Taxpayer-Subsidized Projects for the Elite

Richmond, Virginia, has already been burned on grandiose projects.

"Bands played, balloons soared, fireworks banged and politicians and business leaders glowingly praised Richmond's future yesterday as several thousand people attended the noontime grand opening of the Sixth Street Marketplace," the Times-Dispatch reported back in the autumn of 1985.

The paper quoted T. Justin Moore Jr., the chairman of Richmond Renaissance: "Today, Richmond has the exhilaration of watching a dream turn into a reality." Mayor Roy West shared his enthusiasm: "Ladies and gentlemen, our future is now," he declared. City Manager Manuel Deese agreed: "We can be assured," he promised, "that this event will be remembered as a shining achievement for decades to come."

It didn't work out that way. Not by a long stretch.

Within five years, the "future of downtown" in Richmond was draining millions from the city's public treasury just to stay afloat. Soon, experts from the Urban Land Institute were recommending it be torn down. Several years and many millions of dollars later, it was.

"We should be careful to get out of an experience only the wisdom that is in it," Mark Twain advised, "lest we be like the cat that sits down on a hot stove lid. She will never sit down on a hot stove lid again … but also she will never sit down on a cold one."

Mayor Dwight C. Jones has proposed building a baseball stadium at public expense in Shockoe Bottom. It would constitute part of a broader redevelopment plan that would include a hotel, apartments, grocery store and other commercial redevelopment. A privately funded slavery memorial is also in the works.

The ballpark would replace the current stadium on the Boulevard near Interstate 95, and that location would become the site of an even grander redevelopment project. Richmond should be wise enough not to assume the Shockoe stadium project will be another hot stove lid that will leave everyone feeling burned. But the city also should recognize that the project has some parallels.

The Sixth Street Marketplace did not spring, sui generis, from the minds of Richmond's city fathers. It was a "festival marketplace" '" a creation of developer and urban planner James Rouse. Rouse was a major force behind suburban strip malls before promoting the idea of urban revitalization through European-style marketplaces.

As he said to a group of Richmond businessmen 28 years ago, the concept was "a reaction to the high-tech, passive, computerized life we are being increasingly asked to live in. People can come to a place with merchants behind the counter '" it's very human." Businessmen tended to greet the idea with low expectations, Rouse said, "but once they experience it, the sense of delight is always enormous."

The delight didn't last. By the early 1990s, festival marketplaces from Cityfair in Charlotte to Underground Atlanta were facing considerable difficulty. Some, such as Harborplace in Baltimore, have done well. Others, such as Waterside in Norfolk, have not.

The same holds true for sports stadiums, which also have been sold as miraculous engines of redevelopment. Big-league stadiums have proved to be anything but: Countless studies have found they are economic deadweight or worse.

The record on minor-league stadiums is more mixed, and many midsize cities placing bets on them hope they will turn out to be winners. Fredericksburg is trying to lure the class-A Hagerstown Suns from Maryland with a new facility. Biloxi, Miss., is building a $40 million ballpark with oil spill recovery money in the hope of luring a team '" any team. It doesn't care which one.

But the Shockoe Bottom proposal is not part of the stadium trend alone. It also seems to be part of another trend '" one that urban policy experts Joel Kotkin and Fred Siegel have called "gentry liberalism."

In a recent piece about Chicago for City Journal, a publication of the Manhattan Institute, Aaron Renn describes gentry liberalism as "increased spending on amenities and subsidies targeted at the elite, accompanied by painful cuts in basic public services for the poor and middle class."

He notes that Chicago Mayor Rahm Emanuel, "relying heavily on tax-increment financing (TIF) subsidies … has doled out a nearly limitless stream of money for upper-tier benefits. Hoping to lure talented young professionals, Emanuel has brought protected bike lanes and a bike-sharing program to Chicago. The city is spending $100 million on a lavish, six-block 'riverwalk' … (and) $30 million in TIF subsidies to the developers of a new office tower."

If that sounds familiar to Richmonders, it should. The city also has spent millions on its own Canal Walk. It has designated "sharrows," or shared bicycle lanes; installed bicycle parking posts; and will host the 2015 UCI Road World Cycling Championships, to which the city already has dedicated $2 million.

Richmond has given millions of dollars in subsidies to businesses and development, from the high-end Stony Point fashion mall in 2001 to Health Diagnostic Laboratories, which got a city grant last year. The city also helped subsidize the new Redskins training center near the Science Museum of Virginia, and will kick in $500,000 a year through direct or in-kind payments to the team. Now the mayor wants to spend almost $49 million to build a baseball stadium for the Flying Squirrels.

Basic services in Richmond have not fared so well. A change in utility fees has raised the average resident's water bill by more than $5 per month. The city recently raised fares for the GRTC's CARE service, which serves the elderly and disabled. Last year, the School Board asked for an additional $24 million. In response, Jones impaneled a special review board to find ways to cut the school budget.

And then there are the sidewalks. According to a May report by the city's auditor, Umesh Dalal, "sidewalk repairs, maintenance, and replacements do not represent funding priorities for the city." The city needs to spend $14 million to fix its sidewalks, but has appropriated less than $2 million for that purpose '" over the past five years.

On the other hand, when City Councilman Parker Agelasto suggested the city '" which ranks third in Virginia for spending on central administration '" trim some funds from the offices of the mayor, the chief administrative officer and the City Council, the idea was summarily rejected. Fellow council member Kathy Graziano said cutting money willy-nilly like that was "fiscally irresponsible."

Like Chicago's office tower, the Shockoe Bottom project would be underwritten by tax-increment financing. TIF works by using the increased taxes in a development region '" the tax "increment" '" to pay off the debt for the project.

Advocates claim TIF makes projects self-financing. Skeptics believe otherwise, arguing that it siphons money away from more basic services such as police, firefighting and libraries. TIF does so, they say, by attributing any gain in property values or tax collections to the project, even if they would have occurred anyway, and by capturing increases attributable to inflation. Further, if a general tax increase is passed, the TIF district treats the added revenue as stemming from the development, not the tax increase.

To backers of the stadium project, such quibbles pale in comparison to the general benefit to be had from redeveloping two huge parcels of city real estate. They will maintain the ripple effects from revitalizing Shockoe Bottom and the Boulevard should spread throughout the city and, in the long term, redound to the benefit of those who have felt the brunt of cuts to city services.

That is certainly possible '" though it may seem odd to see Jones, a Baptist minister and former Democratic state legislator, preaching a modern-day version of trickle-down economics. Jones has made alleviating poverty a crusade. If his plans for the Bottom and the Boulevard bear fruit, then he will gain national acclaim for perhaps having found one formula to do so. And if they do not, then at least Richmond will, like Twain's cat, have gotten wisdom out of the experience.

This column originally appeared in the Richmond-Times Dispatch.