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Art Callaham: Government should be lead stadium investor

July 28, 2013|By ART CALLAHAM

Last week, I wrote a column suggesting that we, as a community, review the economic development impact surrounding the building of a new stadium or renovation of the current one. My conclusion, then and today, is that the overall communitywide positive economic development impact makes the stadium project a “no brainer.”

I also promised to share my rationale for declaring that the government should be the primary capital investor in a stadium project. As a homework assignment, I asked you to think of the stadium project as similar to a public road project. Recall, a public road doesn’t have a direct revenue stream, and the upkeep plus maintenance plus the administrative overhead costs will ultimately make a road, by itself, a loser in terms of cost to the community.

Now surely someone will cry “tolls” on the road, but I’d just suggest “how’s that workin’ out for you?” if you have to pay tolls above what you pay in taxes and fees to support roads. I’m sure the smartest analyst and the smartest elected official will cry that I have oversimplified a complex issue, don’t have all the facts necessary to make a conclusion and that I’m in cahoots with rich developers. Well, you can only do so much in a column.

If you liken the stadium project to a public road project, you will see that the overall community value from a public road comes from what travels over and is along the road. For a stadium, the community value is what happens inside and outside the facility. With that thought in mind, why should the government be the primary investor in a stadium, just like government usually is in a public road?

First, the government can. Within reason, governments do projects to promote the general welfare of the citizens. Think of parks and recreation venues, as I have mentioned, or roads, or public safety. These activities of government, plus many more, promote the general welfare of the people.

Second, the government might be the only player with the money. Think about roads again. How many individuals or businesses do you believe have the capital to build road networks to support entire communities, states or nations?  Sure, all of the aforementioned smart people might recall the origins of our railroads (some built privately). Again, how’d that work out?  

Third, the government doesn’t have to be, nor should it be, in the for-profit business. Back once more to the road example, individuals or individual business cannot afford to build every road necessary that leads to or from the individuals’ or businesses’ front doors. 

If a business did build the entire road network, then the charge to the consumer (recouping the cost of the road) would make the business’ product more costly to sell. Yet, the government, through planning and zoning, can tie roads together and leverage the economic development value of all individuals and businesses that travel on the roads or exist along and beside the roads. Over time, the government can recoup the original investment in roads and pay for the upkeep.

The economic case for a stadium project is just about as simple. The government, through its taxing authority, and because the government does not have to make a profit, can, over a period of time, recoup the cost to build and maintain a stadium.

Citizens receive a promoted general welfare as a value from the stadium, while the government leverages the value of what goes on inside and outside the stadium — through taxes, zoning and planning — into an economic value for the entire community.

Sure, someone can point to models where the private sector builds and maintains very profitable recreation venues without government involvement. And, someone can point out road systems built and maintained by private-sector entities that remain profitable. Generally, these projects are anomalies.

For example, Lambeau Field in Green Bay, Wis., is a model for private investment paying for a stadium. That stadium, originally funded through municipal bonds and recently held by stock investors, did include government money in the original financing. It remains an anomaly in professional athletic stadium circles.

Here’s the bottom line: There is nothing sinister or corrupt in government being the chief investor in a capital project that creates a catalyst for communitywide economic development.  Promoting the general welfare (it’s in our Constitution) is something our governments do very well.

Art Callaham is a community activist and president of the Washington County Free Library Board of Trustees.







 

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