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January 14, 2006
NYC stadium revenues won't repay city's costs
An internal economic impact study commission by New York City reveals that new city and state tax revenue will amount to only $225 million in present value - barely half the project's $444 million public cost. And New York City itself - whose mayor, Michael Bloomberg, declared earlier this year that "We make 'investments.' We don't do subsidies. We get our money back, and we make money" - would come out even worse, with just $96 million in new revenues to pay off more than $300 million in red ink.
Worse yet, the study itself looks to have tilted the playing field in the project's favor, meaning the true return on the public's investment would be even lower. "The way environmental-impact statements are done these days, it's like they're advocacy pieces," concludes Westchester city planner (and Bronx Community Board 4 member) Lukas Herbert. "You hire a firm like ERA and say, 'Here, put in some numbers and make us look good.' "
You can read all about it in my article in the Village Voice online edition.
A study that is begging to be done is an analysis of the economic impact reports produced by Economic Research Associates (ERA). They are the hired guns for cities and counties seeking favorable numbers to support the public financing of stadiums and arenas. As Neil points out in his article, when one sits down and wades through the finer details of an ERA report, numerous red flags are raised. ERA's economic impact report on the Dallas Cowboys stadium in Arlington was riddled with errors and questionable assumptions. A comprehensive analysis of ERA's reports over the past ten years or so would be very interesting to see. Hopefully, some economic researchers will undertake such an analysis. Any citizens living in communities where government officials are seeking public funds for a stadium and have commissioned ERA to perform an economic impact study should be prepared for their "findings" (and be ready to question their methodology).
Posted by George on January 15, 2006 10:05 PM
A study that is begging to be done is an analysis of the economic impact reports produced by Economic Research Associates (ERA). They are the hired guns for cities and counties seeking favorable numbers to support the public financing of stadiums and arenas. As Neil points out in his article, when one sits down and wades through the finer details of an ERA report, numerous red flags are raised. ERA's economic impact report on the Dallas Cowboys stadium in Arlington was riddled with errors and questionable assumptions. A comprehensive analysis of ERA's reports over the past ten years or so would be very interesting to see. Hopefully, some economic researchers will undertake such an analysis. Any citizens living in communities where government officials are seeking public funds for a stadium and have commissioned ERA to perform an economic impact study should be prepared for their "findings" (and be ready to question their methodology).
Posted by George on January 15, 2006 10:07 PM
Lukas Herbert, who I quote at the end of the Voice article, told me he's crossed paths with ERA before in his work as a city planner, and been unimpressed to say the least. I agree that a comprehensive study would be excellent - any econ grad students out there looking for a project...?
Posted by Neil on January 16, 2006 12:24 PM
It is not likely that there would be any effective peer review of the "study." These efforts are often undertaken with expensive computer programs plus purchased data. The computer program is most likely proprietary. Assumptions are often borrowed from other studies that were favorable. No matter how complex and expensive they get, the garbage in = garbage out rule still applies. I have yet to hear one of these economic soothsayers ever being sued for malpractice. Unlike accountants or city employees having substantial contact with money, I have never heard of one of them being bonded. When the ship hits the sand they are always Spic and Span.
Posted by Danny L. Newton on January 19, 2006 12:27 AM