It's not "economic development"
- Blog Post by: Nathaniel Hood
- September 12, 2012 - 12:46 PM
The Minnesota Department of Employment and Economic Development (DEED) doesn’t know what it’s doing.
Want proof? The third highest ranking “economic development” project in the State of Minnesota is a parking ramp in Duluth. It ranked 92 out of 100, beating out rural health facilities, wastewater and recycling plants and senior housing.
The methodology relies heavily on short-term construction jobs and dead ideas. The available money is going towards “economic development” (emphasis on the quotations). However, you can file most of the proposals under four basic ‘old economy’ folders:
- Civic / convention / sports centers
- Parking garages
- Industrial parks at the edge of town
- Small town basic needs
Why is it that we still view convention centers, parking garages and “if we build it, they will come” small town industrial parks as economic development? Haven’t we been over this before?
The Minnesota Department of Employment and Economic Development doesn’t know what it’s doing. Let me rephrase that: We don't know what economic development is. It's not just DEED.
The desire for convention centers is a simple. While it brings in outsiders who consume things that are taxed at higher rates (alcohol, hotel rooms, rental cars, etc), it almost never justifies the expenditure. From the city’s perspective, it appears to be a win-win, but these investments come at a loss in the long-term.
The number of conventions and total number of people going to conventions has decreased since it peaked in the mid-1990s. During this same period, the number of conventions centers has rapidly expanded. We have now is that of more cities are competing for fewer dollars. It's a classic race to the bottom. Parking garages are the same. People are increasingly driving less, but parking spaces are still built with abundance. Why are we still calling these projects "economic development"?
There is good news for my hometown though. Mankato dodged a bullet! They didn’t get funding for their convention center expansion.
City officials don’t see it that way. They’re upset DEED didn’t consider them a priority on $47.5 million in state bonding money. The city is demanding information as to why DEED ranked their request below other projects [Source].
I want to see Mankato succeed, but filling up more prime downtown real estate with more rarely used buildings seems like a bad idea. Mankato has made enough downtown destroying decisions, and they don’t need to make another one. [Note: In one of the most confusing pieces of urban planning history, Mankato’s Civic Center removed a street, built a pedestrian mall and then put a skyway directly over the pedestrian mall].
If you look at the DEED projects [Excel], it’s hard to tell what has merit and what doesn’t. There are a handful of small town wastewater and recycling plant requests. These are basic necessities, but it’s hard to say if the qualify as “economic development” - even if I am sympathetic to their request. On the other hand, you have unnecessary old economy projects that may create a lot of short-term construction jobs, like a parking garage in Duluth, but ultimately have no economic benefit and arguably hurt municipalities with long-term maintenance obligations while damaging the urban environment.
The majority of the projects resemble Mankato’s application.
The city’s request, deemed the State’s 17th most worthy, was for $14.5 million to expand their existing convention center. The officials claim the money is needed to keep the 19 year old facility competitive, a common cry when looking for money. The City is upset that it ranked behind other civic center projects. It’s not just that, but Mankato feels it has been overlooked as other towns received convention center money in the past decade while Mankato has been left penniless. It’s true. Mankato raised its own money and is dedicating its own food and beverage tax while the State of Minnesota has single-handedly funded their competition.
Mankato discovered that having a convention center only works if somebody else pays for it. That’s why no other city is doing what Mankato did. It just doesn't make sense.
An expansion to a convention center facility in Mankato might be nice for Mankato (the hockey team would be happy). A new baseball field in downtown St. paul would be nice, too. I like baseball and downtown St. Paul. The proposed economic development parking projects, like those of Duluth and St. Cloud, would make a lot of people's lives easier. No question about it. These projects are a lot of things, and might even be justified under some type of social good; but we need to stop pretending they are economic development.
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