For most people, it is easier to spend someone else’s money than it is to spend their own. This is a simple truth, but an important one.
It implies it is natural to expect that politicians and bureaucrats will not scrutinize public purchases made with public dollars with the same rigor and deliberation with which they would make purchases for themselves out of their own pockets. After all, politicians and bureaucrats are people, too.
In this light, it is not surprising that the Columbia City Council’s plans for a new parking garage at Short Street are as fiscally imprudent as they are.
The proposed garage, with an estimated budget of approximately $9 million, would be built in cooperation with a larger, private construction project to erect a new hotel at the current site of the existing Regency Hotel. The garage is expected to house a total of 300 parking spaces, with 100 of these spaces rented to the new hotel at a rate of $600 per year for each space. Additionally, 50 of these 300 spaces will be reserved for future residential development projects. In effect, a $9 million investment by the City of Columbia will earn it a net increase of 150 parking spaces.
This amounts to $60,000 spent on every spot that will be made available to the public. It should be noted that this figure is, of course, a simplification. It does not account for the $60,000 per year that the city will receive for renting spaces to the proposed hotel — which would decrease the per-space cost. Nor does the estimate account for the costs of servicing the debt the city will incur in financing the project — which would increase the per-space cost. Nevertheless, this number is a useful starting point and presents several important questions for the council to consider before moving further.
Most important of these questions: Do Columbia residents collectively value reliable downtown parking at $60,000 or more per spot?
If so, then there are profits to be had! Surely an entrepreneur should find it viable to proceed with the project independent of the city’s involvement. Are there compelling reasons why the private sector cannot or should not take on the task of planning, funding and constructing this project? Why hasn’t the private sector already recognized the demand and acted to cater to it? Are the members of the council more omnisciently aware of what residents are willing to spend their money on than are entrepreneurs and capitalists? Could it be that the government of Columbia possesses a comparative advantage relative to the private sector in development projects such as these? If so, why wasn’t this comparative advantage in display with the widely derided Fifth and Walnut garage?
Alternatively, if Columbia residents do not collectively value parking at $60,000 per spot, then the city would seem to be acting foolishly. The city would be misallocating resources into the production and provision of something that residents do not strongly value. Suppose residents only value downtown parking at $20,000 per spot. In effect then, the city would be subsidizing each spot to the tune of $40,000. The relevant question then becomes: Is there a compelling economic rationale to do so?
These are all questions that the council would do well to consider carefully. They are the kinds of questions that individuals and corporations who are making purchases or investments with their own money would ask themselves. Indeed, they are the kinds of questions that residents of Columbia, whose dollars would be spent on this project, should ask themselves. Unfortunately, they are also precisely the kinds of questions that members of the council, to whom – it seems – public dollars are like Monopoly money, are least likely to ponder.
Abhi Sivasailam is a student at MU. He is treasurer of the MU chapter of Young Americans for Liberty and vice president of Keep Columbia Free.