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Economist: Hemisfair Park plan a ‘classic case of cronyism’
A plan to leverage tax dollars for private development at San Antonio’s Hemisfair Park won’t benefit the city or its taxpayers, a Texas economist predicts. But he says the projects are gold-plated deals for developers.
“There are only two possible outcomes for each project,” said Dean Stansel, economist at Southern Methodist University's O'Neil Center:
1. Taxpayers will prop up unprofitable real-estate development projects that should not have been undertaken, or,
2. Tax dollars will be used to line the pockets of the developers of those projects that would have been profitable even without the subsidy.
A report by the Hemisfair Park Area Redevelopment Corp. outlines how a public-private partnership will make over the downtown park that hosted the 1968 World’s Fair.
HPARC says some $80 milllion in tax dollars – along with $56 million in current and proposed bond proceeds -- will leverage millions more in private investment.
“Approximately $12.8 million is projected to be contributed annually to the local economy," HPARC estimates.
With HPARC’s calculations light on details, Stansel questions the blue-sky scenario.
“HPARC claims that for every dollar of taxpayer money ‘invested,’ the private sector will bring seven dollars. If the real estate development projects in Hemisfair Park require ghly 1/8th of their costs to be covered by the taxpayers, then those projects are economically unsound and should not be pursued,” Stansel said.
“It’s a classic case of cronyism.”
Stansel said ballyhooed “multiplier effects” and “ripple effects” in the prospectus ignore “opportunity costs.”
“If the new development leads to additional economic activity in the area, the money that funds that activity has to come from somewhere,” Stansel explained. “If consumers spend $100 at the new Hemisfair Park developments, they'll have $100 less to spend at other local businesses.”
“This is not new activity, it's just shifting money from existing businesses in San Antonio to new ones that were put in place by those developers who have the political influence to be involved with the new projects,” the economist asserted.
City Hall politicians are effectively forcing existing San Antonio businesses to pay taxes to subsidize new competitors under the guise of “public investment.”
“This is the exact same phenomenon that occurs at the state level with the Texas Enterprise Fund,” Stansel noted.
Local critics of HPARC’s public-private venture warn that wheeling and dealing at Hemisfair could undermine the city’s upcoming $850 million bond, which contains $21 million for projects at the downtown park and $5 million more for new streets there.
Instead of subsidizing private developers, taxpayer groups say the city should scale back its plans and redirect funding to core services, such as public safety.
The San Antonio Police Department remains almost 150 officers short – even as homicides spiked to a 21-year high in 2016 – and the fire department continues to work without a contract.
A 2012 municipal bond provided $15 million to Hemisfair for a first phase of redevelopment, said HPARC CEO Andres Andujar. Another $15 million was approved to design and build so-called complete park streets.
Much of the work is still ongoing, five years later.
The proposed 2017 bond allocates $21 million to complete design and construction of public improvements at the park.
“Another $5 million is included to continue design and construction of internal park streets such as Hemisfair Boulevard,” Andujar said.
