Monday, September 05, 2011

Economic Development 101

I have to give Racine mayor John Dickert credit for scrapping the money hemorrhaging artist relocation program. Read all about it here.

That said, I think he should also scrap the equally doomed NSP, aka the Neighborhood Stabilization Program. Instead, the mayor is doubling down. According to the JT article: "The next step, the mayor said, will be to move Neighborhood Stabilization Program efforts into the Uptown area next year. Those federal funds may be used to buy foreclosed homes and either rehabilitate them or raze them and rebuild."

The artist relocation program and the NSP house flipping program are virtually identical schemes. They use federal money to buy up distressed properties. They pour lots of money and time into them and then sell them at a huge loss.

There is simply no way that this will work. The city must comply with all sorts of regulations that mom and pop house flippers can avoid, thus driving up the costs well beyond the properties potential selling price. The city further ensures losses by insisting on home ownership, thus reducing the potential number of buyers which in turn puts downward pressure on the sale price.

Top down, government directed economic development just doesn't work, locally or nationally - consider stimulus packages 1 - ? If we must spend our federal money on local redevelopment efforts, it would make far more sense to keep the government out of it as much as possible.

Here is a suggestion. Don't interfere with development efforts. Recognize that developments of all kinds will result in investment, therefor jobs and ultimately higher property values that you can tax. Recognize also that developers aren't developing in large part because they know full well that you will tax the hell out of them. Alleviate this reality based fear with a check, courtesy of unwitting taxpayers from everywhere. Put simply, reduce the cost of investing, those costs that you have driven through the roof with high taxes and a hypermeddling - yah I made that word up - economic development team. Do this and we might get some actual development in this town.

1 comment:

Anonymous said...

Why build in Racine when the tax rate is 50 percent less in Mt Pleasant? Then add in the micro-management of the Dickert team such as no bars on the candy store. This city is going no where as long as John Dickert is mayor.