Hey, wouldn’t a jai alai fronton look great on Stonewall? And nothing says “world class” like a dirigible museum. Finally, a building as long as the Bank of America tower is tall. And you could put them on a light rail line! Local officials gotta find public dollars to help pay for it now.
A farce maybe, but one with a core of truth. Several high-profile, public subsidies for development projects in Charlotte seem to have created an expectation of taxpayer help for private endeavors. Every week brings a new suggestion for a subsidy in one form or another. Instead, a moratorium on such deals might be a better move.
A trio of developments has evidently signaled open season for development subsidies — and on taxpayers’ wallets. The Charlotte Bobcats’ arena, Johnson & Wales University, and redevelopment of the old Charlotte Convention Center site have all various types of subsidy from various government entities. In recent weeks local officials have broached the topic of subsidy for a new ballpark for the Charlotte Knights minor league baseball team and taxpayer help to redevelop the old Charlottetown Mall site. It is fairly easy to see what is going on here.
First, a $170 million handout targeting basketball fans — and the odd billionaire — brings out the baseball partisans. They have an unassailable point on one level. Deciding that an NBA basketball franchise deserves a public subsidy is a terribly arbitrary thing. It merely says that policymakers in Charlotte value that particular use of entertainment dollars. Why not baseball too?
In the case of a baseball stadium the choice is especially stark. One favored site has long been slated for a Third Ward public park. A park is precisely the kind of broadly accessible and genuinely public project that handouts to narrow, special-interest private projects crowd out.
Parks have the great virtue of being user-defined. You can walk, swing, or sit under a tree. Toss a ball or kick one. And no government-dependent owner gets ticket-price revenue in return. To do otherwise, and you might as well subsidize movie theater tickets.
Wait, that is exactly what is happening with Spectrum Properties’ bid to reclaim the convention center site as a tax-paying bit of real estate. The development plan calls for a mix of retail and restaurants, including movie theaters. It might work, or languish like other center city movie-house plans have nationwide, such as City Place in Silver Spring, Maryland.
That early 90s effort had a choice location adjacent to a bustling Silver Spring Metro rail stop, tons of state and local backing, and still wound up more noteworthy for the gun battles in its parking deck than any spur to local growth and economic development. There simply was no demand for such a development, and building it did not create demand. Such are the perils of ignoring powerful market signals that say a project is not sustainable.
If there is truly no hope of redeveloping Charlotte’s old convention center site at a time of historically low interest rates and in the heart of one of banking capitals of the world, then maybe, just maybe, a $6.4 million subsidy from the city and county is not a wise move.
(And it is worth noting that the city sold the convention center for $14 million as part of the NBA arena financing package, an example of how incentives can ripple through budgets in unexpected ways.)
A package similar to the convention center deal is clearly what developers of the now denuded Charlottetown Mall site want. A precedent has been set which says local government will help assume the risk of private real estate ventures.
This brings us to the fundamental problem of such subsidies: opportunity cost. Money routed to developers instead of the general fund is lost forever. Money available for roads, schools, cops — actual public concerns — declines.
Proponents frequently argue that such subsidies “pay for themselves” with increased revenue that otherwise would not be there. But that position assumes a great deal, too much in fact.
It assumes that planners and officials, indeed members of the species Homo sapiens, can know the future with great certainty. That without subsidies or incentives or “tax-increment financing” development would never happen. Indeed, that subsidies cause development.
Perhaps the exact project laid out in a developer’s PowerPoint presentation to local officials requires subsidies to leap off the gel, but it is folly to suggest incentives must accompany all development on a given site.
Such a position guarantees that subsidies will always be sought and projects incompatible with a site’s “organic” character often undertaken in order to please local officials. For example, the best, most natural use of the Charlottetown site might be more of the much disparaged “strip center” space with small retail nooks. But lacking any big name tenant name to flash around in talks with the local officials in control of the subsidies, that approach is clearly a non-starter. Again, market signals can get lost when the political horse-trading starts.
What is for certain is that development subsidies are in danger of becoming the norm for Charlotte. And when the exception becomes the rule you don’t have rules anymore.