Wednesday, February 27, 2013
THE MYTH OF CONVENTION, MEGA EVENT AND SPORT CENTERS AS URBAN DEVELOPMENT STRATEGIES
So far in the series on urban poverty and local economic development papers that I have discussed, the fundamental problems and substantive issues such as displacements, inner city development, and justice, among others have been articulated. Together, these papers have also suggested new approaches and perspectives to understanding and thinking about urban challenges. This paper bears such eminence.
The fact that challenges in sustaining the growth of cities continue to persist despite immense investments and adoptions of varied strategies to induce redevelopment is no news. Indeed, it is such observation that makes it even more critical as innovative strategies are imminent. Cities continue to decline and with it are associated issues of economic prosperity decisions, increase in crimes rates, and decline in local government financial capacities.
Approaches to managing this phenomenon have been conventional and mundane in the form of construction of mega structures to host mega events with the aim that this will rejuvenate the local economy back on track to economic prosperity. Is this the right approach? There exist a dilemma in viewing these strategies as they, evidently, have huge political support and have physical outputs; an elusive attraction if not looked at critically.
In this paper, these types of strategies are examined. This is to reaffirm the obvious findings of several studies and to make aware the fundamental obligation of the urban planner and policy analyst to be creative and innovative. The contention is that “not all that glitters is gold” and grandiosity does not mean effectiveness and efficiency or prosperity. This paper reviews three main strategies that have informed such redevelopments; namely convention centers, mega-events and sports related investments that have been initiated to induce economic development and enhance the welfare of cities. The thrust is to draw awareness on whether these approaches have achieved these aims; what factors were in play; what were the roles played by local government or city authorities; what are the lessons thereof; are there still relevant in the current urban environment; what are the challenges that exist; and what implications and recommendations can be made in relation to emerging findings. This is thus the thrust of this paper.
1.2 Review of Case Studies
1.2.1 The Realities of Convention Centers as Economic Development Strategy
Several cities including Atlanta, Austin, Charlotte, and Chicago have adopted convention centers as means for economic development. According to Sanders (2005), urban planners and city authorities “have invested billions in an arms race with competing cities to lure conventions and their attendees to new or expanded convention centers.” The basic theory underpinning these approaches relate to attracting business actors, individuals of different backgrounds to cities for particular conferences, products marketing shows, festivals, etc. Based on these attraction, these actors through their activities will utilize and spend on the services of the city which would in turn boost sales and revenues of local firms; hotels, restaurants, theaters, night clubs, etc. thus spurring a cycle of economic growth.
However, the context of this theory is changing mostly by the insurgence of communication and technology in addition to increasing competition among cities to attract conventions. This has led to the dilution of the market base (e.g. Chicago, New York, Atlanta, and New Orleans) and questions have emerged as to the continual investments in such approaches and whether they are worthwhile. Critical in this regard are the key flaws in relation to the sustainability of investments influenced by this approach. How long do these activities last? After the euphoria what happens to the infrastructure? Are the brief escapades of people and firms attracted to these activities able to offset these investments that, at times, are fueled by increase taxes and public spending?
Apparently, these activities are mostly occasional or seasonal thus does not offer continual streams of revenue while maintenance and operating cost of these investments are recurrent and long lasting. Unfortunately, the implications of these questions are aggravated by the inadequate and poor capacities of urban planners and decision makers in understanding how the market operates, and is evolving. Sanders (2005) confirms this perspective by articulating that “the pervasive market information provided to these localities and their decision-makers is fundamentally flawed and inaccurate”. This is primarily because the implications thereof of the questions posed seems to elude decision makers or probably receive less attentions as physical structure investments, and their glamour seem to be congenial to city managers. This has consequent led to ill-informed decisions and less effective and efficient outcomes.
1.2.2 Olympic Cities and Sports Centers as Economic Development Strategy
The characteristics of convention centers are similar to Olympic cities and sports centers. Olympics cities face the greatest challenge whereas sport centers have varied outcomes in terms of promoting economic development. The disparity is not due to structure but mainly the processes and the deliberations that informed the planning and implementation of these projects. Gold and Gold (2007) particularly laments the challenge of Olympic Cities to manage the huge infrastructure that come along with such tournaments. Such was the debate in the London Olympic bids and hosting; the issue of sustainability in terms of benefit streams, management, and utilization of the infrastructure. The aftermath of such activities leaves city managers with fewer returns on investment, persistent and reoccurring maintenance cost and the underutilization of infrastructure used for the Olympic tournaments. These agitations and concerns are also spurred by the huge public funds that go into such investments thus presenting issues of loss of taxes generated and investments that could have been used to promote other alternative programs especially for the poor and low-income families (Long, 2005; Gold and Gold 2007; Cantor and Rosentraub, 2012).
This raises the question of justice as intimated by Fainstein (2010) and several other authors on the use of public funds by city managers. Another dimension to the approach of economic development is the issue of public-private partnership investments which leaves the public sector taking up over 60 percent of project cost as well as losing out on the revenues and taxes that would accrue from these investments. In this sense, presenting such collaboration between these actors “as public-private partnerships is inaccurate, in as much as it implies near-equal responsibility between both sectors, and taxpayers continue to bear the majority of costs for constructing and operating new major league sports facilities” (Long, 2005). Therefore identifying and streamlining what a good public-private partnership entails is critical. The definition and components of public-private partnership, the extent of the relationship as well as roles to be played by actors should be evident. A starting point for a good framework should be underpinned by the justice principles of “equity, democracy, and diversity” (Fainstein, 2010). In addition, “subsidiarity, efficiency, transparency and accountability, and security” should be critical principles that must define such urban planning practices (Auclair and Jackohango, 2009).
Success stories exist and one such an example is the case of San Diego’s Ballpark District project (Cantor and Rosentraub, 2012; Miller et al, 2012). Through good negotiations, a public-private partnership between San Diego Padres and San Diego build a new ballpark where “the public sector invested $209 million and the team spent $187.1 million and retained all revenues from the new facility” as well as a the $487 million investment in neighborhood development by the private investor which was to be completed by the end of the project (Cantor and Rosentraub, 2012). Based on the evidences presented and the criteria provided for evaluation, the project achieved it objectives of city revitalization (economic growth), diversity, and maintenance of the values of property. This clearly shows how effective public-private partnerships can be if decision makers become critical and reflective on the approaches they adopt to urban development. Resting on past approaches without understanding the context and factors that induced their earlier success and relating it to current trends may prove investments redundant and ineffective. Espousing indicators of public investments success in promoting economic development should manifest primarily in increase tax revenues and employment as well as income levels. In addition, to must improve social systems and factors rather than increasing them. To the extent that there are consistent losses simply implies that public investments have not been efficient.
An alternative approach to economic development was implicit in the success story of the San Diego’s Ballpark District project; “attract young well-educated individuals as well as older higher income residents” (Cantor and Rosentraub, 2012). This thus offers opportunities for exploring innovative ways for attracting and returning the cadre of these individuals in the city if economic growth and development are to be achieved. However, this must not be taken to mean fewer initiatives for other age groups as they complement each other.
1.2.3 The Real Cost of Public Funding For Mega Facilities and Events
The cost of partnerships between the public and private sector is fraught with discrepancies as well as a lack of transparency in the processes, the excess cost to the tax payer in terms of lost public funds, waste of investments and the eventual benefits of these public funding accruing to a few. Both convention and sport centers including stadiums and Olympic infrastructure reveal typical results. Sanders (2005) observe that “the overall convention marketplace has shifted dramatically, in a manner that suggests that a recovery or turnaround is unlikely to yield much increased business for any given community. Less business, in turn, means less revenue to cover facilities’ expenses, and less money injected into local economies."
Long (2005) analysis of public funding of stadiums also “reveals that public cost is under-reported by an average of $50 million per facility, or $5 billion for all 99 facilities in use in 2001” and concludes that “the real cost of public subsidies for sports facilities is significantly higher than commonly reported. As a result, governments and taxpayers underestimate the magnitude of their ongoing financial commitment”. Subsequently, “local governments focused on economic development should look past the glamor of sports and avoid subsidizing facilities that seemed to concentrate benefits among franchise owners, professional athletes, a region’s economic elite, and perhaps some sports fans” (Miller et al, 2012). Again the reoccurring theme of the continual use of public funding in private investment and the role it plays becomes eminent. Thus there is more cost to the funding of these strategies than meet the eye.
1.3 Summary of Key Findings, Implications and Conclusion
The preceding discussions have given an overview of the issues related to convention centers, Olympic Cities and sports facility investments as strategies to economic development. The critical issues and questions have been raised in the light of these approaches. The subsequent section is devoted to further expatiation of the critical issues that have emerged in the light of the questions raised for this review.
To begin with, evidence so far indicates that investments in these strategies in most cases do not promote large-scale economic development as perceived by the advocates of these interventions. Though not many evidences have been cited, the constellation on this subject matter confirms this as the general consensus. Initial investments in sport stadiums and convention centers may have spurred some level of economic development but declining market trends and changing contexts are eroding this potential. This is especially true for the latter. The poor understanding of changing trends and how fundamental factors that underpinned the initial successes of these approaches are no longer present. As a result persistent investments of public funds into these projects are deemed inappropriate and ineffective because it is not creating the needed jobs and growth. There thus exhibiting inefficiencies in terms of waste of taxes which could otherwise been used for more pressing needs such as affordable housing. The discussion reveals that little evidence exist to suggest that large increases in income or employment are associated with these investments and the realization that not all citizens in a community benefit equally from their presence should inform new approaches to funding such projects starting with less commitment from public sector funding.
The probably factors inducing this continuous trend are related to the lack of transparency in the process such as costing (Long, 2005; Sanders, 2005), poor participation (Sanders, 2005; Fainstein, 2010), and weak negotiation capacities (Rosentrauba et al 2012 and Cantor and Rosentraub 2012). The role of the public sector shifting from funding private investments should also shift to increasing their ability to be innovative, transparent, as well as involve the public in the planning process. This would allow for more definition of aim and discussion of best fits within the context of specific cities. Together Fainstein (2010) principles of equity, democracy and diversity articulated differently by Cantor and Rosentraub (2012) offer fundamental basis to judge public sector decisions into public-private partnerships.
For urban and local economic development planners, the critical issues that must guide decision must begin with the framework of justice. To the extent that public funds do not create employment, retain business, attract people, increase income levels but rather reduces the revenues and tax base of the city at the same time increasing livelihood deterioration must be seen as an inappropriate strategy for urban economic development. Similarly, the appreciation of the factors that influence costs and benefits must be discussed at length to make the assessment of project more reflective of their consequences.
In addition, there must be continuous research to espouse the actual factors that induce economic growth and how the different contexts of location affect the success of particular projects. In this regard, impact studies should address alternative uses of public funds (Coates and Humphreys, 2000). The link therefore between academia and industry should be consolidated to bridge the knowledge gap between what works and what does not in an objective manner. This should also be supported by project and program evaluations to inform new projects and how resources can be effectively utilized to promote economic development. This is especially true for Olympic cities, as they have become a culture in the global world.
Auclair, C. and A. Jackohango (2009): Good Urban Governance: Towards an Effective Private Sector Engagement, Background Paper – Draft 0, Private Sector Unit – UN-HABITAT, Nairobi
Cantor, M.B., & Rosentraub, M.S. (2012). A ballpark and neighborhood change: Economic integration, a recession, and the altered demography of San Diego’s Ballpark District after eight years. City, Culture and Society , http://dx.doi.org/10.1016/j.ccs.2012.05.001
Coates Dennis and Brad R. Humphreys (2000):The Stadium Gambit and Local Economic Development, Economic Development Policy, Regulation, Volume 23, No. 2 http://www.cato.org/pubs/regulation/regv23n2/coates.pdf [Accessed on October 12, 2012]
Fainstein, S. S. (2010). The Just City, Cornell University Press, Ithaca and London
Gold, John R. and Margaret M. Gold (2007). Olympic Cities. London: Routledge.
Long, Judith G. (2005). Full count: the real cost of public funding for major league sports facilities. Journal of Sports Economics, 6: pp.119-43.
Mills, B., Rosentrauba, M., Cantora, M. and J. Winfreea (2012): Tax Sources for Stadium Financing: Fiscal Outcomes for Arlington, Texas, Unpublished.
Sanders, H. (2005). The realities of convention centers as economic development strategy. Washington, DC: Brookings Institution.