I’ll let you in on a little secret. When Colorado economic development officials have nightmares, they go something like this:
People march in the streets screaming “down with corporate welfare.” Signs say “No to Amazon. No to tax breaks and corporate incentives for big companies.”
Vainly, the eco-devos try to tell the people that economic development is in their community’s best interests, creating new jobs and opportunity for people.
But the crowd is hearing none of it. Instead, they chant, over and over, about unaffordable housing, paralyzing traffic and secret deals between government and private business.
Just as their nocturnal blood pressure moves into dangerous territory, however, the eco-devo men and women awake in a cold sweat, relieved that it was all “just a dream.”
But is it?
The recent grassroots effort in New York City giving the heave-ho to retail giant Amazon’s proposal for one of two “second headquarters” locations must’ve sent shivers down the spines of economic development officials across the nation.
For it was indicative of what’s happening in Denver and towns across the metro area, and every mayor, city councilor and municipal official ought to pay attention.
Ordinary people are fed up with out-of-control housing prices, traffic congestion and rising prices and they’re looking around for someone to blame. Go to any social gathering that doesn’t involve people from the local chamber of commerce and you’ll hear it.
“What’s happening to my city?” is a common refrain.
The concerns aren’t so much, “Will I have a job in the future?" but "Can I afford to live here? Will my kids be able to buy a home in the town they grew up in?”
Most people have not made the connection between economic development deals, corporate incentive packages and these mounting complaints about traffic and housing prices.
But they will. And when they do, they’ll start expressing their displeasure at the ballot box. It’s reaching a critical mass right now and when people connect the dots between economic development incentives and the overall deterioration of their quality of life, all the campaign money from deep-pocketed developers and others who benefit from rampant growth won’t be able to overcome it.
And forget about voters approving big public works projects and giant bond issues that seem to benefit a narrow few.
Alarmist? Maybe. But I come at this from having observed economic development in Colorado since the mid-1970s.
Back then nearly everyone was behind the effort to grow business in Colorado. In the 1980s, the economy was on its knees because falling oil prices and wild overbuilding anticipating growth from oil projects that never materialized.
In many ways, economic conditions were worse than in the recent “Great Recession.”
Colorado also was still coming off the devastating worldwide hit to its reputation a decade earlier for rejecting the 1976 Winter Olympics.
The movers and shakers in Denver and Colorado decided they had to do something to diversify the economy and create some new jobs. So, they embarked on a huge selling job to make Colorado a hot place to do business.
Helped along by a few big public investments in a new convention center, a new airport, a major league baseball stadium, the effort proved a huge success.
Over time, the Denver metro area became the envy of communities across the nation for its economic development work and we regularly were listed as among the best cities in the U.S. for business.
Eventually, it worked a little too well. Yes, job opportunities grew, the economy was diversified, and business boomed.
But so did prices, especially for housing. So much so, that today, the median home price in Denver is north of $450,000, nearly double the national median home price. Median incomes haven’t kept up.
Colorado has the most expensive real estate prices of any city in America that’s not on the coasts.
So where do we recruit new business from now? The coasts. Because compared to prices in those areas, Denver’s prices are still a bargain.
But every time we recruit a company from New York, or San Francisco or Washington, D.C., it puts upward pressure on local real estate prices and makes housing more difficult to obtain for those that already live here, especially young people just starting out.
How long can household income in Denver continue to disconnect from median home prices before there’s a correction? Answer: As long as we keep recruiting high-salary companies from elsewhere. But at what cost?
We can’t blame people wanting to live in Denver over Chicago, or Minneapolis or New York City or Dallas or Houston. But with the economy booming, do we really need to hand out tax incentives to recruit more companies to come to Colorado?
Although Colorado has structured its incentive deals to backload the benefit until after a company is operating successfully here, there’s something fundamentally wrong about offering hundreds of millions of dollars to the biggest company in the world run by the richest man in the world.
The competition between cities over these corporate deals feels like a kind of organized bribery. And to what end? Especially now when the economy seems to be pretty robust?
I’ve asked countless economic development people about this dilemma and I can sum up their arguments with this:
Their worst nightmare isn’t people marching in the streets against Amazon. Their worst nightmare is returning to those bleak times when the unemployment rate was more than 8 percent and vacant office buildings dominated the business parks and the newspapers were filled with listings of bank foreclosures.
That’d be enough to give anyone insomnia.
Neil Westergaard is the former editor of the Denver Post and the Denver Business Journal. Reach him at firstname.lastname@example.org.
Photo: Kathleen Lavine / courtesy Denver Business Journal