In a classic story of political distraction, the government of the city of St. Petersburg is working to put their taxpayers on the hook for another loan. The city seeks to rebuild the aging St. Petersburg Pier and has been engaged in a lengthy effort to hold a design competition for the preferred choice. While most have focused on the choice of designs, the real concern should be the price tag and who pays. As always, the taxpayers be bearing the costs for more expensive infrastructure that could be better built by the private sector. Of course, since the government is involved, the true potential for economically productive and highly functional development is lost. Instead, the taxpayers will have yet another park, this time a very expensive one over the water that happens to have a bar and grill on it. A better plan would involve private development as was done with the highly popular “Chelsea Piers” in New York City. This story has all the ingredients of a classic distraction-based con job to get the money!
The pier design committee recently endorsed the “Pier Park” design out of its three finalists. Even though an overwhelming percentage of polled residents desired the “Destination St. Pete” design, the political panel had its own goals in mind. This is just one of the many reasons that the entire concept of funding a pier with taxpayer dollars makes no sense – politics reigns over common sense and serving the market. The better solution would be for the city to change laws so that a long term lease could be signed by a private company for development rights. There could be some basic guidelines on development the city could approve, but it would be the private company that would determine the final structure. They would do so based on what the community would use and what could pay for itself and generate a profit that would sustain the company and the project for decades. Further, a private company is likely to spend 3-4 times more than the $40 million or so left over for this project. Doing this would require our political leaders to place an initiative on the ballot for a long term lease and encourage voters to approve it – to protect their own pocketbooks and allow more market-friendly development. (Current law unexplainably only allows five year leases of waterfront sites).
Instead, of a private company spending its own money and taking its own risks to build what consumers would want, the city will require taxpayers to bear the costs. Contrary to the deception that has been pedaled by the government, well-connected politicos and popular press, there is no $50 million for this project (about $10 million has already been wasted in consultant fees and the prior failed “lens” project!). The money will come from a loan that is backed by future property tax revenues. There will be interest and principal payments to make – all paid for by the taxpayer. Of course if future property tax revenues fall with decreasing property values, then the citizens of St. Petersburg will be taxed further to pay for the loan. Property values dropped for years after the collapse of the housing bubble in 2007. The financing scheme has been well described here in this blog and is known as a Tax Increment Finance (TIF) plan based in a “community redevelopment area” (CRA).
The Sunbeam Times will be carefully evaluating the finances for construction and maintenance of the projects. One thing appears clear already for the “Pier Park”, there will be many government workers employed to maintain a massive grass lawn sitting in the middle of Tampa Bay. When the floating docs are damaged with daily Tampa Bay thunderstorms, it will be the taxpayers on the hook. This appears to be a massive boondoggle in the making. That is pretty typical for St. Petersburg where the well-connected cronies siphon money from the taxpayers to build projects for politicos who continually and arrogantly ignore the taxpayers and common sense.