The opportunity costs of subsidizing Midmark’s move

by David Esrati on March 23, 2013

in Dayton's low self-esteem, Economic Development in Dayton OH, End corporate welfare

On Wednesday, I went to the city commission meeting to speak against handing over tax dollars to a private corporation. As usual, I was working with somewhat faulty information that I’d received from the “Dayton Daily news” in that the money was being approved by the City Commission, but was actually ED/GE funds which are from the County sales tax collections. Either way, it’s tax dollars collected to provide government services being taken from our pockets and put into the pockets of a private corporation. Here is the basics from the PR run in the DDN:

Midmark Corp. will relocate its corporate headquarters to Dayton by July.

The medical, dental and veterinary health care equipment provider said Thursday it has completed lease negotiations and will move the headquarters, to be renamed Midmark Center, to the 1700 South Patterson Building on the University of Dayton’s River Campus. The building once housed NCR Corp.’s headquarters….

Midmark received $100,000 in economic development funding from the city of Dayton to move the jobs. The estimated payroll of the employees moving to the city is $10.8 million, which will generate about $242,000 a year in taxes for the city, according to the agreement between the city and Midmark.

The new headquarters will take up more than 23,000 square feet on the fourth floor of the 1700 South Patterson Building.

via Midmark base coming to Dayton.

Originally, the city had hoped to put Midmark into one of the empty buildings they built via CityWide Development in “Tech Town”- another squander of tax dollars on subsidies of a few private businesses with money that should have been spent on providing best in class services to all citizens. That deal fell through- but UD stepped up, by offering even cheaper space in the NCR HQ building they got for a song when NCR bailed on Dayton. There are unanswered questions about how much UD pays in property taxes vs what NCR paid in property taxes on this property, but that’s something for a paid reporter to investigate.

There is the interesting sidebar to this story, that Midmark’s CEO & President Anne Eiting Klamar also serves on the UD Board of Trustees, making this yet another sweetheart insiders deal.

But before I share my speech, let’s take economics 101. Opportunity costs are the costs of actions not taken, now, and over time. While the five year payback in “income taxes” received sounds wonderful on the $100,000 “investment”- let’s look at the real costs that have already gone into that process.

We’ve paid a myriad of “economic development” people good money to go out and sell out city primarily by whoring tax incentives and deals, instead of selling on our inherent value that we offer. In turn, the money that we’ve wasted on them, and these deals (most of which had no real penalties or clawback provisions and many went far south of positive for the city) has cut our ability to pay for essential government services- like road paving, leaf collection, safety forces, parks and recreation programs, thus making Dayton a less attractive place to live and less safe of an investment- thereby sending a message that we’re a poverty riddled city, much like the ugly girl offering to pay and let a boy have his way with her so she can go to the prom.

Maybe, if we had invested the hundreds of millions we’ve squandered on these “ED” projects over the last 20 years, which benefited a few, at a cost to the many, NCR wouldn’t have left in the first place?

While Midmark may not have any direct competitors in the region, there is also the undemocratic aspect of giving to one company while not giving to their competition- since there are no open competitions for this money, with a guaranteed equal opportunity for all. Banks can’t lend to homeowners with out following the rules of equal opportunity, but our government seemingly gets to pick and choose who to favor. This should be illegal. It reeks of payola to friends and family and political donors much more than it creates wealth. We know that it doesn’t work, because we’ve been losing payroll and investment in the city for about the same amount of time as we’ve been practicing this voodoo juju in the name of good government.

Here is what I said. I was rudely interrupted by the Clerk of Commission as I was finishing up, because the City Commission isn’t really there to hear or respond to citizens at their “public meeting”- they are there to have the shortest possible meeting, so Nan Whaley can get back to her fund raising. For the record, Joey Williams and Dean Lovelace were not in attendance at the March  20, 2013 meeting where this was given:

People often say government would be improved if it was run like a business, but they never take the time to really discuss in depth what business the government should be in.

Apparently, now, the citizens of Dayton are in the medical cabinetry and furniture business- since our tax dollars are about to be invested in Midmark corporation. The payback is supposed to be increased employment and tax revenue for the city- and while that sounds just fine and dandy, it makes me wonder why we chose Midmark- over, well, anyone else?

You see, the tax dollars that are being handed over to Midmark, came out of the pockets of people who are working two jobs just to make their house payments. And their house, well, it’s worth less now because the house a few doors down went into foreclosure and is now occupied by a bunch of dope using thieves, who keep breaking the law and causing the police to visit, oh, 22 times a year on average.

Now those hard working residents, have to buy security cameras, replace the chainsaws that have been stolen out of their garage (twice) and they have to buy new bikes for their kids, a new lawnmower, you get the picture…

Why do hard working Daytonians pay taxes? To hire police officers to stop thieves? To pick up leaves or sweep streets? Apparently not. We pay taxes to invest in Midmark Corporation!

Not only are we spending money on this Midmark giveaway, we pay our hard earned money to hire a staff of “economic development specialists” who seem to believe that they are worth considerably more than a police officer on the street protecting citizens. What if we took those salaries and instead, made sure that Dayton was a safe place to live, where our investments in things like bicycles, lawnmowers, chainsaws were protected?

Maybe it would be easier to live in Dayton and take care of our property, and someone would want to live near us that didn’t engage in crime on a daily basis? Crimes against us.

You see, the criminals stealing my property, aren’t much different than what you are about to do- you are taking my hard earned tax dollar and handing it over to someone else- someone who may even be a business competitor of mine. You are also robbing me of additional police resources- the stuff that I thought my tax dollars were going to be used for.

This isn’t the first time the City has thought they were in a different business than providing services to their residents- I recall a recent initiative to bring a Kroger to the corner of Wayne and Wyoming. Millions of our tax dollars went to acquire options, and property for a grocery store that never came. Just imagine, instead of spending over a million dollars to own an empty lot, you’d spent it on doing the peoples business- police protection, I still might have my bicycle and my chainsaw and my lawnmower- and I wouldn’t be down here wasting my time trying to get the city to stop engaging in “economic development” and try doing the business of the city- which means making our neighborhoods safe and our city an affordable place to do business.

You could probably even cut your income tax rate- if you stopped doing “business” that isn’t any of your business, nor is it mine.

The way you help Midmark is by not getting distracted from what the business of Dayton is.

If you personally want to help Midmark- take your salaries to  the stockmarket and buy stock in Midmark- but that’s the only acceptable thing you should do for Midmark with my tax dollars.

After I sat down, Mayor Leitzell made the lame response, one that reeks of the weakness of vision of our City- “If we didn’t do it, someone else would.” He told me later, everyone on the commission doesn’t like these deals, but fears not doing it. Of course, if everyone else is doing crack, that’s no excuse to do it too, at least, that’s what my momma taught me (well, almost, since crack didn’t exist when my momma was teaching me the difference between right and wrong).

I have an audio recording that’s 7 minutes long, which starts part way into Mr. Down’s explanation that this is County money, and then my talk.

Play

 

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{ 6 comments… read them below or add one }

Gene March 23, 2013 at 10:59 am

Something is better than nothing, and I am not sure “oppurtunity costs” is an accurate way to forecast the future of Dayton. The system in attracting businesses is broke and until it is fixed no businesses will locate here unless there is money involvd. This deal should not have been done, but until there is a structure and system that allows true (and more fair) development, you can fantasize all you want about “what could have been.” There is no real future so the oppurtunity costs that you may want to place on this situation are really a “dream.” Get a real structure for development, not this patch work crap, then you can talk about oppurtunity costs. No company really wants to move to Dayton, and this is what they do to get them. Shitty, yes. But that is the way the world works. From where I sit this is a lack a real leadership, and I think it may be time to change formats for the city of Dayton (Mayor, City Commision, City Mangager, etc.)
DE, you can complain all you want, but leaf removal and more cops and “walk to work tax credits” and parks are areas that are improved once people and businesses actual locate and live in Dayton. A business person could give two shags about leaf removal and misc street repairs. The want to know rent structure and tax incentives. And Dayton is so depleted of decent housing that anyone relocating here would almost always choose to live in the suburbs, especially if they have children. Dayton is not the place to be, sorry.
Maybe Tom Cain and be mayor and do back room deals so there is development, and news stories worth reading.

Smackdown!. What do you think? Thumb up 6 Thumb down 4

David Esrati March 23, 2013 at 11:11 am

@Gene- I’d be more inclined to support tax breaks, grants- if the process was truly open- and available to everyone who applied- like Historic tax credits- or some other true measurable incentive program.

However, again- we shouldn’t have to pay companies to locate here – or anywhere. It should be illegal nationwide.

Brilliant or Bozo? Thumb up 0 Thumb down 2

Gene March 23, 2013 at 11:35 am

Tax breaks and grants are just as bad, and “available” to everyone who applied? I think that is a bit much. Everyone? The reality is it will never be “illegal.” Once we realize and accept this, how does Dayton compete with othere cities? Other cities “do it” and it will never be made illegal.
 
You can have a strong city government who strikes deals with the county and state and fed to get tax money, but again that does what? That process is competitive and open to abuse and back room deals as well.
 
Reduce all taxes on Businesses in the city, cut through the red tape, and Dayton will have companies locating here from all over the country. Try it for just one or two years and I will bet you a Soda I am right.
 
But then again rich people might make money and that certainly would not be fair – even if poor people made three or four times as much money.
 
 
 

Brilliant or Bozo? Thumb up 0 Thumb down 2

Ralph March 23, 2013 at 1:58 pm

Must disagree on issues involving development dollars, especially this one. That’s what this money is intended for.  These are executive positions with executive level salaries to tax not part time jobs that may or may not happen. As for comments on the commission not wanting to listen to citizens your dead on!  

Brilliant or Bozo? Thumb up 2 Thumb down 0

Gary Leitzell March 24, 2013 at 12:42 am

At least my ” lame” response was factual. I don’t recall commissioner Whaley or Joseph responding to your speech. You know my limitations and you know that under the current administration my ability to seek commission support is limited. Get yourself elected and we can do things to make this city soar! The people should know that you and I can agree to disagree but we agree to seek solutions that work. You know, I have had more conversations with you and David Greer in the last four years  than I have ever had with another member of the commission. Vote independent on May 7th because the independents can discuss things without adhering to a national agenda!

Well-loved. Brilliant: Thumb up 11 Thumb down 1

David Esrati March 24, 2013 at 11:09 am

@Gary- yes, your lame response was factual- and it was a response, which is what citizens should get when they take time to go to city hall.

Yes- in the last 3 years, we’ve talked a lot- and about meaningful change- some of it on this site. Other than Joe Lacey, you are the only elected official that takes part.

In case any of you don’t know- the magic number on the city commission is three votes- without them, you are extremely limited in what you can do. We’ve already seen how Matt Joseph and Nan Whaley think of their “service” as a way to enrich themselves- http://esrati.com/nans-having-a-party-for-her-friends-and-family-at-the-first-four/9665/

and that’s just for starters. Look at where Nan’s donations came from- look at her major pushes- see the connection.

It’s time to not have the best politicians money can buy running our city.

Brilliant or Bozo? Thumb up 5 Thumb down 2

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