Tag: development

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Accountability folly free trade & free markets local leaders moral hazard nannyism porkbarrel politics responsibility too much government

Small Target, Big Subsidy

Denver, incentive, California, development, rent, graft, corruption

Something has gone wrong when, to get a tenant to move into an empty space in your prime-location building, you need a $4 million subsidy.

And when I say “prime location,” I’m not engaging in Trumpian over-statement. The downtown Denver, Colorado, property location sees over 35,000 pedestrians per day . . . and that’s with the primo slot empty.

But to get that slot filled, the owners have negotiated with the city government to nab a $2 million “incentive” to fix the place up for Target, which is thinking of leasing the location to put up a smaller-than-usual “flexible-format” store. Oh, and another $2 million for “operational” costs, which seems to be some kind of a loan to be paid back from taxes to be collected — and shared by the city for 20 years with the owners.

In other words, it’s the darnedest business deal you’ll ever see (and never get): up-front money not from a bank or investors, but from Denver’s city government “BIF” — Business Investment Fund — which is obviously part of a convoluted scheme fed by taxes and devised by . . . people I wouldn’t trust with my money.

Structuring deals like this is how modern cronies — er, cities — operate, I know. Am I alone in judging it corrupt on the surface and corrupting in the details?

If prime commercial property has gone unused for about a decade — as this three-storied mall space has — I’d think that maybe the owners have set the rents too high or the city has been a bit too greedy with taxes.

Or both.

This is Common Sense. I’m Paul Jacob.

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free trade & free markets national politics & policies

Pro Bono

U2 singer Paul David Hewson, best known by his stage name Bono, has come to recognize that capitalism is crucial in lifting people out of poverty in any permanent way.

He now calls institutionalized charity like foreign aid only a “stopgap,” not a basic cure for poverty — an understanding perhaps still too generous, since such aid can prevent needed economic and other reforms and thus help entrench poverty.

In any case, for decades Bono has both raised money from individuals for international charity and chastised government officials whose policies seemed too stingy (in spending other people’s money). Now he is surprised to be touting the pivotal virtues of money-making and entrepreneurship.

“Rock star preaches capitalism. Wow. Sometimes I hear myself and I just can’t believe it. But commerce is real. That’s what you’re about here. It’s real. Aid is just a stopgap. Commerce — entrepreneurial capitalism — takes more people out of poverty than aid. Of course we know that.” (See a clip of these words.)

The rock star’s epiphany came after a TED talk a few years ago by George Ayittey, in which the speaker “made a special effort to rip into the foreign aid establishment,” knowing that Bono was in the audience. When the star came up after the talk to express his disagreement, Ayittey gave him a copy of his ideology-changing book Africa Unchained: The Blueprint for Development.

Perspectives unchained by myth and politics are a good idea too.

This is Common Sense. I’m Paul Jacob.

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property rights

Domain of Eminent Irony

You reap what you sow.

That’s the lesson being taught to developers in Ozark, Missouri. A few years ago, a company called Hagerman New Urbanism benefited from Ozark’s use of eminent domain power to trample on the property rights of local citizens. The city shoved residents off their property. Hagerman got the stolen land.

But Ozark is unhappy with the progress of redevelopment. The city wants to pull the plug and give the land to somebody else. How can they, though? After all, Hagerman now “owns” the land. Right? Yeah, right.

The parties are in court fighting about whether the city owes money for the work done so far and other contractual matters. But judicial processes are long-winded and messy. And spending money is expensive. So the city is threatening to use eminent domain yet again. This time against the very developer who benefited from the first land looting.

Local activists like Jane Carpenter, who fought the original use of eminent domain, may appreciate the poetic justice here. But as a matter of principle they don’t support a new eminent domain grab. They say it would signal to businesses thinking of coming to Ozark to stay the heck away.

Good points. Still, I doubt that many folks in Ozark or elsewhere would shed any tears over Hagerman being forced to glug down its own poisonous medicine.

This is Common Sense. I’m Paul Jacob.