Observations Regarding the CRA Redevelopment Advisory Committee

Premises:

1. The Pensacola area has a multitude of advantages.

1. However, we have fallen behind other historic coastal cities.
2. The revival of Downtown Pensacola is vital to the entire area.
3. The City and CRA will have very limited financial resources for the foreseeable future.

Desired outcome: Attract people, businesses and visitors to Pensacola.

Primary requisites: An attractive, clean and safe community – coupled with quality public education.

Government and private development:

1. Local government has a role to play in redevelopment. Its first duty is to fulfill the primary requisites specified above.
2. Government should also set reasonable zoning and code restraints. However the City should not “tie the hands” of entrepreneurs. (As the City did with the failed 9^th Avenue Hawkshaw project.)
3. Beyond these obligations, the private sector should be the principal player.  Free markets almost always make better economic decisions than do governments.
4. In a market economy, producers have to satisfy paying customers. Governments, on the other hand, offer goods and services that they think citizens want or need, and taxpayers pay.
5. Local government should be wary of economic impact studies. They are principally used to justify government subsidies.

Waterfront:

1. The waterfront is Pensacola’s most valuable asset. Convenient and safe pedestrian access to the waterfront is a high priority.
2. The bayfront must be connected to the downtown commercial, historic and residential districts.
3. Public sites along the waterfront should be interconnected.

C.C. Elebash
February 2012

Attachments

1. Local economy
2. Economic impact studies

Local Economy

Metropolitan Pensacola is a community with many desirable attributes. In the past we were the envy of other Northwest Florida and Alabama communities. However we have fallen behind.  We are not moving forward as we can and should.

Assets and advantages

The Pensacola area – including Escambia County and neighboring Santa Rosa County communities – has great potential. We possess very valuable assets. Among them are mild climate, proximity to Gulf beaches, the Gulf Islands National Seashore, miles and miles of additional waterfront, a variety of recreational opportunities, a distinguished regional university, an outstanding state college, the highly respected Pensacola Christian College, and a splendid cultural environment (historical ambiance with fine and performing arts).

We have east-west Interstate 10, fairly convenient connections to north-south Interstate 65, a deep water harbor, the intercoastal waterway and a first rate airport. In addition we have a significant military presence, acclaimed hospital and healthcare systems, a modest amount of industry and a small but growing group of “knowledge” businesses.

Our present situation

Despite all these favorable factors, our area has not kept up with similar communities.  We clearly lag the revitalization that occurred in other historic coastal cities like Charleston, Savannah and even little Fairhope.

Poverty rates in Pensacola and Escambia County are high. Personal income growth is slow. The City’s population is declining, and Escambia County’s population is stable. Escambia County is generally considered to be among the poorest of large urban Florida counties.

C.C. Elebash

Updated February 2012

 

Be skeptical of economic impact studies

Local governments and taxpayers should be skeptical of economic impact studies. These studies are often used by those seeking subsidies and other preferential treatment. Study results are used to justify “special interest” demands.

The studies almost always provide positive outcomes. They are typically based on optimistic assumptions that are run through esoteric computer models.

• People who sponsor impact studies want positive results. They aim to “prove” that government assistance for their cause will provide economic benefits to the community.
• Model designers and consultants also seek favorable outcomes. It would be hard to sell their models and services if they do not produce desired results.

The major difficulty with impact studies is that indirect impact can be neither proved nor disproved. Forecasts of indirect jobs created cannot be verified. The forecasts do not identify specific jobs, their location or the employers. Likewise, the multiplier effect of money injected into the economy cannot be neither traced and nor measured.

The impact of subsides is obscured. The economy is in constant motion. It is dynamic, not static. Change is always taking place.

Economic impact studies may not take into account negative effect. If a subsidized product is produced and consumed locally, net effect is near zero. There is no impact unless the activity attracts out-of-town money and out-of town people. Otherwise, spending is just shifted among local businesses. Some will benefit, but others will lose. Negative impacts will offset positive impacts. (Minor league sports stadiums are an example of subsidized activity that has little or no positive impact.)

 Impact studies encourage governments to make economic choices that should be left to the private sector. Savers and investors almost always make better decisions than do governments. Cities and counties should avoid subsidies. The benefits are murky. Individual taxpayers should be free to spend their money as they see fit. They should not have to pay taxes that end up in government subsidies.

St. Petersburg Times, August 15, 2011: “We're typically wary of economic impact studies because they rely on assumptions and are often attempting to predict outcomes. On top of that, they're usually paid for by groups with something to gain by presenting the data in one form or another.”

C. C. Elebash