Tuesday, January 18, 2011

Oasis Part 4: The Legend of Retail Development

Oasis Part 4: The Legend of Retail Development

Large retail developments like Legends or Cabella's present a problem for the region. These huge developments can cost the city more in these instances. Because Nevada campaigns so heavily for retail development like these, the state (or disconcertingly in other states, the local government) will offer tax breaks and incentives to plant the business in the region. Legends received 20 year STAR bonds, effectively exempting the development from paying a penny in taxes for 20 years. The dirty secret on retail developments like that is that by the 20 year mark the development will pick up and leave. It is actually cheaper and generates more business to pack up and rebuild than to pay the taxes it owes.

Think of it, go to the shimmering new mall or the old mall? To the developer it doesn't matter, the taxpayer will pay for most of it either way and a business is unlikely to get as many incentives for a redevelopment as a new development. The Target in Legends is actually an old Target that was relocated from Reno to Legends Mall in Sparks. The old Target was paying taxes, the new one pays none. The only revenue the local government receives is off sales tax, and any business generated around the area. The trickle down effect. And that is minimal. The estimated cost to the taxpayer in the region is $500 million. That will never be recovered.

An often used argument to support developments like these is that it generates jobs. That is true and false, and Eisinger does an excellent job of breaking down the myths of economic growth in his brilliant book The Rise of the Entrepreneurial State. For the moment let's ignore the argument that chain retail kills mom 'n pop stores (we'll assume that there is a net gain of jobs). The jobs that are generated are very low quality. The average retail job doesn't generate enough income to live comfortably. In fact, most retail jobs aside from the highest positions don't pay highly enough to raise the worker above the poverty line, don't have health benefits, are part-time, and don't always employ existing populations. It does generate a marginal tax base for the city though and fuels more development in the region. As we have seen, the new residential development does not pay for itself though. The new population required for a development such as Legends more than absorb any additional tax revenues in their maintenance costs.

Jobs, while reducing unemployment generally, are not always good. Low quality jobs actually reduce the quality of life in the region. And that excludes the costs to the scenic landscape, traffic, destroyed local businesses, and much more. In states that rely more on manufacturing, high tech, tourist, or the service sector jobs and quality of life are much easier to maintain and improve. For every retail development that is built there needs to be an equivalent increase in overall quality of life for the area. Henry Ford made sure that everyone that worked for him could buy the products that they produced. Now it is not only an impossible but completely ridiculous notion that one can live a middle class existence by working in a mall (with the exception of the few managerial positions of course).

Demographically, the people that work there are only supplemental incomes to their respective households. They do not 'bring home the bacon'. Instead the workers tend to be housewives, teenagers, and others who do not pay the majority of the bills in a household. These jobs do not represent a qualitative gain in the area.

Similarly, for people who do have these low-skill, low wage jobs to pay the bills must often take on a second or even a third job to keep themselves above the poverty line. Often, even that is insufficient. Worse, these workers tend to live in areas of concentrated poverty, exacerbating class disparities in the region.

Washoe county suffers from a lack of competitiveness against other regions because of the low education of its population. This means that low-skill jobs tend to be the only industries attracted to the region. The job training programs are minimal in Washoe county, and there are very few high quality jobs attracted to the region. The incentive system instead favors the perpetuation of these low education industries and thus quality of life is steadily spiraling downward as other regions become more competitive by providing a better workforce instead of weakening standards for industries that don't give back to the community.

Obviously there is always a certain demand for retail; the massive consumption of land that outdoor malls like Summit Sierra use are not the only way to have a mall though. Good regional planning dictates a few things about developments like these. Let me briefly emphasize that what I am about to say is uncontroversial; every Regional Planner, politician, developer, and activist I have talked to has reiterated these details to me. Good regional planning states that by placing a new development in an identified growth node (an area that is ripe for growth with much, if not all, of the infrastructure in place) projects like Legends can greatly enhance the region. Secondly, it is important to look to making efficient use of the land. The more pedestrian friendly, the better the business. Third, integrating a mall into a mixed use type of zoning really integrates it into the community. If a new development creates jobs, residences, and recreation it can greatly reduce the cost on existing taxpayers and be seen as more a part of the community.

Politics tends to get in the way of these goals and Legends was no exception. Good regional planning is not just rhetoric, it must be practiced. The future of Washoe county is uncertain because development like Legends persists, and along with it our unsustainable land and water grabs.

Tomorrow: The regional plan, water wars, and the parking lot that will drown us all.