Reprinted with permission
Harrison Square Doubts Were Well-Founded
By Ron Reinking, CPA
In the ongoing discussion in the press and the chatter on local talk radio regarding Fort Wayne’s Harrison Square there’s a line of reasoning that goes like this:
“Nobody could have foreseen these economic times . . . city officials did their very best with our money . . . they should not be blamed for having the courage to bring a vision to reality, a plan that could have worked, something good for the entire community.”
That is a defense, however, against accusations never made.
No one believed that those involved in the planning of Harrison Square were careless or insincere. It did become obvious, however, that while promoters initially may have wished good for the community, human nature inevitably took over and self-interest began to drive public policy.
As a result, Fort Wayne now must be counted another victim of well-intentioned visionaries with the power to tax.
The Nobel laureate Milton Freidman in his award-winning book and television series, “Free to Choose,” describes such a situation in the context of one of four different ways people spend money, i.e., “spending other people’s money on other people.”
Thus the well-meaning fellow with a fuzzy civic vision places himself in the position of spending others money for community “good.” Classically, it means serving on a not-for-profit board or assuming the position of “public servant.” In many of these positions, Friedman wants us to know, there is virtually no restraints on spending and, if your intentions are deemed worthy by the media, honor and esteem to boot.
And when, as is the case of Harrison Square, the wheels do fall off, there is no personal punishment or accountability. Indeed, failure itself is often used to justify even more money to “clean up the mess.”
Dr. Friedman continues: “If I want to do good with other people’s money, I first have to take it away from them. That means, at its very bottom, a philosophy of violence and coercion. It’s against freedom, because I have to use force to get the money. In the second place, few people spend other people’s money as carefully as they spend their own.”
Citizens of Fort Wayne, if they hope to prevent future debacles, must hold the boosters of Harrison Square accountable to the Freidman dictum, and for a number of reasons.
First, we must question how much civic courage it takes to pursue a vision of “good” with money taken from other people. Was it ethical, appropriate and even legal to expropriate the taxpayers’ resources for condominiums and baseball stadiums? If the answer is “yes”, then we are little more than indentured servants of a government granted unrestrained power to tax and spend.
Second, we must ask if it is true that nobody could have foreseen this outcome. Eighty percent of the public saw it coming, according to opinion polling. And 100 percent of private investors refused to risk their own capital on the government’s vision. The politicians, with no skin in the game, proceeding anyway, calculating they could make excuses if the bag (which we now hold) ultimately turned up empty.
It is a good guess that the Atlanta “investors” in Harrison Square still retain benefits in the form of tax abatements, forgiven leases of the old stadium and probably cash.* Fort Wayne citizens wish they could say the same.
On this last point it is interesting to note that practically all construction contracts contain performance bond requirements and set dates for completion of a project, thus placing risks on the developers. In the case of Harrison Square, these risks have now apparently become the taxpayers’ problem. (Some will recall that Councilmen Tom Smith and former Councilman Don Schmidt asked unsuccessfully to review our Harrison Square partners’ financial statements in order to evaluate their credit capacities.)
And finally, as hard as it is to say, nobody can ever know for sure that the project is honest. That, unfortunately, is the nature of other people spending your money — you’re never quite certain where it went.
This was the primary concern of Fort Wayne citizens like me with Harrison Square — specifically, that without the tests of a free market we would never really know whether it was a good idea or bad.
That concern, recent events now demonstrate, was spot on.
Ron Reinking, CPA, owns an accounting firm in downtown Fort Wayne. He is an adjunct scholar of the Indiana Policy Review writing frequently on economic development and urban public policy. Contact him at ipr@iquest.net.
* A good part of the investment of the lone “private investor” in Harrison Square, a company of unknown assets and financial accountability, was apparently guaranteed by various agreements and legal devices.
Tags:
Graham Richard,
Hardball Capital,
Harrison Square,
Tom Henry
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