Friday, May 11, 2012

The Impact of Economic Impacts



People, get off the ledge - it's going to be OK!  That is what I wanted to scream at the masses who outwardly loathed the findings of the Economic Impact Study Indiana performed on its portion of the Ohio River Bridges Project.  The fact that only 12,000 jobs were projected to be created over a 30 year period and that many of the original impact would last only through construction had people worried about the sky falling and wondering if we should even build anything?  Hell, at this rate we could have had the ONE GUY who has been re-decking the Big 4 Bridge into a walking connector build both bridges AND re-configure spaghetti junction all during his lunch hour during the time it has taken us (some 50+ years) to debate these bridges.

Lets get something straight: Economic impact studies should not be considered the end-all-be-all for decisions regarding community planning and development for the simple fact that despite their headline-grabbing star power, they are inherently flawed and incredibly inconsistent.  I recently completed an impact study for the Kentucky Derby Festival as they were trying to find a way to numerically prove their worth to the local powers that be, and in the pre-study research I discovered at least four separate methodologies for how to effectively perform the research (ultimately we settled on doing what closest resembled past efforts for the KDF in order to obtain results that had a consistent background).  And apparently sample size is not an issue for some of these big firms that are collecting huge fees to conduct this supposedly "scientific" work.  The most recent study was based upon 110 total responses for a project that impacts an entire state.  Our work for the KDF included nearly 800 responses in review of a project that impacts just a single city - how does that make sense?  Furthermore, some so-called experts say that the only dollars that should be counted as part of the impact are those that are brought in from out of town, while others insist that anything spent in regards to the subject matter should be included in the total as those dollars could either not be spent at all or be sent elsewhere.  And beyond that there are huge questions about the multiplier effects really should be considered, it's just not a cookie-cutter thing here.

All of this is to say that, while economic impact studies are important and do serve a purpose, they should only be considered with a grain of salt, and should never be the full-on basis for a decision.  In the case of the ORBP I think the facts speak for themselves.  In the 1960's cities like Atlanta, St. Louis, Cincinnati, Indianapolis, and Nashville began building massive transit-infrastructure projects to increase traffic flow and prepare for future growth.  Louisville sat on its hands, and continues to do so as the old-money powers that be conjure up diversion after diversion to postpone and even threaten the projects existence.  In 1992 the city took a very public, very controversial vote on the issue and it was defeated by a slim margin.  At that time it was proclaimed that an East-End Bridge would never happen.  Well people understand this - IT IS HAPPENING, and if you want your city to grow and prosper and attract world-renown companies to staff jobs and wealth into this city IT MUST HAPPEN.  If Louisville is considered The Possibility City please understand that there are only two outcomes available:  It's either going to be Possible for Louisville to climb into the 21st century as a leader of the midwest and the preeminent neo-American city; or it's Possible that Louisville will shrivel into oblivion as UPS and Humana leave the city for greener pastures where greater economies of scale are available because of closer vendor relationships and improved infrastructure.

If you continue to cry wolf and continue to play scared then the latter will happen and it won't be pretty (see Cleveland).  And that will be the true impact of these so-called economic impact studies.  

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