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Making Change:  The Big Deal on Public Investments

Wednesday, March 19, 2003 at 11:29 AM

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There are many questions surrounding Cleveland's proposal to build a new convention center, including cost, location and timing. Since voters may ultimately be asked to approve public funds for a new center, one big question must be answered... will it really have the economic impact so many are promising? As part of Making Change: Reinventing Our Economy, ideastream's Shula Neuman wondered if ANY public investment has ever paid off.

For the moment, let’s forget about the convention center issue. Let’s consider that every few years, cities all over the country ask residents to pay for some kind of large facility… it could be a museum, a ballpark or a new lakefront. Usually supporters say the investment will be a wonderful economic development tool; it’ll create jobs, attract tourists and lure new businesses. Ask Norman Krumholtz, professor of urban planning at Cleveland State University, if these public investments actually payoff and he’ll say.

NORMAN KRUMHOLTZ: Not very well, as it turns out. Gateway is a great case in point.

The promoters of Gateway - including Cleveland Tomorrow led by then-executive director Richard Shatten - said it would generate 29-thousand new jobs and 15 million dollars to the Cleveland Board of education. Instead, Krumholtz says, Gateway produced about 19-hundred low pay, seasonal jobs.

KRUMHOLTZ: And with respect to property taxes, it will never provide a dime’s worth of new property tax for the Cleveland Board of Education because the properties has been rendered tax exempt in perpetuity. So in terms of payoff, spending 400-million dollars on a stadium and an arena was not really a very good deal.

Krumholtz says spending it on education or job training would make more sense. But take a trip to the other end of the College of Urban Affairs at CSU and you get a different view when you talk to the school’s dean.

MARK ROSENTRAUB: So it was a good idea, it was a valid concept, but the reality of sports business in the United States created a disadvantage bargaining position for cities.

Mark Rosentraub studies the impact of sports teams on their cities. He refers to professional sports leagues as cartels that manipulate bad deals for cities ...such as Cleveland, that fear losing their major league teams will create a minor league city. Rosentraub says linking new stadiums to new jobs is false advertising and that Gateway definitely got the raw end of the stick on the deals it cut. But there is an upside.

ROSENTRAUB: We still have to point to the fact that in a downtown area in good years the Indians and the Cavaliers bring almost four million visits to the downtown area. And people have to reflect back that prior to the building of these two facilities and the performance of the Indians in the ‘90s, if I would have told anyone that you’d be getting four million visits to downtown Cleveland, largely by suburbanites, they would have looked at me like I was absolutely crazy. Well, it happened.

What also happened was an increase in downtown residential living AND the renovation of the area around Gateway - like East 4th street. And note Rosentraub mentioned the visits are largely from locals - not tourists. Which leads us back to the Convention Center issue. City planning director Chris Ronayne says there are a slew of questions the region needs to answer before we decide on the issue:

CHRIS RONAYNE: We have a question that is on the table that we’re wrestling with the community about is do still philosophically want to be a destination city? Is that in our overall strategy for this region? Should Cleveland be a place that competes as a destination market for tourism and convention business?

JEFF FINKLE: I think the question is: “what is the definition of a world class city?”

Jeff Finkle is president and CEO of the International Economic Development Council - an organization that advises the city of Cleveland and the Port Authority, among others. Finkle says that if “world class” means having a football team, baseball team and viable convention center, then we better worry about whether our facility can hold and attract national and international meetings.

JF: But if you decide that you’re giving up. That you’re not going to compete for certain types of businesses, you’re not going to try to show off downtown Cleveland; you’re not going to try to make those new infrastructure investments, then frankly, maybe you’re saying that you’re closing up shop and that children will have to find jobs in places that are willing to make those investments

To those who say Cleveland should focus on making the city a great place to live, Terry Jones, Political Science Professor at the University of Missouri St. Louis, says nice idea, but unrealistic. Jones says St. Louis’s convention center did give its surrounding neighborhood a boost. But it may be unrealistic to focus only on internal improvements.

TERRY JONES: In the abstract, investing in yourself before investing in a facility that’s going to attract outsiders makes a great deal of sense IF there is consensus in the community about not only what the purpose of those dollars should be, but the plan, the strategy for spending them.

Jones says in that regard spending public money on a tangible convention center is an easier sell than spending on education. And based on the proliferation of plans for Cleveland’s new center, the city has a way to go before it can agree on a single strategy for economic growth. In Cleveland, Shula Neuman 90.3

Tags

Making Change, Regional Economy/Business - Analysis and Trends, Regional Economy/Business - News

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