HoustonChronicle.com - Steffy: Economic hype clouds judgment

Another entry in the Kelo v New London backlash. From Loren Steffy, writing June 29, 2005:

Just hours after the Supreme Court's decision Thursday, Freeport officials began efforts to seize waterfront property from two seafood companies as part of an $8 million marina development, according to a report by Chronicle correspondent Thayer Evans.

The action was accompanied by the usual economic development blather. The marina will lure $60 million worth of hotels, restaurants and shops, create hundreds of jobs and revitalize downtown.

Hitting a home run

"It's all dependent on the marina," Lee Cameron, the city's economic development director, told the Chronicle. "Without the marina, (the hotels) aren't interested. With the marina, (the hotels) think it's a home run."

Therein lies the flawed logic that too often creeps into economic development programs: Success is assumed. Build the marina and the hotels will be a "home run."

It ignores questions developers don't ask, but cities should. What if they strike out? What if, even with a marina, no one stays at the hotels? How long will the hotels stay in business if occupancy rates trail their forecasts?

[snip]

I'm not predicting failure for the Freeport development. But developers by their nature are optimistic. Every project will succeed until it doesn't.

The 5-4 split in the Supreme Court's decision focused on what constitutes "public use" in the Bill of Rights. The court's majority opinion argues that the economic hype, in the end, justifies the means. Higher taxes from development will benefit all.

It ignores the other component in such deals. Taxes too often are waived, abated or offset with grants and loan guarantees.

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