Why 'destroying the suburbs' should be a Republican idea -- also, the Growth Ponzi Scheme revisited.

Exhibit 456-90-2020 in our series, "Nothing In America Makes Sense."

'Destroying the suburbs' should be a Republican idea, by Bonnie Kristian (The Week)

The Democrats, says President Trump, are going to destroy the suburbs ... so what, exactly, does destroying the suburbs entail?

Think: zoning.

Taken at face value, this is a bizarre policy choice for the Republican Party, both in its pre-2016 social conservatism and free-marketism and in its post-2016 Trumpian populism. Upzoning — allowing construction of buildings with more units or more nonresidential units than was previously permitted in a given area — seems like it should fit the GOP agenda.

It's a move toward greater economic freedom and stronger property rights. It can lower housing prices and make homeownership more accessible, especially for young couples who struggle to afford both home and kids. (A brief dig through the archives of the conservative Heritage Foundation turns up years of praise for Houston's unusual lack of zoning restrictions on exactly these grounds, and The American Conservative regularly publishes arguments for upzoning, including advocacy for doing away with single-family zoning altogether.) Also, having a granny flat means you might actually live with your granny, who can pass along familial traditions and help with childcare, a very attractive option amid pandemic. Surely this is the kind of pro-family, even pro-natalist policy Republicans ought to like. Why is Trump railing against it?

Because polls show the suburbs losing interest in Trump.

In those remarks and an even shorter comment on the subject three days prior, Trump singled out an Obama-era rule called Affirmatively Furthering Fair Housing (AFFH), which Biden supports and which Trump promised to repeal. That repeal arrived Thursday. The adfarm-near-me/">ministration characterizes it as a strike for freedom, federalism, and family. It is none of those things.

AFFH didn't "force" municipalities to do anything, as some conservatives have alleged. It mainly set conditions on some federal housing and transportation subsidies. (Suburbia is very subsidy-dependent.) It told local governments that to receive cash from Washington, they'd have to meet certain requirements, most notably ending single-family zoning. But single-family zoning isn't the creature of local self-governance Trump suggests. It originated significantly because of a previous set of conditions for different federal subsidies — subsidies, in fact, introduced by the archetypical Democratic adfarm-near-me/">ministration: the New Deal-era White House of Franklin Delano Roosevelt.

We've been talking about suburban subsidies for as long as the NA Confidential blog has existed. Take it away, Charles Marohn.

"[S]ingle-family zoning became the standard for American suburbs during the New Deal when the Roosevelt adfarm-near-me/">ministration, through various programs such as the Home Owners Loan Corporation, required it for home refinancing assistance," explains Charles Marohn, founder of Strong Towns, a new urbanism advocacy organization. "So, [AFFH said,] suburban governments, you won't get the subsidy this time unless you repeal the regulation we required you to enact decades ago to get the subsidy we were offering back then," he continues. "And we oppose this today because we are conservatives?"

It makes no sense.

Ah, but there's even more to it.

In addition to being heavily subsidized in both construction and ongoing maintenance, much of suburbia was shaped by 20th-century housing and highway policies that implicitly or, sometimes, explicitly functioned to segregate American homes. "White flight" was not merely an organic movement of private prejudice and social fashion. It was in no small part engineered by federal policies, as Richard Rothstein has meticulously documented in The Color of Law: A Forgotten History of How Our Government Segregated America.

"To prevent lower-income African Americans from living in neighborhoods where middle-class whites resided, local and federal officials began in the 1910s to promote zoning ordinances to reserve middle-class neighborhoods for single-family homes that lower-income families of all races could not afford," Rothstein writes. Some of this was classism, he notes, but some of it was done with "open racial intent."

This, might we suggest, is the underlying reason for the suburb hubbub.

The Obama adfarm-near-me/">ministration's AFFH rule focused on the residue of that deliberate segregation, and Trump's critique of it hasn't untangled the issue of federal manipulation of local policies from the issue of racist zoning. That makes it plausible to see his talk of single-family zoning as the bastion of suburban integrity as implicitly part of an older tradition of state-enforced racism. It's not unreasonable to wonder if being "invaded by negroes" is what Trump means when he deplores watching a "beautiful suburb ... go to hell."

If you have not previously read Marohn's articles about the Growth Ponzi Scheme, as published at Strong Towns, then now is the ideal time.

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The Growth Ponzi Scheme, Part 1

The underpinnings of the current financial crisis lie in a living arrangement—the American pattern of development—that does not financially support itself. 

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The Growth Ponzi Scheme, Part 2

If you want a simple explanation for why our economy is stalled and cannot be restarted, it is this: Our places do not create wealth, they destroy wealth. 

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The Growth Ponzi Scheme, Part 3

Our development pattern is not productive enough to sustain itself.

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The Growth Ponzi Scheme, Part 4

Our national economy is "all in" on the suburban experiment. We cannot sustain the trajectory we are on, but we've gone too far down the path to turn back.

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The Growth Ponzi Scheme, Part 5 (finale)

How did we build such an amazing place before the home mortgage interest deduction? How did we accomplish this before zoning? What created this place before we had state and federal subsidies of local water and sewer systems?

We began writing about the Growth Ponzi Scheme in 2011 with a prominent series of articles that outlined the way American cities, towns and neighborhoods were growing themselves into insolvency.  Since then, the Growth Ponzi Scheme has been discussed in numerous publications. The term, as we've defined it, continues to be widely used and cited.

Amazon, NYC, subsidies and YOUR town: "Tightening the parameters whereby cities can give out subsidies is a way to nudge us closer to that reality."

My social media feed was interesting last week. So many of you were angry: why would anyone NOT feed public money to a colossal monopolistic entity and fail to WELCOME its arrival to further squelch competition, fluff the oligarchs and concentrate amassed capital even further?

Me, for one. Sayeth a writer at The Nation:

The absurdities of the Amazon deal, which enraged New Yorkers and motivated them to fight back, are globalized absurdities present in every factory, every office, every farm, and every export-processing zone across the planet in which people are treated like cattle, offered by their governments to Amazon and other world-striding corporations as a cheap resource to be exploited. This outward-looking, supranational view is already implicit in New York’s anti-Amazon movement, which, much to the company’s displeasure, broadened its perspective to encompass Amazon’s general attitude toward unionization, corporate welfare, and immigration policy. In other words, the movement’s was a holistic critique: rejecting Amazon’s values for a wholly different idea of the kind of world we want.

Meanwhile Strong Towns shrinks the analysis to the micro, i.e. communities like ours and what we're willing to give away in the name of "economic development." There are other ways, though they're not always effective in building the personality cults of big fish in small ponds.

What Local Government Should Do in the Wake of Amazon's HQ2, by Charles Marohn (Strong Towns)

 ... How Baseball Resembles Economic Development
Last week Amazon announced that they were pulling out of the deal they had made with a handful of power-brokers in New York to build a new headquarters there. The traditional practice of negotiating these bad deals in private and then forcing them through the various approval processes based on sheer momentum is undermined by today’s populist mood. For those aspiring to political power, there is less to be gained by going along and being a good soldier. We live in interesting times.

I also don’t think it is lost on Amazon executives—or those of other major tech companies—that prior populist movements in the United States coincided with massive levels of wealth inequality and eventually led to the breakup of anti-competitive monopolies. Our grandchildren may study Amazon’s HQ2 shakedown as a turning point in the Gilded Tech Age.

I admit that I was confused about New York offering so much subsidy to Amazon. By my sense of how economic development works, if there was any city in North America that did not have to bribe a business to love them, it would be New York City, a highly-skilled workforce replete with tech workers with all the cosmopolitan amenities to attract the best workers in the world. New York has done all the up-front work; why not just sit back and let the deals come to them? It’s what they did with Google, which just announced a $1 billion expansion and 7,000 new jobs (without any subsidy).

Nowadays incremental local ecosystem improvements don't seem to be the strategy calculated to get you re-elected.

My hope is that cities would ultimately evolve to be like MLB teams: they would start to see that their resources would be better committed to growing their own talent within, to incrementally improving their own economic ecosystem instead of paying for free agents to pretend you’re their favorite team. It’s not happening, and I’m doubtful that it will, for reasons that MLB teams sometimes struggle with.

I love this idea of a citizen advisory group purposefully purged of usual suspects.

Establishing Ground Rules for Business Incentives
For state governments looking to strengthen their cities, I’m on record already as saying I would dramatically expand the municipal toolbox, but I’d limit the city’s annual debt service to 10% of locally-generated revenue. It’s a mechanism to prevent short-term thinking from blowing them up. I’d add to that some provisions on tax subsidies that allowed cities to be competitive, but limited how deep they could go. Something like:

• Set the maximum length of any deal to something less than seven years to keep current leadership from imperiling future leadership,
• Set the maximum annual dollar amount of any deal to something less than 2% of the city’s locally-generated revenue to keep any mistakes from damaging the system, and
• Set the maximum amount of a rebate to 50% of the amount of revenue generated from the deal, so that the new business has skin in the game.

If every city had to live by these rules—which would function, essentially, like a salary cap—it would limit the capacity of businesses to play local governments off against each other, at least within a state. I’m aware it would also limit how much smaller cities could give away to compete with larger cities—something many would call unfair. But I’ve worked and lived in small cities all my life; what they need most of all is enterprises scaled to them, not something vastly disproportionate that is only preying on their weakness.

Ultimately, what we all want is for the right business to be matched with the right city for the right reasons. Tightening the parameters whereby cities can give out subsidies is a way to nudge us closer to that reality.

And for populist advocates on the left and right who dislike these kind of deals, here’s how to be more effective. First, I recommend you educate yourselves on how these tax subsidies actually work. I’ve heard many advocates out there undermine their own credibility by suggesting things like, “We can use this money saved on schools and solar panels.” In fact, you didn’t save anything, you just didn’t collect any of the money you would have given away in subsidy. These kinds of corporate incentives come out of future taxes the company would otherwise owe, not from money that’s available up front.)

Then, I think you should advocate for two things in your community:

First, your city should have a set of values for when giving out tax subsidy is a good fit and what kinds of things would disqualify an applicant. Having such a document in advance, something that can be discussed community-wide, will counter the blindness that passion can create during decision-making.

Second, I’d recommend a broadly representative advisory group to study tax subsidy deals and make an independent recommendation before the deal gets to the city council. Some prominent business people that aren’t in the get-rich-quick game—more like an established banker than a real estate agent—along with someone from the school system, neighborhood groups, maybe a member of the clergy…. Just not the regulars. This group should be trained on how tax subsidy deals work. When a package is put together, they should be empowered to review it and report, not to the city council, but to the community at large, prior to any vote. The staff supporting them should not be the same staff that put together the deal.

Subsidies aren’t going away, but the failure of this Amazon deal—on multiple levels—should prompt us all to re-examine ways to improve our own local approach.

Fact-checking Deaf Gahan: He hasn't spent one penny of his own money to welcome another business to New Albany. Taxpayer-financed subsidies? Those are another matter entirely.

It's an election year, so take note of the lead sentence in the propaganda commissariat's latest blurb:

I'm sure he's sufficiently welcoming. After all, Gahan's not the one who paid for the sewer tap-in waivers he graciously awarded Flaherty and Collins in his capacity as sewer board president (that's a paid position, by the way) during the opening stages of the Breakwater development.

From January of 2017:

Flaherty and Collins apparently is offering to lease this (restaurant) space at the low bargain rate and provide something like $50,000 in cash for the build-out (the Green Mouse was told by the restaurateur that it wasn't enough of an enticement to interest him), but the dollars-per-square-foot price fairly skyrockets if the building's owner must finish the space.

Always be aware that as City Hall touts the many restaurants and bars downtown, as though it had anything whatever to do with their founding and operation -- and you can ask virtually any eatery owner to explain where the bulk of the start-up capital originates, this being with them, and not a magical bunkerside ATM -- the fact that the city subsidized the entirety of the Break Wind development means that the city also is subsidizing the eatery or bar that eventually comes to rest in the rough unfinished space. The city might as well be the one writing the check for $50K, right?

I'm not making this point owing to my antipathy for the current occupant, which is real, but rather because it's absolutely true. With Break Wind, the city's been picking winners with your money -- and is picking winners with your money the sort of thing you want Jeff Gahan doing?

Two years and an insurance fire have passed; Breakwater has residents, and now the restaurant space is to be filled. It's all good, or at least as good as it can be, because the same question awaits Gahan's attention -- and the next attempt he makes to answer it will be his first.

To what extent (if any) should City Hall subsidize private, for-profit development with an array of sewer tap-in waivers, tax abatements and other incentives -- enticements generally unavailable to smaller business entities, who must sink or swim by their own merits?

That's because it is perfectly legitimate to continue to ask questions about the applicability of taxpayer subsidies, the precedent of sewer tap-in waivers, the quality of construction techniques, the use of union versus non-union labor, the applicability of giveaways in the cause of "economic development" -- to name only a few issues.

The problem is Gahan is deaf.

8:39 p.m. update:

Given the money the City borrowed to help subsidize Breakwater and the 20-year TIF plan to pay it back, the development being two years old means only 18 more years to go before it contributes a single dime in property taxes to schools and the city general fund -- Jeff Gillenwater

#FireGahan2019

NFL Follies: "Billion dollar teams choosing to fail rather than sign Kaepernick is a scandal for reasons beyond wins and losses."

I'm told that the national concussion league's playoffs begin this weekend, moving from wild cards and betting lines toward the inevitable Stupor Bowl, which exists for otherwise intelligent people to indulge their childlike glee while comparing the merits of advertisements designed to relieve them of their money.

Meanwhile, Dave Zirin remains the only sportswriter who matters, because he writes about things that ... matter.

Zirin places sports into a context, as a part of life, not removed from it. I only wish he had time to bring the same skill set to beer writing, which is in a wretched condition these days.

As a prelude to Zirin, consider this: Colts fans offended by anthem kneeling could receive refunds under legislative proposal.

Colts management tanked its season after it became obvious Andrew Luck wouldn't return -- but fans are strongly urged to be outraged by freedom of expression and civil rights, not the team's ineptitude.

Uh huh.

The NFL Chose to Tank Its Season Rather Than Sign Colin Kaepernick, by Dave Zirin (The Nation)

Billion dollar teams choosing to fail rather than sign Kaepernick is a scandal for reasons beyond wins and losses.

... That is why the sports story of 2017 was how many NFL teams chose to flush their seasons, screw their fan bases, and gut the local economies that had lavished them with tax payer dollars rather than sign free agent quarterback Colin Kaepernick ...

... This matters not only because it reveals the moral rot of a league that would sign abusers of women before people who have given time and money to organizations that empower women or a league that lives in fear of the tweets of a racist autocrat with a 32 percent approval rating. It matters because so many of the above teams cited have stadiums at least partially built on the public dime. Whether you are a sports fan or not, you are subsidizing these organizations. By fielding an inferior product, that means fewer fans in the seats, fewer people in the bars and restaurants, fewer rooms filled at the hotels. It means that the always exaggerated bang-for-your-buck that comes from subsidizing a stadium was muted just so NFL owners could send a shot across the bow to other players that political talk would not be tolerated. Of course, all they did was spur more resistance.

Kaepernick’s current collusion lawsuit against the NFL should not be complicated. It should be as basic as showing videotape from the 2017 season and asking the question, “Why would multiple NFL teams with playoff hopes willingly choose to tank rather than sign me? Why was Tom Savage put under center only to be concussed?” To even ask the question is to answer it: the Bob McNairs and John Elways of the world hate the idea of a free-thinking, openly anti-racist player more than they love the idea of winning a Super Bowl. That damns this league as much as hiding concussion data, and ignoring instances of violence against women. It’s more evidence that the league’s moral compass points in one direction: it’s not toward money and it’s not toward winning. It’s toward remaking this country in their political image: an image where billionaires make the decisions and the rest of us just shut up, work, and salute on demand.

Chain and big box subsidies cost us far more than we imagine, but who cares so long as Starbucks is there?

From the linked Strong Towns article.

I've always wondered if the presumed "neutrality" of chains and big boxes -- they're generic and identical from place to place, all buttons with no fingers -- fills some sort of psychological need in those for whom "localism" implies not a set of economic nuts and bolts, but the local community's parochialism (or worse).

There always have been adherents to internationalism as a corrective to narrower nationalism (or localism), as applicable to seemingly universal belief systems otherwise diametrically opposed: Communism's Internationale versus the worldwide Roman Catholic Church, for example.

As such: "I belong to the worldwide fraternity of Chipotle, where consistency and safety everywhere are the ultimate filters against the messiness of individualism and diversity -- which barely exist in my burg, anyway." 

Admittedly, it's probably more likely that identification with chains and big boxes owes to the narcissistic qualities of consumer culture; I want this or that, and for so long as the price is right, the costs to others be damned.

Or, maybe, that few of us bother to think at all.

Before the Strong Towns link, there's this transcript of a podcast from the Institute for Local Self-Reliance, with ILSR's Stacy Mitchell and Greg LeRoy, executive director of Good Jobs First.

It’s estimated, best ballpark number we have right now, that states and cities spend at least 70 billion, with a B, dollars a year in economic development incentives, and by far most of that is tax breaks, property tax abatements, sales tax exemptions, corporate income tax credits, R&D credits, film production credits. There’s a big menu. The average state has dozens of such programs on the books, which in turn are often locally administered.

Tax increment financing districts, enterprise zones, industrial revenue bonds, all those come under this category. The truth is, as you said, although some of the programs are justified in the name of helping small businesses or helping struggling neighborhoods, and in some cases that’s the way the programs were originally structured and written, over time they’ve become deregulated. Over time they’ve become give-mes that can go anywhere.

So we have TIF districts at the fringe of urban areas piling up apple orchards for Walmart Supercenters. We have subsidies for Amazon sortation centers that are just undermining Macy’s and K-Mart and Sears and all the other retail chains that are laying people off. We have an affluent suburb of Missouri, Des Peres, Missouri, outside of St. Louis, saying or mall is blighted because we don’t have a Nordstrom yet. We need to give a $31 million TIF deal this multinational REIT that owns this mall so that they won’t be blighted anymore and can subsidize bringing in a Nordstrom. It’s gotten really perverse. The anti-poverty argument has been turned upside down and on its head frankly over and over.

In short, government picks winners, and the chosen winners usually are the ones who had enough money to start with.

BIG BOX STORES ARE COSTING OUR CITIES FAR MORE THAN WE EVER IMAGINED, by Rachel Quednau (Strong Towns)

Drive a little ways out from the center of any town and you’re likely to find several big box stores—Target, Home Depot, Piggly Wiggly, you name it. They’re everywhere. If you took a helicopter or a drone above these parts of town, you’d likely see a vast amount of land taken up with just a handful of stores and their accompanying parking lots. The houses and small businesses around them would be dwarfed in comparison. Not only do they use up a ton of land, but as a result, big box stores also demand miles of public infrastructure like pipes and roads to serve them.

But here’s the crazy part: Those enormous stores are paying a negligible amount in taxes. For their size, they are contributing hardly anything while meanwhile demanding new electric lines and frontage roads and signalized intersections (among other things). In most cases, their taxes are not nearly enough to pay for the maintenance of these basic services, let alone the many other functions of our local governments that we expect taxes to pay for, like schools and fire protection.

Here’s a textbook example of this, created by our friends at Urban3, a firm that analyzes the relationship between building design and tax production. The illustration below shows the tax value of a big box store near Asheville, North Carolina, compared with a modest downtown building. Pay special attention to the taxes per acre.

Metro Louisville's pitch to Amazon promises “a quality of life second to none for every Amazonian.”

Dude.

Amazonian

Am·a·zo·ni·an

1. of, like, or characteristic of an Amazon
2. [oftena-] of an amazon; tall, strong, aggressive, etc.: said of a woman
3. of the Amazon River or the country around it

Promising (at least to me, given my proclivities), but maybe GLI, Wendy and the gang should have found a few liberal arts majors to work on the prose -- or pros, as opposed to amateurs.

Exclusive: Greater Louisville’s Amazon proposal, a great pitch, or a foul ball? (LEO Weekly)

We knew it would not be long before the local application for Amazon’s second headquarters was leaked, and it so happens that LEO got a peek at it — first.

The bid detailed on a six-part website, a collaboration of government and business leaders in Louisville, Kentucky and Southern Indiana, touts the region’s obvious, best selling point — location, location, location. It also employs expected hyperbole — “unprecedented collaboration with university and public administration partnerships, as well as strong incentives and easy transit.” Ha! “Easy transit …” And then there is the boast of “a quality of life second to none for every Amazonian.”

In what seemed like defeatist, meta, self-reflection, the introduction says picking Louisville involves “swinging for the fences” because we “may not be the obvious choice for Amazon, but we are the bold choice.” The phrasing and, as it turns out, much of the intro video, parrots Amazon CEO Jeff Bezos’ annual shareholder letter. Using his words is smart, perhaps, but once he gets the joke, will Bezos be willing to risk a $5 billion mistake… er, investment by coming here? ...

... Certainly, in the coming days and weeks, arguments will be had about the proposal’s content. We thought it would be instructive to take a critical look at how the proposal was presented — Did Louisville use its millisecond elevator pitch effectively, or has the door shut on us before we had a chance? So we asked someone from a local advertising agency for their thoughts (he asked to remain anonymous) ...

Previously:

Amazon's bid: More required reading that Wendy Dant Chesser and One Southern Indiana will add to their bonfire of the vacuities.

Amazon's bid: More required reading that Wendy Dant Chesser and One Southern Indiana will add to their bonfire of the vacuities.

Wendy is positively giddy -- and liberal arts degree holders should be scared.

Here’s what we know about Louisville’s Amazon bid, by Caitlin Bowling (Insider Louisville)

While other cities are publicly touting potential sites and incentives for Amazon’s secondary headquarters or crafting gimmicks to attract attention, the city of Louisville has remained relatively mum when it comes to its bid.

Louisville’s economic development arm Louisville Forward is spearheading the effort, but it has culled information from various other entities inside and outside of Jefferson County to help strengthen its proposal ...

... Wendy Dant Chesser, president and CEO of chamber of commerce One Southern Indiana, said the experience was fun because of the collaborative spirit surrounding it.

“If we can work together and be successful, we can all benefit from it,” she said. “We put in a package what I think is indicative of what the region has to offer. Now will it be enough? We will have to wait to hear from Amazon.”

It's always fun when you're playing with house (taxpayer) money. Now for that pesky fine print. I'm guessing there aren't copies of this article in the break room at 1Si.

Amazon’s Uneven Playing Field, by Olivia LaVecchia (Motherboard)

Amazon is looking for a big subsidy to build its new headquarters—the latest move in the company’s long history of using the government to get favors its rivals can’t.

In the hierarchy of the corporate world today, Amazon is near the top. It's one of the top five most valuable companies traded on the major exchanges, and founder and CEO Jeff Bezos is now the second-richest person in the world.

People tend to think that Amazon has gotten there simply by out-competing everyone else. But there's another part of the story of Amazon's rise. From the very beginning, a core part of Amazon's strategy has been taking advantage of public benefits not available to its competitors.

Now, bidding is set to close Thursday on the latest play in this strategy: Amazon's decision to launch a public auction for the location of its second North American headquarters. In that auction, Amazon is angling for such a substantial public handout that, as Amazon itself puts it in its Request for Proposals, the "magnitude may require special incentive legislation." Since Amazon opened bidding, more than 100 cities across the U.S. and Canada have publicly announced their interest in the Amazon sweepstakes, and have given over conference rooms and staff time to work on the bid, launched PR stunts, and started hashtags. Experts say that the end result of all of this hype could be a multi-billion dollar giveaway from taxpayers to Amazon.

Excellent point: "Louisville should not spend tens of millions for a soccer stadium unless it creates better jobs."

Last evening the first step was taken toward a soccer stadium in Louisville.

The Fischer administration made a successful appeal to council members Tuesday saying the public-private partnership, which would erect a 10,000-seat facility, is a good use of taxpayer money that will put acres of underused land to good use.

After a nearly two-hour discussion in the council's Budget Committee, members voted 4-1 to approve the bond.

Investors said they need to move swiftly on a new home field to stay in the professional United Soccer League. Since its inception three years ago, Louisville City FC has played at the Louisville Slugger Field baseball stadium.

Earlier there was an insightful commentary in which the authors refrained from opposing the pump-priming required to build a soccer stadium, but rather explored the implications of it, and suggested positive outcomes of the sort that Greg Fischer rarely acknowledges.

This is precisely the thinking needed whenever local officials propose tethering development to TIF zones. For instance, the jobs generated by New Albany's aquatic center are seasonal and low-paying.

Shouldn't the benefits be more expansive than that?

Louisville should not spend tens of millions for a soccer stadium unless it creates better jobs, by Richard Becker and Bryan Trafford (Insider Louisville)

Richard Becker is co-chair of Kentucky Jobs With Justice. Bryan Trafford is on the executive committee of Jobs With Justice, works at an area casino, and is a member of Teamsters Local 89.

To move forward, Louisville needs to create more jobs that pay enough to support a family. Right now, too many working families in our city feel like they are falling behind, no matter how hard they work. A low-wage floor holds down household spending power, which holds back our local economy.

As Louisville grows and puts taxpayer money into new development projects, our elected representatives should make choices that help paychecks get bigger and neighborhoods get stronger across the city.

Metro Louisville government has a chance to get this right with a major new project. The owners of Louisville City Football Club want as much as $60 million in state and local taxpayer money to help build a stadium, hotel, offices and retail stores on a parcel of land near Butchertown.

The owners of the team want Louisville taxpayers to get a $30 million loan to buy the land where they would own and operate the development. The owners apparently also plan to ask for approximately $30 million in additional taxpayer funding from the state through a “Tax Increment Funding” financing mechanism.

The development has been portrayed as a done deal, with the team saying it expects Metro Council to rush to a vote in two weeks.

But so far, there has been almost no public discussion about whether spending so much of our money on this project will help raise wages and improve the quality of jobs in our city. The members of Metro Council need to slow down, ask questions, and find ways to use this kind of major investment to create better jobs.

Here's one for Wendy: "How Corporate Welfare Is Killing Small Businesses."

(Infographic from Money Choice)

But, you know, River Ridge and all. Follow the link to examine the chart in greater detail.

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How Corporate Welfare Is Killing Small Businesses, by John White (Inc)

Despite being the backbone of the economy, funding from the Small Business Administration is a fraction of that of corporate welfare.

What is corporate welfare?
Corporate welfare is tax money that is given to corporations in order to encourage growth in a specific sector, stabilize a shaky sector, or avoid financial meltdown in a certain sector. Most notably we've seen this used to successfully avert a banking crisis in 2008, as well as the predicted collapse of the American auto industry between 2009 and 2013.

Big business wins big
Between 2000 and 2015, two-thirds of corporate welfare subsidies went to fewer than 600 large companies.

Small businesses can't compete
Even though small businesses are considered by many to be the backbone of our economy, accounting for 54% of all sales in the United States as well as the lion's share of job growth since the early 1990s, funding from the Small Business Administration is a fraction of that of corporate welfare. The SBA's budget was $1.4 billion in 2016, but the SBA only provides grants for nonprofits and educational institutions in certain growth sectors.

It does not provide direct loans to small businesses; instead, it provides guidelines for small business loans from lending institutions. You know, those big banks getting all the bailouts.

As Duggins juggles hats and pay stubs, Redevelopment seeks a developer to shower with largess.

When the newspaper reported this story several days after you read it here first ...

Public Housing Putsch '17: Gahan, Trump remain in lock step as sycophants queue after the NAHA's director of finance resigns.

... it was noted that David Duggins remains on the city's payroll. But can he be on the city's payroll at the same time as serving as interim NAHA director? Isn't this both a federal and state violation?

By the way, if anyone knows the identity of the new insurance carrier for NAHA employees, can you let the Green Mouse know? Seems the bobbleheaded board of sycophants tabled the vote at the last public meeting, then took it into a closed door meeting.

According to Gahanism, this suggests a successful bid by Bob Norwood, who also is seated on the board. But what do we know?

Oh, yes; there's this. Redevelopment is looking for someone to subsidize. Have I started inadvertently repeating myself?

New Albany officials ask developers for ideas on Market Boy, Tommy Lancaster properties, by Elizabeth Beilman (Gahan Fluff Monster)

Redevelopment commission hoping for mixed use developments

NEW ALBANY — The famous Tommy Lancaster Restaurant and Market Boy Grocery are only memories to locals now, but soon the empty properties could hold brand new developments.

The New Albany Redevelopment Commission is advertising a request for proposals for the Market Street properties, as well as a grassy lot along Bank Street near the Underground Station.

"They're properties that have been underdeveloped ... in the case of Tommy Lancaster and Market Boy, they were blights to the neighborhood," New Albany Redevelopment Director David Duggins said.

The commission is asking for mixed-use developments for both, a concept that involves first-floor retail and upper-floor residential space often seen in urban settings.

The proposals don't request anything more detailed than "mixed use," in terms of the type of development. The commission is asking developers provide specifics on construction timeline, funding and other matters.

"Basically, [the proposals] ask for a developer to come to us to say what they would do there," Duggins said.

Death to chains, by the numbers -- "The Multiplier Effect of Local Independent Businesses."

The obvious question: If local independent business recirculates more revenue locally, why do the local government economic incentives and abatements inevitably flow to the chains?

The most recent example is Summit Springs. City Hall happily bills itself as a partner in this development, and city funds will be used to make it a reality. There'll be two hotels, both chains, along with three restaurants (need we ask?), on a commercial strip already dominated by big box retail.

In effect, in this and other projects like it, the city overlooks the multiplier by subsidizing the businesses most likely to recirculate less revenue locally.

The Multiplier Effect of Local Independent Businesses (AMIBA)

Clearly communicating the importance of the local economic multiplier effect or “local premium” is a key part of effective “buy local” and public education campaigns. The multiplier results from the fact that independent locally-owned businesses recirculate a far greater percentage of revenue locally compared to absentee-owned businesses (or locally-owned franchises ... in other words, going local creates more local wealth and jobs.

I can hear the excuses now -- except I can't. City Hall doesn't publicly discuss matters like this, does it?

And that's the real problem, isn't it?

Meanwhile, even the area's premier publication for chain glorification gets the memo.

Chain restaurants only do three things better than independents, study says, by David A. Mann (Louisville Business First)

Independent restaurants seem to have an advantage over their chain counterparts in a number of different operational and emotional metrics, according to a new consumer study.

The study came from industry consulting firm Pentallect and research partner Critical Mix. Consumers give independents the edge in 12 of 15 metrics being surveyed.

Independent restaurants seem to have an advantage over their chain counterparts in a number of different operational and emotional metrics, according to a new consumer study ...

Never forget that Jeff Gahan used your tax dollars to subsidize luxury at Breakwater.

An "alternative fact" of a skyline? Learn more here.

Let's hope new residents at the Break Wind Lofts at Duggins Flats aren't too disappointed when the city of Louisville turns out to be situated a bit further to the southwest than Pastime's gazebo.

Austin Carmony, the firm's vice president of development, said the complex's 66-unit residential building, where tenants have already started moving in, was completed in December. The second 125-unit building will be done in April. Rent for the units ranges from $650 to $1,650.

Let's also hope the most luxurious of the high end digs aren't gifted with a view of the lovely landscaping at AT&T, across an as yet uncalmed one-way Spring Street -- where presently, the traffic is moving faster than ever.

A relatively small space on the east side of the former Coyle showroom remains rough and unfinished, and so this evidently is what Carmony refers to in this passage.

The renovated former Coyle showroom will house retail and amenities including a heated pool, gym, grilling stations, fire pit and a dog park. Carmony said no one has signed on to fill the space yet, but he thinks a restaurant would be ideal in the location.

Another dog park? Who knew that the Coyle lot was built atop a Native American site? As an aside, I still think it was a mistake to omit bocce ball; if only Redevelopment would have kicked in another couple hundred thousand to a for-profit private developer to make it happen.

Wouldn't bocce have fit comfortably on one of those rooftops, thus better facilitating a distanced squint at Louisville?

Two months ago, a local restaurateur told the Green Mouse that the unfinished potential eatery space in the former showroom actually is priced fairly -- for being unfinished.

Flaherty and Collins apparently is offering to lease this space at the low bargain rate and provide something like $50,000 in cash for the build-out (the Green Mouse was told by the restaurateur that it wasn't enough of an enticement to interest him), but the dollars-per-square-foot price fairly skyrockets if the building's owner must finish the space.

Always be aware that as City Hall touts the many restaurants and bars downtown, as though it had anything whatever to do with their founding and operation -- and you can ask virtually any eatery owner to explain where the bulk of the start-up capital originates, this being with them, and not a magical bunkerside ATM -- the fact that the city subsidized the entirety of the Break Wind development means that the city also is subsidizing the eatery or bar that eventually comes to rest in the rough unfinished space. The city might as well be the one writing the check for $50K, right?

I'm not making this point owing to my antipathy for the current occupant, which is real, but rather because it's absolutely true. With Break Wind, the city's been picking winners with your money -- and is picking winners with your money the sort of thing you want Jeff Gahan doing?

Coyle showroom now luxury clubhouse in New Albany, by Madeleine Winer (Courier-Journal)

The clubhouse is open and the first tenants have started to move into The Breakwater, a luxury apartment complex still under construction in New Albany.

Breakwater, Break Wind: "We got to move these refrigerators, we gotta move these color TV's," or else we'll miss the thrill of public housing demolitions.

The expected breathlessness comes to us straight from the Hanson Advertising Aggregator, so a few actual facts are worth remembering:

1. Break Wind is the first instance in municipal history of sewer tap-in fees being waived for a private, for-profit developer, adding another few hundred thousand to the bonds mentioned below.

2. At a time when affordable housing is a nationwide dilemma, this public relations exaltation of drywall 'n' pressboard "luxury" is occurring simultaneously with Mayor Jeff Gahan's packing of the New Albany Housing Authority Board with slobbering sycophants (sorry, Shane) in anticipation of permanently reducing affordable housing (and shrinking the safety net) for the city's working poor.

3. Finally, seeing as the city is subsidizing this private for-profit development with sewer tap-in waivers, bonds and infrastructure, the city also will be subsidizing the private for-profit eatery mentioned as potential tenant of Break Wind's retail space.This is an affront to every entrepreneur who has invested in downtown with little or no similar assistance from Team Gahan.

In the Dear Leader's shining city on the flood plain, the beat (and the hypocrisy, and the reconstituted prostitution) goes on ... and on ... and on ...

The Breakwater starts moving in tenants; 13 leasers set to move into the first, 66-unit residential building by the end of the month, by Danielle Grady

Flaherty & Collins is still looking for a tenant to fill the retail space, however. A restaurant that benefits the city would be ideal, Carmony said.

As the property continues to take shape, Carmony said he expects more Breakwater residents to sign leases.

The Breakwater, a $26.5 million project, is being built with the help of $4.9 million in bonds from the city and a $3.3 million tax credit from the Indiana Economic Development Corp.

The development will pay $250,000 in property taxes, and its residents will pump millions into the local economy, said David Flaherty, the CEO of Flaherty & Collins, in a previous News and Tribune article.

He's melting: If the newspapers won't ask David Duggins hard questions, maybe a bucket of water is the answer.

In these two articles by the News and Tribune's Danielle Grady, there are so many questions to be asked, and so few questions actually asked.

Are they ever asked? I really want to know. If I can think of these questions (and others) while reading, then ...

Industrial development growing in New Albany

FireKing Security Group to be first tenant in Industrial Park West

... David Duggins, New Albany’s director of economic development and redevelopment, said that three years isn’t that long of a time to search for a tenant — a good one, at least.

Is there any evidence for this assertion, or perhaps a corresponding example?

Did the city show property to five potential tenants in three years out of taste and discernment, or because its development hand is so exceedingly weak?

The Carlisle Family was attracted to the Industrial Park partly because of the tax abatements the city offered them. They city approved one abatement for the $6.5 million the Carlisle Family is investing into its new building, while also approving a tax abatement for the $2.2 million worth of manufacturing and IT equipment FireKing is investing into the new location.

Lots and lots of boilerplate tax abatements. The city is adept at giving away money to bigger companies. What sort of programs exist to "assist" smaller start-ups?

“We think that once FireKing gets built up, it’ll really help spur more development because if you don’t know it’s there, you really don’t know it’s there,” he said.

Was that Duggins speaking, or the late Yogi Berra?

Finally, how does the headline "industrial development growing" jibe with the article's conclusion: "Grant Line Industrial Park West might be one of the last frontiers for industry in the city. New Albany is almost out of industrial space, said Duggins."

Let's move on to a second collection of unchallenged smoke-blowing, this time on site at The Break Wind Lofts at Duggins Flats ... and waiter, may I have another plaque?

With cream on top?

The Breakwater apartment complex in New Albany starts accepting tenants

First building opens in mid-December

... The city of New Albany has been happy with how The Breakwater has been coming along — especially regarding the types of tenants it is attracting.

“We want people to live in downtown that are excited to be in downtown,” said David Duggins, New Albany’s director of economic development and redevelopment.

And the apartment complex just looks nice, Duggins said.

“When you go out there, it’s cool, and I think that’s hard to accomplish sometimes,” he said.

So many questions.

How cool are the sewer tap-in waivers and other public subsidies enabling a private for-profit enterprise to be given its special leg-up?

Given these subsidies, isn't the city also subsidizing future retail occupants of the old Coyle building, these being subsidies unavailable to other small business owners?

Duggins has denied two-way streets ever came up during these subsidy negotiations, but at least one Flaherty Collins employee has indicated otherwise.

Which is it? Because if this did in fact arise, and if assurances were made by the city to this effect, then every subsequent protest of "two-way streets aren't a done deal" was a lie (yeah, Irv -- you can use that).

But wait -- it's cool, dude.

After all, Duggins isn't so much a director of economic development as a style arbiter. He's Gianni Versace, reincarnated, and Jeff Gahan believes it.

If that doesn't terrify you, nothing will.

What city is this, anyway?

"The dirty little secret of big box development – and it’s really not a secret – is that the buildings are designed to be abandoned."

It's Big Box Week at Strong Towns, while here in Southern Indiana, it's Big Box Week every week of the year.

Big Box Week, by Charles Marohn (Strong Towns)

... This all serves to illuminate the fact that big box development is extremely risky. We, the taxpayers, put a pipe in the ground in our name and we’ve made an eternal promise that generation after generation is expected to make good on. The big box retailer builds a store and they’ve recouped their capital costs in a decade. They are then free and clear to move on leaving us with a dead site.

Their zealous obligation is to their shareholders. I can respect that, but our obligation to our taxpayers – today’s and tomorrow’s – needs to be equally zealous.

This week we’re going to focus on big box stores. We’re going to look at their relatively low financial productivity combined with their high risk. We will examine sites that have failed and sites that have been reclaimed. We’ll delve a little into what is known as “sprawl retrofit” (their term, not mine) and take some time to look at the good and bad of urban big box stores. I also want to examine state subsidies for big box stores and how state governments have created – for their own financial benefit – a race to the bottom for municipalities.

It's just boilerplate to pay someone to make a profitable investment, right?

Yesterday we were breathlessly told to prepare for yet another apocalyptic weather event that never arrived. Out in search of flashlight batteries and cans of beans, I happened upon representatives of Flaherty Collins, loading the trunks of their cars with cases of champagne.

Sly Stone once observed a riot going on. In New Albany, we specialize in anointments.

Coyle site TIF abuse: "Because subsidizing wealthy, out of town developers is the only thing our economic development director knows how to do with our tax money."

There was a gently facetious comment posted about the preceding, and while normally I wouldn't repeat it, the sentiment is deserving of open refutation proportionate to the backroom greasings that have produced the Coyle site deal.

How dare them foreigners (from Indiana) invest in our town! Xenophobia is alive and well in some quarters.

If the investment "in our town" is credible (read: profitable), as developers like Matt Chalfant, Steve Resch, the Carters and others seem to think it is, then why must we in effect pay someone to invest in NA?

This is what we're doing with Flaherty Collins.

But couldn't these monies be used to augment the non-subsidized local investments already taking place, by developers working on their own, from no more than a profit incentive borne of risk and opportunity?

Didn't I read somewhere that this is the essence of the free market?

Perhaps there is more than the immediately obvious to "boilerplate" economic development strategies.

Coyle site TIF abuse: "Because subsidizing wealthy, out of town developers is the only thing our economic development director knows how to do with our tax money."

Hint: Those little white nodules are the unregulated rental properties.

I'm going to borrow Randy's introduction to what became a well-populated Facebook discussion.

On Thursday, the New Albany city council is set to approve $4.9 million in redevelopment borrowing for site prep and infrastructure upgrades to the Coyle site on Spring Street. 190 units of what are being called luxury apartments plus 2,000 s.f. of commercial space are to be built there by Flaherty Collins of Indianapolis. What do you think?

There were many replies, which I'll purposefully restrict to a sampling only because I've bigger fish to fry.

• My opinion on this is to look who comes out after voting on this with full pockets.
• Is Spring Street going to be made into a 2-way street? If not, think about the difficulty accessing the apartments? 
• How far to the nearest grocery store?
• Rentals or condos, doesn't really matter to me. To draw the clientele they want to attract, there needs to be more in downtown. 
• A good grant researcher/writer would go a L-O-N-G way.
• I don't know if luxury is the right term. The last I heard the units were being targeted towards young professionals, who I absolutely believe would want to live in this neighborhood. I don't necessarily agree with the path being taken to build something like this but that doesn't mean I think it's not needed or won't work.

Randy addressed the political aspect.

Since this is our money, I think that makes it political. I can't just write a check every six months and then not care how it's spent. And yes, it's TIF money. That's our money, too. The certifier must work with an enormous multiplier to believe that the new taxes we get far in the future make this a good investment. 

Jeff Gillenwater promptly began driving nails.

Because our Democratically controlled city council will likely rubber stamp it without so much as a passing reference to the now decades long failure of trickle down economics?

Because the public will be on the hook for millions in entirely private luxury to which they'll have no access?

I at least hope the district's councilman will vote against it.

We could easily reconfigure the downtown/midtown street grid for less and see a higher rate of return in both private investment and public well being. That would be a worthy TIF goal. This is TIF abuse.

I subsequently noted the obvious, or at least what should be obvious to those without Kool Aid stains on their suit jackets.

Currently a half-dozen developers are rehabbing downtown properties into residential space. They're doing it almost entirely on their own dimes, gradually and sustainably, sans breathless incentives. I simply find it appalling that we're forever willing to provide breaks to entities of a certain size that don't need them, while allowing small and independent business to spin the wheel.

To which Jeff replied (emphasis mine):

And you can bet that if all those local players hadn't already invested millions of their own, this developer wouldn't be looking at New Albany at all. Using TIF properly to improve shared infrastructure rewards those local investors, induces further investment, and helps level the playing field. Using it this way does the exact opposite across the board.

I added a final thought of my own.

Lest we forget, hoping that our councilman Greg Phipps is reading: Everything we're discussing here has been summarized by David Duggins with one special word: "Boilerplate."

Just another day with the same usual suspects, and their same customary cash flow. Indie businesses often refer to recirculation of money through local economies. What we see here is the recirculation of political wheel-greasing slush.

To conclude, Jeff summarized two major themes in magisterial fashion. First, how to do it right. Next, how the current City Hall occupant continues doing it wrong.

The only thing we have to do in the oldest parts of our city to attract young folks, old folks, and in-between folks is to allow them to function as they were designed. We already have an enviable collection of assets and plenty of smarts not represented in local decision making. Return the infrastructure to a safer, multi-modal pattern with a few modern updates, make sure stuff is accessible and works, and then largely get the hell out of the way. Some will want to live in it, some will want to live near it, and others will visit regularly. It's cheap, it's easy, it's the primary function of local government, it's the only part private parties can't do on their own, and the pattern is right in front of us. All the $750,000 pocket parks, $3 million single streets, $9 million aquatic centers, multi-million developer subsidies, and other largely irrelevant schemes in the world don't change that.

We keep electing people who want to be the absentee dad who shows up on random weekends to take the kids to the amusement park and buy them ice cream.

What we need is a mom during the week.

I can't recall it being said any better, and Jeff already knows that I'll be borrowing that last line.

Smith: "Sewer Utility Still Draining Tax Dollars."

Randy Smith lays it out. Read and discuss.

Sewer Utility Still Draining Tax Dollars

Quite a few of the incumbents, including Mayor Jeff “M” Gahan, are boasting about the state of our sewer system (Gahan is also the paid president of the city-owned municipal utility).

But it turns out that our elected officials have resumed an illegal shell game with taxpayer money once again being used to disguise the true state of the utility’s finances.

Just four years ago I asked voters in New Albany’s Fifth Council District to elect me. During that campaign, I pleaded with Gahan to promise to end that subsidy. He denied it was illegal and declined to make such a pledge.

I had thought the chicanery had finally ended when I read last year that the subsidy had been removed. But just to make sure, I perused the city’s 2015 budget. There, to my astonishment, was yet another transfer of $570,000 from the income tax fund (EDIT) to the sewer utility.

Read it all, right here