Everyone knows -- or at least pretends to know -- that "economic development" subsidies for corporations and developers are rarely of any real benefit to society. But when it comes to a specific case, no one ever wants to do anything about it. Elected leaders in particular suddenly lose whatever fight they had in them; they start repeating the developer's every ridiculously-inflated claim about "jobs," minimal ecological impact, and community benefits. No one wants to vote against this development for fear that everyone else will vote against the next one, this time in the politician's own district; and no matter how indifferent or even opposed many local voters are to such a development, the politician always believes that the fake "grassroots" group of local rent-seeking elites is speaking for the whole people when they scream that the development is absolutely necessary for the neighborhood and that government funding or tax breaks for it are essential.
That's why it's all the more encouraging when they do insist on a higher standard. What wouldn't you give for a tough-minded state auditor general who insisted that a company promise to do something substantial for the community before granting them a lucrative license?
Consider Pennsylvania Auditor General Jack Wagner. Pennsylvania recently legalized slot-machine gambling, and is in the process of granting a limited number of licenses for slots parlors around the state. One of these is reserved for Pittsburgh. Over half of the gross revenue from these slots parlors will go to taxes. But Wagner won't stop there. He's insisting that the company that bids on the Pittsburgh slots license should promise to do more for the community . . . by, er, building a new arena for the Pittsburgh Penguins.
Yes, you did read that right. Pittsburgh may be functionally bankrupt; it may have experienced the steepest population decline of any of the 25 largest metropolitan areas in the country over the last five years; and it may have a rising poverty rate with scandalously wide racial disparities on every conceivable economic and health measure available. But when it comes time for our civic and state leaders to insist on more from developers, they know what the priority is: Slots for Mario!
The official enthusiasm over this proposal is unlikely to rub off on the common people, who are dedicated sports fans but who voted 2-to-1 against public funding for two new stadiums for the Pirates and -- yes -- even the Steelers just under a decade ago. When democracy got in the way, our "leaders" came up with "Plan B," using primarily state money to build the stadiums and additions to the convention center in Pittsburgh, while also building two new stadiums in Philadelphia; they meanwhile raided funds from the Regional Asset District that were supposed to be used for other purposes. City and county finances being what they are now, there was never any question of using tax money for the Penguins too, despite Mario Lemieux's shrill and incessant blackmail-bleats to the effect that he is about to decamp for Kansas City.
But it has become such a matter of course that rapaciously greedy for-profit outfits of dubious civic benefit will receive public funding that it is considered a novelty when a new arena is to be built entirely with "private" funds. Which is why the joint proposal by the Penguins, Isle of Capri Casinos, and Nationwide Realty looks so good in the eyes of politicians. They argue that in addition to the tax revenue that will come from any slots license, it is good that the casino operator is offering to invest in something of public benefit when that money would have otherwise gone to profits.
But this begs the question, and it is the central question: If private funding for an arena is a point in this proposal's favor, why not private funding for something else?
A slots license is lucrative. Otherwise, why would Isle of Capri be offering $293 million in funding for the arena? By its own admission, Isle of Capri is a company of "substantial indebtedness" (some $1.2 billion in long-term debt, in fact, while the company has not quite $1.8 billion in total assets) and Wall Street analysts don't see it as an especially healthy enterprise, especially given the recent hurricane damage to its central operations in Mississippi. An expansion plan that requires that that much revenue be foregone for the sake of placating state and local politicians by building an arena does not look all that promising -- unless Isle of Capri is planning on making a hell of a lot of money.
I am by no means suggesting that the other proposals for the slots license are any better. But what developers are willing to dangle in front of us is telling. Gambling is one of the most regressive taxes imaginable, and it is hardly irrelevant that if this proposal succeeds, the casino will be placed in the lower Hill District, within walking distance of as bleak a concentration of urban poverty as exists anywhere in the country. It is no small concern that gambling addiction will be added to already-rampant social ills in that neighborhood. Don't kid yourself that slots will merely replace the illegal numbers games; they will likely augment them. For its part of the deal, Nationwide Realty is promising mixed-use retail and housing, but we're hearing nothing about whether that housing will be affordable or how poor neighborhoods in particular will otherwise benefit. The Lower Hill could be gentrified, and while I am not one to run screaming from that word in the manner of those who romanticize concentrated poverty as a colorful part of the urban landscape to be lovingly cherished, I also think that there is little value in simply moving poverty around. When the Lower Hill was destroyed the first time (to build the current Civic Arena in the 1950s!), it was among the first instances of "Negro removal" in the country, creating the mini-diaspora of local blacks who soon populated Homewood and other East End neighborhoods in larger numbers. Something tells me that if new housing comes to the Lower Hill again, it won't be of the kind that most people in the Upper Hill can afford.
So why not insist on something more? At a minimum, shouldn't the housing developments be affordable? Or better yet, shouldn't we insist that instead of spending nearly $300 million on an arena, the developer who gets the slots license should devote that money to a special fund to cover people without health insurance in Pittsburgh? Or that the developer should devote more money than will otherwise be received in taxes, so that the City of Pittsburgh can afford to reopen all the youth rec centers and pools it closed a few years ago because of budget constraints?
I'm tempted to ask the question, "Where's the imagination?" -- but it just doesn't feel right. This shouldn't require any special imagination; it's downright "commonsensical." It is our so-called leaders who must require a lot of imagination to believe that their current way of doing things is worthwhile for much of anyone in this city other than the developers (and consequently campaign contributors) they hang out with every day.