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GUEST COMMENTARY: Enhanced Enterprise Zone is not the answer

Thursday, April 26, 2012 | 5:03 p.m. CDT; updated 12:15 p.m. CDT, Friday, April 27, 2012

In a very funny 1983 episode of “Family Ties,” the father, Steven Keaton, reads an FBI file describing his mild 1960s activism as participation in “left-wing attempts to overthrow the government.” Keaton angrily confronts an FBI agent about the charge. “Oh, don’t take it so personally,” the agent airily responds. “It’s just a bookkeeping thing.”

That is pretty much how Columbia city leaders responded to objections to the recent Enhanced Enterprise Zone (EEZ) designation declaring more than half of Columbia as blighted.

“The word ‘blight’ is just semantics,” Columbia Mayor Bob McDavid told a crowd.

“Blight” is not semantics. In this context, it is a word loaded with hidden meaning that the mayor and others do not want to discuss. It does mean that Columbia is taking a major step toward much heavier use of taxpayer subsidies for all types of commercial activity. Once you have blighted more than half the city, it is a short step to the point where almost every development receives some type of subsidy. That is not a “maybe.” That is the current reality in St. Louis and Kansas City.

The dirty little secret that Regional Economic Development Inc., the local media and Columbia city officials do not want you to know is that EEZ, tax-increment financing (TIF), Community Improvement Districts (CID), and other subsidies do not work. They do not succeed in growing the local economy. “Call me blighted and give me the money,” as city councilman Fred Schmidt stated, may be an oafish example of out-of-control government, but even worse is the abject economic ignorance it displays.

The panoply of subsidies that come into play when a large area is declared blighted have a number of adverse side effects. They shrink the local tax base, encourage more government planning of the economy, and increase the chances of eminent domain abuse.

As famous Swedish economist Assar Lindbeck once said, “It is not by planting trees or subsidizing tree planting in a desert created by politicians that the government can promote ... industry, but by refraining from measures that create a desert environment.”

Columbia supporters of the EEZ say that other cities have used these tools with great success (for example, an editorial in the Columbia Daily Tribune, Aug. 13, 2009). In this, they are completely wrong. They might as well stare you in the face and tell you the sun rises in the north. The City of St. Louis has been using urban redevelopment tools such as Enterprise Zones and many others for half a century. How has it worked out? "Mapping Decline," a 2008 book by Colin Gordon, documents the decline of the city of St. Louis. The book’s research is exhaustive. The dominant theme is the use of urban renewal tools and tax subsidies (including EEZ) — and their absolute, total failure. From the conclusion:

"The overarching irony, in St. Louis and elsewhere, is that efforts to save the city from such practices and patterns almost always made things worse. In setting after setting, both the diagnosis (blight) and its prescription (urban renewal) were shaped by — and compromised by — the same assumptions and expectations and prejudices that had created the condition in the first place."

I can already hear readers in Columbia saying, “But we’re not St. Louis.” You are right, you are not; so do not follow a path that will make your city repeat St. Louis’ mistakes. It is one thing for St. Louis to try these projects and have them fail. It would be even worse for a city like Columbia to follow that example with the knowledge that the entire process has failed. At least the trailblazer who takes the wrong path has an excuse.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.


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Comments

David Sautner April 26, 2012 | 7:51 p.m.

"Although the Midwest region only grew by about 4% over the last ten years, Columbia has grown by nearly 25% during the same time period, and a lot of growth has happened in the urban core. How, exactly, then does the Columbia urban core qualify to be “blighted,” especially when compared to many other areas in the state and in the Midwest that have experienced substantial population loss?" - from the Occupy COMO newsletter FYI.

(Report Comment)
Mike Martin April 27, 2012 | 1:48 p.m.

Columbia also has a tragic history with blight-related redevelopment incentives -- so tragic it's hard to believe local leaders are so eager to re-embrace it:

http://www.columbiaheartbeat.com/index.p...

http://www.columbiaheartbeat.com/index.p...

(Report Comment)

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