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Demand true cost/benefit analyses of proposed projects rather than too-good-to-be-true sales pitches. Look at projects responsibly, including accounting for opportunity costs and unforeseen negative consequences.

Avoid cronyism, sweetheart deals, playing favorites with the tax code, etc. Usually the argument that the government needs to help this business or this group of well-connected insiders in order to help the economy winds up being just a thin veneer for cronyism.

Background

Out of civic pride, local leaders are often captivated by the idea of convention centers, sports stadiums, and other vanity projects they believe will grow their communities' economies and raise their profiles.

Nevertheless, these projects are best left to the private sector to build where there is actual viability. Trying to force them in areas unable to sustain them leads to taxpayers subsidizing losing ventures for years to come and harming, not helping, economic growth for the overall community. The procession of money-losing stadiums, convention centers, and other civic vanity projects across the nation is very long and growing.

Convention centers

The conclusion of the 20th century saw a frenzy of cities across the nation engaged in building convention centers, which continues in the 21st. The projects are attractive to city leaders, who expect a new center to be a huge boost to the local economy, bringing in lots of newcomers who will pay special taxes on hotel occupancy, car rentals, and prepared meals.

Nevertheless, conference going has declined by 1.7 percent even as convention center space expanded by 35 percent from 2000 to 2011, according to Heywood Sanders of the University of Texas at San Antonio, the nation's foremost expert on convention centers. This massive oversupply of meeting space is forcing host cities to offer huge discounts and subsidies just to win meetings, undercutting from the get-go the foundational assumption of the centers being economic bonanzas.

City leaders who make their communities contribute to this glut are reaping construction cost overruns, fewer conventions hosted than expected, mostly in-state or local attendees, operating losses, and a pressing need to offer greater discounts and rely on taxpayer subsidies. Rather than boosting the local economy, they are adding another unnecessary weight slowing it down.

Sports stadiums

The past few decades have also witnessed a growing phenomenon of professional sports franchises demanding and receiving new, lush stadium facilities built with public funds, on the belief that the crowds on game days will bring new spending on restaurants, hotels, and shops. Franchises have also been known to leverage new stadiums from the flip side of that belief — lost spending should the team leave town for a new stadium built elsewhere.

Economists have long warned of the overwhelming costs of taxpayer-funded sports stadiums. Actual construction costs are invariably greater than projections, which are more about making the political sale. Game days are few, but stadium expenses are constant. Much of the "new" spending is just redirected from entertainment spending already flowing to the area. With little direct risk for upgrading or building anew, franchises frequently press for improved digs mere years into the lives of their current, publicly funded ones. Bearing the city's name and an established fan base, the franchise has additional leverage over public officials in future, inevitable stadium quests. Rarely is the net effect of the stadium positive for the community at large, though it does benefit a few downtown property owners and businesses — and franchise owners, of course.

Stadiums have become such a money-bleeding venture of late, however, that it's drawing national attention. A Dec. 9, 2013, article in TIME magazine called publicly funding sports stadiums a "Loser's Game." A November 2013 report in The Atlantic details "How the NFL Fleeces Taxpayers." Jay Busbee, a columnist for Yahoo sports writing on Virginia and the District of Columbia's competition over the Washington Redskins, called the idea of sports stadiums as "civic landmarks" a "relic of a bygone age" and said that today, "stadiums have the life expectancy of hamsters."

Analysis

When convention centers, stadiums, and other major projects are proposed to local officials, boosters come armed with impressive economic-impact projections. They are invariably based on input/output models that only track projects' direct and indirect spending effects and make no accounting for opportunity costs, unlike a true cost/benefit analysis. Such models do not account for lost alternative uses of the taxpayer funds used to build the projects, nor do they differentiate whether the spending the projects attract is new or merely redirected.

As such, they are biased to produce "deal of a lifetime" projections that pressure leaders to support the projects rather than brave the political risk of questioning them. As Belmont City Councilman Bill Toole told WFAE in 2011 in its report on such studies, "No elected official wants to stand up and say 'I'm standing in the way of new jobs.'" Instead, they read the highlighted portion of the executive summary promising hundreds of jobs and millions in revenue and vote for the project.

The entire 2014 City & County Issue Guide, is available for download as a 3.6MB Adobe Acrobat file.
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