John Locke Update / Research Newsletter (Archive)

In this issue: The failure of urban vanity projects, such as sports stadiums, convention centers, and trains

posted on in Local Government

Why is almost every major city in the nation infatuated with the Big Three: sports stadiums, convention centers and trains? Charlotte has all three, and so far Raleigh has escaped burdening taxpayers with two of the three, but forces are hard at work to change that. Durham will vote on the half-cent sales tax for trains next week, and outgoing Raleigh mayor Charles Meeker has suggested demolishing the RBC Center and building a new stadium downtown.

Joel Kotkin provides the answer: Regardless of the economic facts that show these taxpayer-funded facilities add little to employment or overall economic prosperity, the Big Three are good politics in that well-connected developers prosper and reward their political patrons with campaign donations.

Add to the mix gullible news media and you get a classic case of soaking taxpayers for the benefit of a few developers, speculators, and downtown landowners. Kotkin tells the whole sordid story as it relates to the latest move to build a stadium in downtown Los Angeles.

Raleigh has followed the same pattern. City leaders have pumped $1 billion of taxpayer’s money into the downtown ghost town called Fayetteville Street, while across town the unsubsidized Glenwood South entertainment district is booming. Politically connected developers win while taxpayers lose.

This same story is currently being played out in Durham when voters will vote November 8 on a half-cent sales-tax increase to pay for the Triangle rail project. See this November 1 N&O article. My letter to the editor in response exposes the scam.

Kotkin summarizes the problem:

Indeed years of independent investigations have discovered that urban vanity projects like sports teams and convention centers add little to permanent employment or overall regional economic well-being. As a Minneapolis Fed study revealed, consumers simply shift their expenditures from other activities to the new stadium. Certainly mega-stadiums have done little to boost sad-sack, depopulating cities such as St. Louis, Baltimore or Cleveland.

Commitments to mega-projects tend to further drive urban areas into debt, largely by issuing more bonds that taxpayers are obligated to pay back. One particularly gruesome case can be found in Harrisburg, Pa., whose underwriting of a minor league baseball team helped push the city into bankruptcy. To get the stadium deal, Los Angeles, already over-indebted and suffering a poor credit rating, will issue another $275 million.

Such projects often obscure the real and more complex challenge of nurturing broad-based economic growth. This would require substantive change in a city or regional political culture. Instead the football stadium services two basic political constituencies: large unions and big-time speculators, particularly in the downtown area. The fact that the stadium will be built with union labor, for example, all but guaranteed its approval by the city’s trade union-dominated council.

Click here for the Local Government Update archive.


Michael Sanera is Director of Research and Local Government Studies at the John Locke Foundation. He served as a policy analyst for the Washington, DC based The Heritage Foundation, and the Competitive Enterprise Institute and the California based Claremont Institute. ...

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