So Kansas City didn't get the Penguins. Which gives that city the seemingly impossible distinction of having an arena deal worse than ours. (On the other hand, at least they only offered Mario 75 percent of non-hockey revenue. We gave him the whole kit and kaboodle.)
But a passion for professional sports welfare is not the only thing we have in common with KC. A helpful reader has forwarded a draft version of a report about that city's experience with TIF financing. My gosh. It is dismal, dismal stuff. Seriously. Look at this. Just look at it:
TIF plans generated $233 million below original projections. The projections are the revenue expected to be available to pay redevelopment costs. The City Council reviews the TIF plan, including the projections made by developers who have an interest in securing public incentives, before plan approval.
TIF projections consistently overstate TIF revenues. TIF revenues fell below projections for about 78 percent of the plans. Approved plans are a promise by both the developer and the City Council to citizens about what will happen in a TIF area. ...
Ten of the approved TIF plans are backed by city bonds. Revenues from five of these TIF plans are insufficient to cover debt service. ...
The revenue totaled only 50 percent of the original projections. ... These original projections help sell the plans to the TIF Commission and the City Council. Less than a fourth of the plans met or exceeded expectations. ...
The plans projected about $465 million in revenue but produced only $231 million through 2005.
Well, certainly there are consequences when a TIF-supported development does not live up to expectations. Or at least there is when a full 78 percent of them fail to live up to projections. Well... er. Not really. The report is advocating some sort of accountability. But so far... nothing.
It's brutal. But at least a few people are beginning to cast a skeptical eye on the whole idea. From the report:
Projections have been consistently overstated. TIF revenues fell below projections for about 78 percent of the plans. It may be easier for TIF proposals to be approved when revenue projections are inflated. Research of 300 large projects in 20 countries to determine which projects were built found that "it isn't the best ones, but instead those for which the proponents best succeed in designing --deliberately or not--a fantasy world of underestimated costs, overestimated revenues, overvalued local development effects and underestimated environmental impacts."
That final quote is from an article in Harvard Design Magazine, titled "Design by Deception: the Politics of Megaproject Approval." It was written, apparently, by the stupendously named Bent Flyvbjerg. So now I will,as they say, get Bent. Meaning I will try to track it down.
In the meantime, try real hard and see if you can think of anything that sounds like "a fantasy world of underestimated costs, overestimated revenues, overvalued local development effects and underestimated environmental impacts."
UPDATE: Found that article. Holy crap.