
Those who negotiated and trumpeted this “deal” demonstrated an alarming lack of judgment, foresight and due diligence. That they can’t admit as much argues against entrusting them with 1A money.
By pointing out these things, it’s not my intention to be dismissive of all economic development efforts undertaken by the city or the EDC. The people who back these efforts are well-intentioned, even when their efforts have failed and their approaches are flawed. And they’ve had some successes, I’m sure.
But because the passage of 1A represents a dramatic change of approach in how the city does economic development – and because it puts so much taxpayer money directly at risk – it’s important that we look candidly at the mistakes, misjudgments and failures, as well as the successes.
The city’s track record in the “incentives game” just isn’t good enough to merit the major promotion – the additional new resources and significant new powers – it is seeking with 1A. If past is prologue, entrusting this new responsibility to City Hall almost certainly will lead to the waste and misapplication of taxpayer dollars.
How many more reasons do you need to vote “no” on 1A?
Sean Paige is the executive director of Local Liberty Action and the editor of Local Liberty Online.org.