economic development Archives - Bankers Anonymous

June 10, 2024June 10, 2024

Book Review: The 15-Minute City by Carlos Moreno

Professor Carlos Moreno first presented his “15-Minute City” idea in 2016 at a climate conference. His big idea was that reducing fossil-fuel emissions required a radical redesign of urban life, reducing automobile traffic by making everything much more accessible to smaller neighborhood units.

Part of the power of Moreno’s concept comes from the fact that current Paris Mayor Anne Hidalgo has adopted the 15-Minute City concept as her guiding leadership principle, and she will be mayor until 2026.

Moreno’s new book The 15-Minute City: The Solution To Saving Our Time & Our Planet published May 7th explains this concept in depth and chronicles attempts by leaders of contemporary cities – first 20 cities, then 40 cities, and now many more cities – to imagine and then implement design and zoning changes to improve urban life.

Moreno’s argument is that we can and should measure the distance in time it takes city-dwellers to reach essential services like education, work, health, food, and entertainment amenities. Healthier cities try to avoid long commutes and traffic jams, some of which are caused by car-centric planning. We can accomplish this partly by creating the conditions for more walking, biking and public transportation modes. Mixing residential and commercial buildings makes it more likely that people can live in complete neighborhoods where much of life can be reached without getting stuck in traffic.

Moreno’s 15-Minute City is a great example of how a cleverly conceived big idea can drive change when adopted by the right people.The mayors of cities as diverse as Paris, Milan, Cleveland, Portland, Melbourne, Buenos Aires, and even Busan in Korea and Souse in Tunisia have explicitly modeled their urban redevelopment plans on Moreno’s concepts, as explained in his book.

The convincing appeal of The 15-Minute City, for me personally, has very little to do with environmental impact or as a way to address climate change. I’m not in fact convinced by his arguments on that aspect of it.

I am convinced instead by the aesthetic and lifestyle improvements that a 15-minute city seem to offer. In the car-centric world of 21st-Century Texas cities, I lament and resent the reliance on cars that our built environment requires. In San Antonio, where I live, we tend to build new residential communities with single access points that connect only to interstate highways. This requires everyone to get in their automobiles, use the interstate like a city street, and then drive three exits down to get to their local grocery store. Congestion is a guaranteed outcome. With this model, time wasted in traffic is inevitable.

We enjoy a number of walkable amenities and a pedestrian-friendly life in my neighborhood. But I still of course get in my car and drive 15+ minutes to go to the doctor, or to bring my daughter to her soccer team practices thrice weekly. It’s fine, but it could be a lot better.

Objections to the Book

This is by no means a perfect book.

First, the book does not provide a proof of his concept in any way. It does not provide rigorous data or analysis on the plan versus other solutions. The book is much more of a manifesto for a better way to approach urban design, as well as a history of what went before his big ideas and what has happened since, to coalesce urban planners around his big idea.

Moreno’s also neither a great writer (English may be his third language) nor a convincing scholar. He repeats himself and relies on fuzzy descriptions of hopeful ideas from around the world that might hopefully accomplish his big idea, ideas which are still very much in the planning phase.

I find the 15-Minute City convincing not because of the quality of his evidence or argument, but because I’m predisposed aesthetically to this kind of urban life. It’s a big idea, I like the big idea, and I think we should aim for it. The 15-Minute City is totally different from the way Texas cities are being built right now, and that’s a damn shame.

The Wacko Objections To The Book

One version of good-faith criticism of the 15-Minute City is that urban design emphasizing small, slow, and localized neighborhoods inside a large city could involve convenience, lifestyle, and economic trade-offs. Developers of new neighborhoods and new office parks clearly find it to their advantage to continue to do more of what they’ve already been doing. Traffic engineers clearly find it to their advantage to build faster and bigger roadways for automobile-oriented transportation. I think I could see why they wouldn’t naturally be big fans of Moreno’s ideas.

Carlos Moreno is a very big Jane Jacobs fan

Then there are the bad-faith critics and wackadoodles. Moreno in news reports has mentioned receiving death threats because of his idea. For a nerdy academic concept like this, the threats are probably a sign that he is on to something big and important.

The 15-Minute City concept is potentially threatening to the status quo of cities as developed since the 1950s. As an idea it’s been twisted by bad-faith critics into some monstrous intrusion into contemporary urban development. Socialism! Europeanism! The death of the automobile!

Earlier iterations of international climate-friendly zoning ideas have acted like a red cape before a bull. A UN-sponsored agreement from 1992 signed by 178 countries, called Agenda 21, became a conspiracy-theory code word for far right commentators who imagined this as a forerunner of a secret “New World Order.” Attempts to limit the potential profits of developers can be, and has been, spun into some threat to an American way of life. What seems like sensible planning for better life in cities to some can be seen as an attack on private property rights to others.

While Moreno is certainly European in outlook and interested in small scale, walkable, and bike-friendly neighborhoods, he does not personally represent a vast conspiracy. He is just a guy, a Colombian-born Parisian professor who happens to have come up with a cleverly-marketed way to help city-planners imagine better cities. And as described in his book, he hit the zeitgeist for many cities on different continents led by leaders looking to revitalize small-scale neighborhood life among modern metropolises.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Link to purchase book: The 15-Minute City by Carlos Moreno

Please see related posts

Book Review: The Death and Life of Great American Cities by Jane Jacobs

Book Review: Going Going by Naomi Shihab Nye

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November 6, 2022June 13, 2023

DeLorean’s Legacy

August was a big month for the DeLorean car company’s legacy. In fact, August 18 was a particularly big day on both coasts. On the west coast, San Antonio-based DeLorean Motors Reimagined hosted a public launch of its “Alpha5” concept car at the 70th Annual 2022 Pebble Beach Concours d’Elegance auto show.

Meanwhile on August 18 in New Hampshire, an alternate claim to the DeLorean legacy was announced as well. Kathryn DeLorean, original founder John Z. DeLorean’s daughter, launched the DeLorean Legacy Project, an educational engineering center with plans to build a signature tribute car, the Model JZD, first designed by Angel Guerra in 2020.

One of these is a for-profit business and the other is a historical tribute and non-profit educational project. Both are attempts to grapple with what this car brand meant in the past and what it will mean in the future. What is DeLorean’s true legacy?

Ever since its star turn in the famous Michael J. Fox movie, the DeLorean brand has operated in the boundary space between the past and the future. Any DeLorean project wrestles with this fact. A DeLorean-branded car is by definition a 40-year-old throwback while simultaneously marketing itself as a blast into the future.

The DeLorean of our imagination embodies this paradox. A retro-futuristic relic of discontinuous-time and liminal space.

The DeLorean Motors Reimagined folks know this. The name “Alpha5” – the prototype they debuted last week at Pebble Beach – uses “5” in the name because the company claims to have imagined 1990, 2000, 2010 DeLoreans (the Alphas 2, 3 and 4) that never were. That’s a cool made-up retconned legacy idea, actually.

Their signature tagline, “The Future Was Never Promised” to me sounds somewhat apologetic, as if anticipating and then responding to a disappointed fan who objects to their vision of the future for DeLorean.

Unfortunately, or maybe inevitably, it’s proving hard to satisfy the hardcore fandom that wants both retro and futuristic styling. So far it’s gone over about as well as did Hayden Christiansen’s Anakin Skywalker in the Star Wars prequels, as compared to the original Darth Vader narratives, another retconned remake that enraged original superfans.

The Delorean Motors Reimagined Instagram page hosts a relentless series of complaints about the Alpha5: that it’s not a real DeLorean, that it very clearly reused a 2019 design for a concept car called the DaVinci, that it looks like a Tesla, and that they didn’t honor the DeLorean design legacy. To satisfy your own schadenfreude, I invite you to visit their social media.

The most immediate challenge to their future business hit the company a week before Pebble Beach. Electric car company Karma Motors sued DeLorean Motors Reimagined and its top executives for stealing intellectual property and breaching the non-disclosure agreements they signed as Karma employees in 2021. For them to have a future, they will need to go back to address this past, in court.

Other fights over intellectual property

As one dives deeper into the obsessions of the DeLorean fandom online, the questions of intellectual property rights and legitimacy get even more convoluted. By the time it publicly launched in 2022, the San Antonio-based DeLorean Motors Reimagined had already teamed up in a joint venture with Delorean Motor Company of Texas, based in Humble. That company, led by Stephen Wynne, had long ago established itself as the successor to John Z. DeLorean’s bankrupted firm by buying up DeLorean parts and then over time acquiring lapsed trademark rights to the name, logo and design.

Sally Baldwin DeLorean, the administrator for John Z. DeLorean’s estate and his fourth wife at the time of his death in 2005, however, sued DeLorean Motor Company of Texas for improper use of intellectual property in 2014 and again in 2018. That case was settled in 2018 for an undisclosed amount, leaving DeLorean Motor Company of Texas in a strong position to claim intellectual property rights to the DeLorean name, brand, imagery and logo. Rights which it has now shared in a joint venture with DeLorean Motors Reimagined.

John DeLorean’s daughter Kathryn and a fan-favorite design

Kathryn DeLorean, JZD’s daughter, believes that Sally cheated on her father and also cheated her out of proceeds of her late father’s estate. Meanwhile, she has embarked on her own attempt to establish a DeLorean legacy, by working with a fan-friendly designer.

In November and December 2020, freelance automobile designer Angel Guerra of Spain launched a COVID-era fantasy idea: A 2021 DeLorean tribute to the 40th anniversary of the car.

In the online super fandom of DeLorean, Angel Guerra’s designs caught spontaneous fire. In Guerra’s telling, he reached out to Delorean Motor Company of Texas and shared his vision and even business plans for building a prototype within a year. When DeLorean Motor Company of Texas declined to pursue the idea, Guerra returned to his regular day job, working on European hyper-car auto designs.

Guerra was then surprised to hear a few months later that in fact DeLorean Motor Company of Texas was pursuing a new futuristic electric car joint venture. This turned out to be a group from Karma Motors that formed the executive team of DeLorean Motors Reimagined in San Antonio. Guerra’s comment to me on the formation of that venture, just a few months after he pitched Stephen Wynne of DeLorean Motor Company of Texas, was “what a coincidence.”

Guerra subsequently joined forces with Kathryn DeLorean to offer another kind of legacy. They hope students of design and engineering will learn from building his concept car, the “Model JZD.”

Angel Guerra and Kathryn DeLorean are careful in their public communications to disclose that the DeLorean Legacy Project is not affiliated with DeLorean Motors Reimagined (of San Antonio) or DeLorean Motor Company, Texas (of Humble).

They are not competing in any commercial sense. They represent a different claim, however, to the fandom of the DeLorean. In launching her legacy project, Kathryn says “There is no competition, I am a DeLorean, I’m making engineers, not engines.”

Now then, let’s go back to the future. Ten years from now, Whose legacy will we remember? Obviously, I don’t know.

But there’s a recurring pattern with this company. Kathryn DeLorean claims she was cheated out of her estate by her step-mother Sally Baldwin DeLorean. Sally Baldwin DeLorean claimed she was cheated out of intellectual property and royalties by Stephen Wynne’s company. Karma Motors feels cheated out of intellectual property by the executive team of DeLorean Motors Reimagined. Guerra feels cheated out of credit and inspiration by Wynne. Online superfans feel cheated out of DeLorean’s legacy by the new designs. And I’m worried about the public being cheated out of up-to-$1 million in city and county subsidies offered to DeLorean Motors Reimagined, a pure startup with no track record, entering an extremely difficult industry.

A version of this post ran in the San Antonio Express News and Houston Chronicle.

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September 26, 2018September 26, 2018

Good To Miss The Amazon HQ Sweepstakes

The Amazon HQ announcement is coming to your headlines soon. CEO Jeff Bezos said by the end of the year, even though others believe they’re going to Northern Virginia. I’m thankful neither Houston nor San Antonio played that game, although Austin was named a top-20 finalist.

The game, if you need a refresher, is that Amazon intends to build a new 50,000-employee second headquarters, and invited city and county leaders last year to inundate the company with slavish economic incentives to woo Amazon and those sweet, sweet, jobs.

Economic Development: Left and Right

One of the things I think about economic development incentives, which is clearly quite naive of me, is that partisans on the Left and Right should always, for ideological reasons, oppose targeted tax breaks for specific companies.

On the Right, a targeted tax break incentive seems the very antithesis of free-market capitalism. This involves a government, usually a state or city or county, putting its thumb on the scale to pick winners and losers. Pro-market folks should see this as a clear disruption of the way markets are supposed work. Worse, the incentives usually come with intrusive requirements like minimum numbers of jobs created, minimum salaries, and further government interference. From a free-market perspective, when the government picks winners and losers we get a bad mixture of misallocated resources and opportunities for corruption.

To the Left, a targeted tax break for a specific company should appear as clear corporate welfare. When a government cuts property taxes or other fees for a specific business, the small number of capitalist owners of that specific company get a direct benefit to their bottom line, while the general population bears a greater burden for all the rest of the taxes. That’s the very definition of benefitting the few on the backs of the many, and should present clear problem for ideologues on the Left.

Setting aside my naïve brain, however, it seems like both the givers of government largesse and the recipients of the largesse believe in tremendous personal benefits from economic incentives. Meanwhile PR announcements inevitably focus on some amount of “good paying jobs,” or praise the “job-creating government.”

Again, this is just one man’s dumb opinion, but when you incentivize companies to move to your city because of a supposed tax break, and that company is willing to submit itself to a specific requirement for creating a certain number of jobs at a certain salary, there are two highly likely scenarios.

The optimistic scenario is that the company is well-run, planned the expansion anyway with or without government incentives, and is cynically happy to receive government freebies because, hey, free money. That’s at least a clever, but cynical, company.

The pessimistic scenario is that the company makes important executive decisions based on tax incentives. That kind of company will be gone in five years, either because their executives have their priorities wrong and the company is badly run, or because another city or county has another better set of incentives to offer five years from now.

To be clear, I’m confident Amazon is extremely well-run, will extract maximum value from its already preferred and chosen location, and they’re interested in incentives because, hey, free money.

The Academics’ View on Economic Development Incentives

UT Austin Professor Nathan M. Jensen and Duke University professor Edmund J. Malesky recently published a book Incentives To Pander: How Politicians Use Corporate Welfare For Political Gain addressing these problems. They review what economists already know, which is that there’s scant evidence that economic incentives work. Or if they work, the public benefit cannot be justified by the public cost.

Their study focuses less on the economic case for incentives and more on the political advantage city and county leaders get by offering these corporate goodies. It doesn’t matter so much that incentives don’t work, but rather it matters that voters think they work. And voters have far less information than leaders, so generally can’t prove that incentives don’t work. Jensen and Malesky further argue that even an unsuccessful attempt to woo a company with tax breaks, for example, helps a political leader, because they can at least claim to have “tried their best.”

One Mayor’s View on Amazon

In the light of Jensen and Malesky’s book, and leaders’ incentives to pander, San Antonio Mayor Ron Nirenberg and Bexar County Judge Nelson Wolff’s early and decisive NO to Amazon HQ in October 2017 stands out as particularly courageous.

I asked Nirenberg recently whether he had any regrets about declining to compete for Amazon HQ. His short answer is, no, no regrets.

His longer answer is that they didn’t so much say no to Amazon as they started a different economic opportunity conversation about what San Antonio has to offer.

“With respect to HQ2 and the sweepstakes, that narrative of San Antonio’s bright future is weaved right into it. When the stories are written about the Amazon RFP, there is a subplot, which is San Antonio’s response,” Nirenberg said.

I have to say, because I hate incentives so much, that it’s refreshing to see an earnest refocus on the economic advantages of a place rather than dangling public goodies to a private company.

Nirenberg continued, “We are investing in the fundamentals in terms of housing, water supply, a reliable energy grid. And we have a workforce that mirrors what the rest of the country will look like 20 years from now. We are making investments in that workforce before most cities have even woken up to that reality.”

Says Nirenberg, “if a company is interested in a 5-year return, and cashing out, there are many other cities. But if companies are interested in the 30-year return, I feel the fundamentals of our city are extremely competitive.”

Brother, can I get an Amen? This is the kind of talk professors Jensen and Malesky would welcome.

Northern Virginia, early congrats on your future “win.”

Please see related posts:

Need Transparency on Economic Development Taken To Eleven

Amarillo By Mornin’ – Stadium Building

Economic Development for Solar – Turtles All The Way Down

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February 8, 2018

Super Bowl Stadium Thoughts

In case the broadcast of the Super Bowl on Sunday didn’t make it crystal clear on high definition TV, there’s one very specific reason why the NFL chose to hold a giant tourist event in freezing Minnesota in February. (Hint: It wasn’t for the fan experience.)

The reason: Money.

Specifically, $1.2 billion spent to construct the new US Bank Stadium in Minneapolis. Even more specifically, the estimated $498 million in taxpayer subsidies for the stadium. That amount of public money keeps sports franchise owners toasty warm in their luxury boxes, bless their hearts.

The NFL’s reward for extracting our taxpayer funds is the Super Bowl. Historically the NFL chooses a warm-weather city in Florida, Texas, Arizona, or Louisiana for the Super Bowl. Football fans, one would sort of think, prefer their walkable pre-game experience without putting on eight layers of clothing. For the right amount of taxpayer money, however, the NFL will send die-hard fans to the weather-equivalent of planet Hoth.

Awarding Super Bowl locations follows the construction of new stadiums by NFL cities, just like night follows day. Here, have some data:

New $1.2 billion stadium for the Vikings in 2016? Super Bowl LII in Minneapolis in 2018.

New $1.4 billion stadium for the Falcons in 2017? Super Bowl LIII in Atlanta 2019.

$550 stadium renovation of the Dolphins’ stadium in 2016? Super Bowl LIV in Miami 2020.

$150 stadium renovation for the Buccaneers in 2017: Super Bowl LV in Tampa 2021.

New $2.6 billion stadium for the LA Rams in 2020: Super Bowl LVI in Inglewood, CA. in 2022.

If I were a gambling man, I’d wager my life’s fortune on Super Bowl in 2023 in Las Vegas, after the peripatetic Raiders’ new stadium gets built on the sturdy foundation of taxpayers’ wallets in Nevada. Please, somebody, tell me if there’s a sports book at Caesar’s Palace that will accept my wager on the location of Super Bowl LVII in 2023.

Anyway, those new stadium price tags aren’t the amount taxpayers subsidize billionaire sports owners, but rather the total estimated costs of construction. Here are the estimated taxpayer subsidies associated with those specific stadium construction projects:

Minnesota: $498 million

Atlanta: $200 million

Miami: $75 million

Tampa: $29 million

LA-adjacent Inglewood: $0. The LA Rams’ owner reportedly turned down an offer of $477 million in public subsidies from St. Louis to keep the Rams from moving to California. Yay!

Las Vegas: $750 million

By the way, I love the owner of the LA Rams for that. That’s the way a good NFL owner does it.

The way the rest of the owners do it, however, is to extract maximum taxpayer dollars as a subsidy for their privately-owned sports businesses. Which makes me mad.

Did you know that Patriots owner Robert Kraft also built Gillette Stadium without using any taxpayer money? Karmically speaking, that explains everything about their success in the last 17 years, no?

Back in 2002, Houston received its award from the NFL for building the $449 million NRG stadium, two-thirds of which was funded by taxpayers. That entitled Houston to host two Patriots championships during the 2004 and 2017 Super Bowls. So that was nice. Maybe taxpayer funds help you host, but karma wins championships?

I’m sorry, where was I?

Oh yes. Besides the inherently anti-capitalist practice of using public subsidies for private owners’ gain, I don’t believe the public gets good value for its money.

The New York Times filed a glowing economic development report in mid-January on the surge in economic development around Minneapolis’ new US Bank stadium. The story features excited architects, developers, real estate agents, and the leaders of a public-private partnership promoting their neighborhood, and lots of pictures of cranes at construction sites. The story name-drops future company office spaces, a big number of planned housing units, and potential hotels with plans to move there. What’s not to love, at least according to developers? This echoes the familiar argument that taxpayer money into the pockets of billionaire owners is justified because it spurs local economic development.

Now I’ll adopt my grumpy Bill Belichick-persona about the Times’ glowing report. Studies regularly debunk this myth of development-through-publically-subsidized stadiums. The University of Chicago polled economists on whether taxpayer costs for stadium building outweighed public benefits, with 83 percent agreeing, and 2 percent disagreeing. (The remaining economists polled did what economists do, which is respond with some version of “it’s complicated.”)

A Brookings Institute report on the subject in 2016 does not equivocate: “after 20 years of academic research on the topic, articles published in peer-reviewed economics journals contain almost no evidence that professional sports franchises and facilities have a measurable economic impact on the economy.” Take that, New York Times.

On the subject of the myriad ways we taxpayers subsidize private sports team owners, do you remember the Tax Cuts and Jobs Act passed in December 2017? Whatever the merits or demerits of the final bill, I had pinned my hopes on a little-discussed provision of the proposed House bill that forbade federal taxpayer subsidies for sports stadiums via tax-exempt municipal bonds.

Frankly, I loved that little reform provision with all my heart.

The House version of the bill would have eliminated that subsidy right up until the very end. Oklahoma Senator James Lankford (R) and New Jersey Senator Cory Booker (D) tried to team up in the Senate to eliminate subsidies in the bill’s Senate version as well. And then, in the wee hours of legislative reconciliation, the final bill re-opened up federal subsidies for sports stadiums via tax exempt municipal bonds. Nevada Senator Dean Heller (R) bragged about “preserving” the subsidy in the final bill, presumably because of the upcoming stadium to be built for the Raiders in Las Vegas, using taxpayer money.

The Empire struck back! Billionaire sports owners won again. Senator Heller was Lucy to our Charlie Brown, snatching the ball away from our kickoff at the last minute. A little part of me – the uber-nerdy federal tax-reform-following part of me – died that day. (The other part of me died when the Pats didn’t win Sunday.)

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June 21, 2017

Need Transparency Taken To Eleven

In my last post I mentioned the terrible scores Houston and San Antonio governments received for transparency in their economic development programs, according to a report by Good Jobs First.

One reason the stakes for transparency are high is because the amounts of subsidy are so big. How big? Well, we’ll soon find out. In 2017, for the first time, cities and counties nationwide will have to disclose how much in total subsidies they provide to private businesses, due to a new accounting standard known as GASB 77.

A study by the New York Times in 2012 found that governments in Texas provided the most economic subsidies to private business of any state in the nation, at $19.1 billion.

Texas Monthly writer Erica Grieder makes the point in her book Big, Hot, Cheap and Right: What America Can Learn From the Strange Genius of Texas, that “free-market capitalism” in Texas has, ironically, long relied on strong government intervention and subsidies for private business.

But with that high subsidy comes – I would argue – a heightened duty to keep the public informed of programs and results.

The current way of reporting on economic development subsidies, officials in each of the City of Houston, City of San Antonio, and Bexar County all told me, is that, once a year, the economic development department sends a spreadsheet over to someone at the newspaper, either the Houston Chronicle or San Antonio Express News. Beyond that once-a-year data dump, either an enterprising citizen or more likely a bored reporter on a fishing expedition working on deadline would need to submit a specific request to the economic development department of the city or county.

Since the information is deemed public, this request presumably would be fulfilled with little muss or fuss. All of the officials with whom I spoke reiterated that no formal “Freedom of Information Act” request (a “FOIA” for the cool kids) needs to be filed.

But you can probably see why, although that constitutes a minimum standard of public disclosure, it falls far short of what we should reasonably expect in 2017. What if the reporter or editor at the respective paper had a full plate of stories that week and didn’t really want to make use of the information? What if – as is likely every year – no particular economic development deal jumped out as worthy of newspaper coverage? What if – as shocking as this will sound to all of you reader-types – a citizen doesn’t actually read the newspaper? How would they learn about this? For each of these reasons and more, an annual newspaper data dump isn’t the right level of transparency at this point in time.

All of the economic development officials I spoke with agreed with me in theory on this point, but obviously it will take some effort and resources in their respective departments to improve the situation.

And we can agree that improving searchable websites for ease of transparency can be difficult. Bexar County’s Executive Director of Economic Development David Marquez pointed out to me that certain (not to be named) newspaper websites can be notoriously un-searchable. That’s a fair point, my man. A fair point.

Anyway, I hope they will all take a look at Austin’s searchable database, to see what good disclosure and transparency looks like.

Beyond the amount of money involved, why else do we need a high degree of transparency with respect to economic development deals? Just this. There is nothing quite like conferring a public good – a generous tax break – to a private company that gets my spider sense tingling about potential conflicts of interest. You don’t have to be paranoid or a cynic like me (although I invite you to be) to believe that a natural symbiosis exists between public officials who need money and have the ability to award valuable subsidies and private enterprises who would happily return the favor.

We – not just writers, but also citizens – should be able bring up an online database showing, just to pick an example, political campaign contributions, and compare that database to public subsidies of private companies. Are there any connections? Does a company that contributes to a campaign show up as a beneficiary of public subsidy? That’s the very definition of conflict of interest, and we need the tools to prevent that. If there are any dots to connect, everyone should have the power and ability to connect them, from the comfort of their own laptop. If there are no dots to connect, then we all sleep better at night.

This is in no way a Republican or Democratic Party issue. But if you want to see it that way, just consider the importance of making sure officials from that other party (the one you most distrust) can’t get away with it. We need you on that wall, people, guarding against that other party’s nefarious conflicts of interest!

I believe the right volume of transparency for economic development tax breaks for private companies is a “SHOUT IT FROM THE ROOFTOPS, CONSTANTLY” level of transparency. On a scale of one to ten, I want transparency that goes to eleven. Because you see, it’s that one bit louder, isn’t it?

The next best thing to a transparency volume turned up to eleven is an online searchable database. Properly understood, that’s strongly in the interest of public officials and private corporate recipients as well. They also want and deserve the legitimacy that goes with transparent economic development plans, free from charges of influence peddling or conflicts of interest.
Please see related posts:

A version of this post ran in the San Antonio Express News and Houston Chronicle.

Need for Transparency in Economic Development Part 1

Economic Development Subsidies: Turtles All The Way Down

Book Review: Big Hot Cheap and Right, by Erica Greider

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June 17, 2017

Failing Transparency Scores for Houston and San Antonio

Let’s say it’s Friday night, 11:30pm. You stayed in to Netflix and Chill with Bae. But then you bolt upright in bed, wide awake because, like, “Exactly what kind of tax abatements DID my city give out to attract that out-of-state manufacturing company, anyway? And also, how many jobs does my city expect and what’s the average salary for those new jobs?” Darn it, now there will be no sleeping for hours.

I’m being a bit flippant but now please forgive me if I go too far the other way. The Washington Post’s new adopted tagline captures, at least for me, why citizens need to be able to see economic development subsidies whenever the question occurs to us. Because “Democracy Dies In Darkness.” You have to be able to follow the money. We should all be sleepless if we can’t figure out which private companies enjoy our public subsidies, because the opportunity for mischief is too great.

If you live in San Antonio and Houston, you need to wait weeks, at least, to get answers to your subsidy question, if you even know how to request them, which you probably don’t. If you live in Austin, however, you’d have answers on your laptop by approximately 11:34pm, through their online searchable database. Then you can fall right back to sleep.

In March 2017 a think-tank named Good Jobs First published an excellent report titled “Show Us The Local Subsidies” grading the country’s 50 largest cities on the quality of their economic development program disclosures for subsidies like tax abatements. Meaning, if somebody wants to know which private companies received city or county tax breaks or investments, this report described how a citizen could, or could not, access that information on the web. The report included the largest Texas cities and counties, and the results were quite mixed.

Austin scored 95 and 90 points out of 100 for two of its programs, best in class. Fort Worth earned an underwhelming 50 and 55, Houston scored a middling 45, and Dallas County a 30. Other Texas governments scored zeros for web-based disclosure – include the City of San Antonio and Bexar County (San Antonio), City of Dallas, City of El Paso, Harris County (Houston), and Tarrant County (Fort Worth). To be clear, these scores do not indicate anything about the effectiveness of their economic development subsidies, but rather how easy it is for someone to get data online on the economic development deals cut by governments for private companies.

Scoring zero means that specific information about tax abatements for private companies is not available, at all, on the web. For the purposes of the Good Jobs First report, a perfect score requires not only that information be online, but that it be conveniently searchable through a database, including the value and type of subsidy, the private recipient’s name, the date of the subsidy, and the estimated number of jobs to be affected, including average expected salaries. In addition, a perfect score would require multiple years of data for comparative purposes.

David Marquez, Executive Director of Economic Development for Bexar County, takes exception with the report’s characterization of his program as not transparent. He points out that his office is in the habit of sending a spreadsheet of information whenever a reporter requests it.

“It’s the accessibility, not so much the transparency,” says Marquez. “It’s clearly not hidden. That’s not the case. There’s a nuance there.”

Gwen Tillotson, Deputy Director of Economic Development for the City of Houston, notes that all tax abatements awarded under a program called Chapter 380 agreements are posted online in PDF format, usually between 40 and 70 pages of text. In addition, she notes, public meetings notes are posted on a separate website, but “if somebody wanted to go deeper, people could contact us, and we could help them.” Her office also told me that once a year they send a report to the Houston Chronicle on all the subsidies they awarded throughout the year.

Rene Dominguez, Director of Economic Development for the City of San Antonio, also assured me that once a year his office sends a spreadsheet of his office’s transactions to the San Antonio Express News. His office also responds to requests from the public, as needed.

What has worked as a minimum standard of public disclosure in past years, however, is shifting.

Aiding the positive trend toward transparency, this year – for the first time – the Government Accounting Standard Board Rule 77 (GASB 77 for you cool kids) requires cities and counties to disclose the total amount of subsidies and tax abatements awarded to private companies for economic development. Although disclosure is voluntary and does not name individual beneficiaries, nor does it need to be detailed beyond a single total number, a failure to disclose could affect pesky things like bonds ratings and official annual financial audits.

The State of Texas, through the office of Comptroller Glenn Hegar, instituted a “Transparency Stars” program last year to encourage best practices in local government financial reporting, specifically including economic development programs. The comptroller’s criteria for a star closely resemble Good Jobs First’s requirements, including disclosure of data over multiple years, and data visualization. Local governments may apply to the Comptroller’s office for a review and eligibility for a star. So far five cities in Texas have earned a star in economic development.

Says San Antonio’s Dominguez, “I think we as a city strive to be a leader in transparency. Transparency in economic development has become a critical issue,

GASB 77 is a clear example of that, and we’re going to provide additional disclosures. That’s meant to increase transparency.”

Although all of the officials I spoke with expressed a sympathetic interest in greater disclosure, a zero score (San Antonio and Bexar) or even a 45 out of 100 (Houston) is not a good look. I’m throwing down the gauntlet now because I hope to call everyone back in 2018 to congratulate them that they all scored at the top of next year’s Good Jobs First report.

Please see related post:

We deserve more transparency on economic development programs – Part 2

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