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USOC a done deal?

Fri, Aug 7, 2009

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Last night’s “town hall” meeting, wherein the hapless public was invited to come to City Hall at 7 p.m. and comment about the U.S. Olympic Committee deal, had all the elements of Kabuki theater.

Councilmembers (excluding Messrs. Glenn and Heimlicher) drifted slowly to the dais and, stone faced, took their seats. The mayor opened the meeting by announcing that members of the public who wished to comment would be allocated a generous six minutes, instead of the miserly three minutes usually permitted to folks who speak about non-agenda issues.

Assistant City Manager Mike Anderson then made his way to the microphone and proceeded to give a 25-minute overview of the deal, aided by a PowerPoint presentation, copies of which were unavailable to the public.

In his presentation, Anderson said that the USOC’s annual economic impact is more than $350 million, and that it and related sports organizations account directly for 910 jobs and indirectly for 2,600 more.

He emphasized the dire consequences that would, in a worst-case scenario, result from the departure of the organization. These consequences include the loss of all USOC-related jobs, as well as the disappearance of the sales and property tax revenue associated directly and indirectly with the organization.

I’ve never been comfortable with so-called “economic impact analyses.”  At best, they give you a crude, but useful, snapshot of the economic impact of a particular business, class of business or economic activity. At worst, they’re deliberately designed to overstate economic impact and benefit organizations which seek preferential treatment from government entities that can hand over the goods.

The problem with Anderson’s analysis is that it presents a static, deterministic view of the USOC, and an equally rigid view of the possible consequences of its departure.

Anderson stated, for example, that the city might lose all of the 910 “direct” jobs, and that most of the folks now employed by the USOC and other sports-related organizations might leave town.

In the real world, individual behavior is much more dynamic and unpredictable.

People who lose their jobs (particularly those lucky enough to live in the “Best City in America”) are as likely to look for new employment or start their own businesses as to pull up stakes and leave town. And it’s worth pointing out that the USOC deal, if approved by council, guarantees only that the USOC will keep its headquarters in town.

It’s silent concerning the national governing bodies and the Olympic Training Center, which together account for most of the direct jobs.

Moreover, regional economies are far more resilient than such models indicate.

Schumpeter’s classic description of capitalism as a process of “creativedestruction,” wherein new business and business models shoulder aside the old, applies regionally as well as globally. Businesses, be they Intel, Apple or MCI, grow, thrive and fade away, and others arise to take their place.

In his presentation, Anderson also attributed $4.6 million in annual property tax revenue to the USOC and associated entities. That might be true, but remember that property tax collections do not depend upon ownership. Real estate is real estate — and whoever owns it pays the bill — or doesn’t.

In fact, all the land and improvements that comprise the Olympic Training Center at 1750 E. Boulder, which have a 2008 assessed valuation of $44,154, 258, are classified as “exempt charitable,” and are thereby exempted from those pesky property taxes.

As the evening wore on, it seemed clear that city officials see no alternativeother than to approve the deal. Councilmembers, it appears, believe that the USOC holds the whip hand, and that they have little choice but to vote “yea.”

So, after so many months of “sturm und drang,” it’s almost time for the play to come to an end.

Will LandCo, the city and the USOC go off into the sunset, hand in hand in hand, and live happily ever after?

Will Mayor Lionel Rivera, as a senior councilmember predicted last night, just get “a slap on the wrist” from the ethics commission and walk away unscathed?

Will Ray Marshall dodge the district attorney’s bullet and remain unindicted?

And will USOC boss of bosses Stephanie Streeter show up for the final act on Tuesday afternoon, and at least smile gracefully as council hands her organization $40 million or $50 million?

I’ll be there — at least until the ADD kicks in …

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