Beware Of The Economic Development Hucksters

It's really tough keeping track of all the debunked and disproven economic development ideas the power-brokers of Wisconsin keep trying to sell the public.

Delta Center Needs To Be Expanded Soon To Compete With Other Cities

The list of investment black-holes proposed for Wisconsin is growing - charter school expansion, venture capital, stadiums, convention centers, etc.

Heywood Sanders' research regarding convention centers has found:

To cities the lure of the convention business has long been the prospect of visitors emptying their wallets on meals, lodging, and entertainment, helping to rejuvenate ailing downtowns.

However, an examination of the convention business and city and state spending on host venues finds that:

The overall convention marketplace is declining in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community, contrary to repeated industry projections. Moreover this decline began prior to the disruptions of 9-11 and is exacerbated by advances in communications technology. Currently, overall attendance at the 200 largest tradeshow events languishes at 1993 levels.

Nonetheless, localities, sometimes with state assistance, have continued a type of arms race with competing cities to host these events, investing massive amounts of capital in new convention center construction and expansion of existing facilities.Over the past decade alone, public capital spending on convention centers has doubled to $2.4 billion annually, increasing convention space by over 50 percent since 1990. Nationwide, 44 new or expanded convention centers are now in planning or construction.

Faced with increased competition, many cities spend more money on additional convention amenities, like publicly-financed hotels to serve as convention "headquarters." Another competitive response has been to offer deep discounts to tradeshow groups. Despite dedicated taxes to pay off the public bonds issued to build convention centers, many—including Washington, D.C and St. Louis—operate at a loss.

Ronald Wertz, writing for the Federal Reserve Bank of Minneapolis, discovered:

Current research indicates that stadiums and arenas have a particularly bad track record when it comes to delivering on promises of community economic windfalls...

"As market size decreases, the strength of that [economic development] argument becomes shaky," Kaatz said, mainly because smaller markets often do not draw a significant number of visitors from outside the region. Nonetheless, smaller markets continue to use the argument, which Kaatz said "is a reflection of the fact that the whole [convention center] phenomenon has been generated from larger cities, and the argument has filtered down to smaller cities."

A University of Wisconsin-Milwaukee (UWM) Center For Economic Development study explained:

Whatever the original economic folly of Miller Park and the Midwest Airlines Center, what’s done is done: both facilities exist and will certainly operate for the foreseeable future. For the purposes of this study, there is no point in reopening a historical debate about whether public dollars should have been spent on these facilities. However, down the road, as part of a city strategy to build a chimerical tourist industry in Milwaukee, taxpayers once again may be called upon to provide public funding for an expanded convention center, or perhaps a new arena for a local professional sports team. Such expenditures should be scrupulously avoided: tourism has been a losing economic development strategy for Milwaukee as a whole, and for the inner city, tourism investments have represented a huge “opportunity cost’ of funds that could have been invested in inner city economic renewal.

Marc Levine, UWM professor, wrote in the Journal Sentinel:

In that vein, consider Milwaukee's signature initiatives over the past decade: Miller Park, the Midwest Airlines convention center, the Grand Avenue mall make-over and the "Initiative for a Competitive Milwaukee."

All were heavily promoted by the MMAC and GMC, which lobbied for massive public spending on these projects chiefly on the grounds that they would be prodigious job generators. 

Well, the results are in - and Milwaukee's employment decline over the past decade speaks volumes on the job-generating efficacy of the business community's pet projects. 

What's more, these projects soaked up millions in public dollars that could have been devoted to more productive, employment-generating investments.