Billions of dollars have been invested in "economic development" projects in cities around the country. Yet there is little evidence of their effectiveness in promoting new jobs or boosting tax revenue. In study after study, we learn of businesses that have received tax favors but failed to live up to their promises.
...we can reach certain conclusions: (1) Most of the subsidies have gone to hotels, offices, and sports stadiums in urban downtowns, where market pressures would support development without public funds. (2) The beneficiaries of most public subsidies generally are the richest people in town. (3) The process is corrupting because it links the public subsidies to developers who make hefty private contributions to political campaigns. (4) Most important, the process doesn't work.
In my town, Cleveland, for example, the city and county have issued close to $1 billion worth of bonds to build two stadiums and an arena. These facilities were represented as economic development projects that would create 29,000 good jobs and $15 million a year in new property taxes for the public school system.
So far, we have counted about 1,900 new jobs, all of which are seasonal, temporary, and low-income, and zero in new property taxes because all the projects received a tax exemption forever. Meanwhile, the public school system was forced into receivership by a lack of funds.
