I had an opportunity to be part of a planning committee looking at doubling the size of the city’s business park. As a young engineer, I had been an inspector for the utility construction in the original park. Now, a decade later, that park was nearly filled, and city officials were looking to expand. My new role, as planner, was to clear any regulatory hurdles necessary to make this project successful.

The plans put forth by the city’s engineering firm would exactly mirror the existing park on land the city owned directly adjacent to it. This would be the same business park, constructed in the same way, on land that was essentially identical. In other words, in the Quantum Theory of Economic Development, this represented a perfect case study to do some proton smashing.

The engineer provided the cost estimate. That was pretty straightforward. I was then able to examine the existing park and the wealth that existed there. I assumed that the new park we were looking to build would turn out the same as the existing one, which everyone considered a success.

I went through city records and figured out the phasing in the existing park to see how quickly it was built out. I also tried to account for the tax subsidies that were given out and the fact that a number of the properties in the park were tax exempt. I put all of this into a spreadsheet and ran the numbers to see how long it would take the city to pay down the bond they were planning to take on.

They never would. If we repeated what we had done with the existing park, the revenues the city received didn’t even cover the interest payments.

I felt that couldn’t be right, so I went back and worked on my assumptions. I got rid of the tax subsidies. I got rid of the tax exemptions. It still didn’t work.

I assumed that the entire park would be build out within just five years. Then three years. Then one year. It still didn’t work.

Then I tried assuming, on top of these other overly-optimistic assumptions, that every single penny of new revenue brought in by this park would go to retiring the debt. If that happened, if the taxpayers of the city agreed to have their taxes raised to pay to plow the snow, fill the potholes, provide police and fire protection, and all the other routine services needed by this new expansion, then and only then—assuming all properties were developed within a year by fully taxpaying, non-subsidized businesses—could the city hope to retire the debt in 29 years. That’s a little longer than (but close to) how long the industrial street would be expected to last without needing major renovation.

Cities hard-sell business parks to their residents by citing the jobs and economic activity they will create. In a state like Minnesota or New York, where there isn’t a local sales tax, the real benefit of a business park is the potential for growing the tax base, adding wealth to the community that is reflected in the property tax receipts. In my experience, the business park was considered the premier way to grow a solid tax base—every community that could would build one—and I believed that to be the case. It’s not true.

I’ve since examined a number of these and found similar results. Here in my hometown of Brainerd, we have a business park that has had vacant lots for well over a decade (maybe two), yet we recently spent around $13 million running utilities to the airport for the chance at an air-oriented business park. Back-of-the-envelope calculations I did at the time (when it was still a $7 million project) suggested the city would need to bring in over $65 million in new tax base to make this pay off in a generation. There is no chance this will ever happen, and I will take all bets in any amount on that.

Circumstantial Evidence?

I’m not an academic. I don’t do research. I’m not going to write a white paper or publish in a professional journal. That’s for other people.

What I am is a rather bad engineer and a pretty poor planner. My greatest career limitation was that, instead of just doing my job, I spent too much time trying to figure out why we were doing what we were doing. And by this point in the story of my life—around 2008—I was pretty confused by it all. A little scared and a lot angry.

And with banks failing, housing prices collapsing, gas prices spiking, insane bailouts, and a crazy election cycle that didn’t touch on anything I thought important to it all, I found myself more and more on the outside looking in. I was the guy nobody wanted in their meeting, which is not a good career trajectory for a consultant, especially one with young kids at home.

I was screaming into the void, a voice in the wilderness, and nobody was listening. In retrospect, I can’t blame them; I was really angry about it all.

I had lost faith in my foundational beliefs, in the people I had relied on to guide my career, in the professions I had selected for my calling. Was there anyone else out there who was seeing what I was seeing? Was the whole world crazy or was I crazy? I wasn’t sure.

I sat down and started to write. I would soon find a whole bunch of people eager to help me figure this problem out. More on that in the next post.