Friday, March 28, 2014

Cronyism and Economic Development: Where's It Going?

Transportation is a hot issue in Tampa Bay today.  Economic development is the buzz word of the day from our elected officials.  What happens when your start tying the two closely together?

In Pinellas, we're told by the local transit agency PSTA and most of the Pinellas County Commissioners that the reason high cost rail is included in the Greenlight Pinellas plan is economic development. We're told we need mixed use land development of residential and retail around train stations.

In Hillsborough we hear the same echo chamber from the pro rail power brokers that high cost fixed rail corridors will "magically" drive economic development - transit-oriented development (TOD) . TOD is heralded as the panacea for our economic prosperity.

But at least we have confirmed that high cost rail systems are NOT about mobility or reducing congestion.

So what is high cost rail projects really all about?  To start, there's a perversion for why the power brokers push for costly rail projects as Randal O'Toole from CATO Institute testified last December before the Congressional House Transportation Committee:
[Federal} New Starts, however, is a competitive grant program [for light rail]. The rules of the competition can be boiled down to this: regions and transit agencies that propose the most expensive projects get the most money (emphasis mine). 
The Obama administration eliminated cost effectiveness as a criteria for getting federal grants.  Why not go for the gusto to get the most federal tax dollars for costly rail projects? Then local governments can subsidize the TOD to incentivize development or designate areas as Community Redevelopment Areas (CRA's) and use tax-increment financing (TIF's) for specific redevelopment purposes.

According to the Florida Redevelopment Association:
Examples of conditions that can support the creation of a Community Redevelopment Area include, but are not limited to: the presence of substandard or inadequate structures, a shortage of affordable housing, inadequate infrastructure, insufficient roadways, and inadequate parking 
Tax increment financing is a unique tool available to cities and counties for redevelopment activities. It is used to leverage public funds to promote private sector activity in the targeted area
O'Toole also testified:
The reality is that almost all of the economic development they claim along light-rail and streetcar lines has resulted from tax-increment financing and other subsidies to developers. Experience in many places has shown that almost no new development takes place along a rail line without subsidies to developers.
Mayor Buckhorn held his State of the City address this week. 

At about 44:21 (go to that time on video link if your browser does not automatically go there) Buckhorn talks about mobility options, including light rail, he advocates support for Greenlight Pinellas, admits rail will never pay for itself and makes a strange comment about not worrying about  fare box revenue has to make sense. Mayor Buckhorn then talks about working with his partners in Hillsborough County to extend the CRA's in Tampa and the use of TIF's.  No mention of the cost to do all of it.

However, Buckhorn's biggest challenge may be a revenue shortfall of $10 million to $15 million for next year's budget, that he must find a way to close.

We previously connected the dots on the local rail cartel. The cartel is a cozy relationship between pro rail politicians and the taxpayer funded agencies and special interests who will benefit from the flood of tax dollars heading their way. Then the deep pocketed special interests can circulate campaign donations back to the politicians to ensure their influence is maintained.

This must be one of the coziest relationships. At times it is difficult to distinguish the difference between TBARTA, a taxpayer funded agency and special interest Tampa Bay Partnership. TBARTA was created by our state legislature in 2007 at the behest of the Tampa Bay Partnership. TBARTA was setup to cover the same geographical area as the Partnership. Was TBARTA simply created to advance Tampa Bay Partnership's regional agenda? 

We previously posted about the conflict of interest issue Ronnie Duncan, chairman of TBARTA had when he also began leading the private advocacy campaign Yes for Greenlight.  We reported that Duncan started organizing and raising money for the private campaign at the same time TBARTA was endorsing the Greenlight Pinellas plan months before Greenlight got on the ballot last December. Duncan owns a land development company and his wife owns a commercial real estate company. Coincidence?

Where was the Yes for Greenlight kickoff event held in February?  At the Pinellas Realtors Association office in Clearwater, not at a local bus station or any other public venue.

What can happen when our tax dollars are flowing to local municipalities to build high cost rail where economic development around train stations is sold as the dire reason we must have a train.  What can happen when the politicians and central planning bureaucrats plan where "they" want development to occur, can designate areas as CRA's and use TIF's or other subsidies to incentivize development? And what happens when there's collusion and cronyism with special interests and/or amongst them all?

Back in 2010 we were told by the local media and pro rail contingent that we needed to follow Charlotte as they were the "gold standard light rail model" to follow. 

Wednesday, Charlotte's Mayor Patrick Cannon, Democrat, was arrested on bribery and corruption charges. Mayor Cannon  has since resigned.  The Tribune reported
Cannon solicited and accepted more than $48,000 in cash, airline tickets, a hotel room and the use of a luxury apartment as bribes, according to a criminal complaint. 
According to the complaint, FBI agents posing as commercial real estate developers paid Cannon on five separate occasions between January 2013 and February 2014. Cannon accepted cash in exchange for access to city officials responsible for planning, zoning and permitting. 
The investigation began in August 2010 after a tip from a local undercover officer about public corruption. At the time, Cannon still held an at-large seat on the Charlotte City Council.

Two days after Cannon announced he was running for mayor in May 2013, the first undercover agent introduced him to a second undercover agent posing as a developer from Las Vegas. The second agent told Cannon he was interested in developments along a streetcar and light rail line being built in Charlotte. Cannon provided the proposed routes and stops, according to the complaint (emphasis mine). 
Mayor Cannon got caught. How many others have not? Who knows how often and where else unethical, if not illegal activities, have occurred where lots of tax dollars are flowing to build rail and to subsidize economic development.

Could that type of corruption happen in Tampa Bay? We don't know. We do know we've seen corruption before in Hillsborough. We see a rail cartel in Tampa Bay pushing a high cost rail agenda.  We see PSTA's taxpayer funded Greenlight Pinellas advocacy campaign, attempting to skirt our electioneering laws, while using hundreds of thousands of taxpayer dollars marketing their Greenlight plan. We see taxpayer funded entities and special interests looking to benefit from the flow of tax dollars.  

What we do not want to see in Tampa Bay is cronyism that leads to corruption and results in crooks.

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