[CPEO-BIF] Re: Re-Working the Thinking on Brownfields Subsidies

[Peter B. Meyer]

I wish we could educate local officials about real estate market 
conditions in their jurisdictions and hold them accountable to support 
the public interest, as Bruce Reshen has suggested ... that would be 
ideal. However, we need a reality fix here: the average (that is, mean 
sized) local government jurisdiction in the USA has a total population 
of something on the order of 2-3,000 people .... that means is does not 
have full time staff to educate! That also means that they probably rely 
on the local Chamber of Commerce to manage their economic development 
and related  subsidy and business incentive programs. And, regardless of 
size, the local officials typically depend on local businesspeople to 
help finance their campaigns. ... so where do we get the objectivity 
that Bruce recommends? It is at least as unrealistic to expect our 
cities and towns to develop those capacities as it is to pursue the 
mythic "optimal efficiency" of neoclassical microeconomics.
       ... and lest someone suggest that state decisions will be better, 
let me remind us all that states get their data on local economic issues 
from their localities. The states do not have the staff to collect those 
data objectively themselves.

Next, let me address the "anything that claws back or places additional 
restrictions on developers is bad, therefore no conditions can apply" 
argument. This appears to be what Lee Hoffman has put before us in his 
statements, and Barry Trilling appears to also hold this position now, 
which confuses me, since I agreed with his earlier comment that he and I 
were converging in our thinking.  Let me posit an argument based on an 
extreme case: that we give away whatever funds we have to stimulate 
brownfield redevelopment on a first come, first serve, basis, accepting 
the claims of need of the developers, backed by zero proof of their 
actual risks or true expected returns on investment.

Would that be rational?  Remember, that means that the first developer 
to apply, whethe ror not the project needed the funds, would get them, 
and later developers, who might have planned a bit better and done more 
research on how to maximize profits through their own efforts, would get 
nothing.

Excuse me, all public officials who attempt NOT to do what I just 
described, but what I described above as an "extreme case" is, in 
reality, a common practice ... and it is not efficient, not effective, 
and not even rational.  It does not serve the bulk of the development 
industry well, and it certainly does not serve taxpayers' interests.

Barry's suggestion of a balancing out after the fact is well worth 
considering, as is the incrementalism Lee describes (which is akin to 
the "pay for performance" contracting that the Office of Underground 
Storage Tanks was avocating some years ago). Let's return to the issue 
of a viable program to use our limited funds as efficiently as we can 
... that is what this discourse can best generate.

There now will be a few days' gap in my responding to the listserve, 
since I am travelling and will not have regular e-mail access. Please do 
not take my delayed responses as a lack of interest in this extrmely 
important topic.

Peter