Tax breaks for businesses that may or may not follow through on their promises? Those are still alive and well.
Local governments in Des Moines are doubling down on failed economic development policies, leaving taxpayers and essential public services to bear the cost for years.
Elected officials are continuing their economic central planning efforts by subsidizing well-connected corporations and real estate developers with taxpayer dollars, despite decades of real-world evidence that those deals do little to attract or keep companies in the city. The latest project that has grabbed headlines is a downtown soccer stadium meant to house a minor league soccer team that will be owned by the Krause Group, who recently sold their Kum & Go chain of convenience stores.
In a vote with interesting timing, and one that seemed to skirt the taxpayer’s input, two outgoing Polk County Supervisors were pivotal in approving $10 million in additional funding for the stadium, bringing the county’s total contribution to $17 million. This decision comes on the heels of an audit revealing the high-profile Krause Gateway Center project has become a virtual ghost town, with just 58 full-time employees left in a building where more than 275 were promised and 446 once worked. That project was supposed to be a shining example of the benefits of economic development bureaucracy at work in Des Moines.
Economic development problems in Des Moines run far deeper than this one project, as deals with promised benefits keep failing to cover very real costs. Local governments must balance their budgets, and a dollar that’s lost to a subsidized office building or stadium is a dollar that can’t be spent on public services like police and fire departments, roads, sewers, parks or libraries. This was on display in a recent Des Moines City Council session, where proposed street improvements were indefinitely delayed thanks to looming budget cuts.
Elected officials may reflexively complain that state tax cuts are to blame for budgetary belt-tightening, but their behavior suggests they only feel that way about tax breaks for homeowners. Tax breaks for businesses that may or may not follow through on their promises? Those are still alive and well in the region, as City of Des Moines officials have joined in on the fun and are contributing $1.5 million for the new soccer stadium development project.
It’s just common sense: If local governments believe they must roll back basic public services next year because they’re collecting less in property taxes from local homeowners, then they shouldn’t be spending more money on speculative economic development projects.
The Des Moines soccer stadium project is a perfect example of this. Its cheerleaders say it will be a source of great economic impact for Des Moines, but an impartial analysis suggests that a planned convenience store in the stadium district might end up generating more economic impact than the stadium itself will.
It’s a simple question of customer count: The “Pro Iowa” team will likely play an 18-game home schedule in the USL Championship next season. If you add in exhibitions, cup matches and playoffs to get to a 25-game home schedule and assume they sell out every single match, that would mean roughly 160,000 fans through the stadium turnstiles next year.
By way of comparison, the average American gas station convenience store serves roughly 400,000 customers a year. That’s more than twice as many customers as the soccer team, with everything that means for economic impact in terms of taxes, jobs and more – but nobody would subsidize a single convenience store with $26 million, would they?
Of course, officials already have a track record of making bad decisions with taxpayer dollars when convenience store companies come calling…so who knows?
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