Economic Development vs. Supporting Education – An Urban Dilemma
In May, Mayor Rahm Emanuel and the university announced a proposal for a 10,000 seat, $173 million arena near
Place, a convention center along the lakefront
south of downtown. DePaul and the quasi-government agency that runs McCormick Place
would chip in $70 million each for the publicly owned venture. The city’s tab would
be $33 million, and that has created a bit of a stir.
The city counters that calling the project only an investment in a basketball arena is shortsighted and incomplete. DePaul represents one piece of a $1.1 billion investment to boost tourism, a plan that includes adding amenities to
which has lost convention business to cities like Orlando
and sprucing up Navy Pier, the state’s No. 1 tourist attraction, which is just
north of downtown. Las Vegas
The arena is part of a goal to revitalize the
Loop neighborhood, and the project includes two hotels, new
restaurants and areas for entertainment, and potentially a casino.
The arena would be an events center for concerts and conventions when DePaul is not playing, and the university has agreed to pay rent at $25,000 a game for men’s home dates and $7,500 for women’s games.
DePaul’s $70 million investment was needed, Tom Alexander, a city spokesman, said, because it would ensure that construction at Navy Pier and
could proceed in tandem. “This is really a facility the entire city can use,”
he said. “DePaul is helping facilitate it.”
Then there are the 10,000 construction and 3,800 permanent jobs that it would create, by the city’s math. The unemployment rate in the
metro area is
more than 9 percent. Chicago
“I would be safe to assume any city in the country would love to have these jobs and these types of announcements,” said Jorge Ramirez, the president of the
Federation of Labor. Chicago
Are any of these promised economic development really going to happen? Hard to say, cities and developers notoriously overestimate the public benefits of investment like this. To argue that 10,000 construction jobs will be created is not credible. And the construction jobs that are created will be temporary, short term and maybe even part time.
The solution here is to adopt what conservatives would propose if conservatives were true to their principles, which is to let market forces decide the issue. In this situation the groups involved should form a corporation which will own and operate the arena, and borrow the funds for the city’s contribution amount with only the profits of the arena available to make the debt service payments. If the proponents can convince the bond market that the project is viable great, no problem. If not, then why should the city get involved in a financial loser when it has so many other problems.
See, sometimes conservative principles are appropriate. We just need principled conservatives to be present, which unfortunately is a harder proposition than borrowing money for a basketball arena for