Critics Blast Study on Bull Street Project
Editor’s Note: The following story is the second in a two-part series on development issues in Columbia. The first story was published on Thursday.
Critics aren’t mincing words about a study projecting a more than $1 billion impact with the planned redevelopment of the state mental health campus on Bull Street in downtown Columbia.
They say it’s a better piece of fiction than Harry Potter. They say it has more holes than Mark Sanford’s backyard. They say its pages bleed so badly it needs a tourniquet.
Supporters of the project say the development will change downtown forever and has the potential to transform the city unlike any project since the Congaree Vista. They say putting such a huge percentage of downtown real estate – approximately 180 acres – back on the tax rolls will have benefits that far outweigh a proposed publicly funded investment of at least $31.25 million.
Critics hope so. They just don’t believe the assessment used to tout the idea is sound; they don’t believe the city has the money to commit in the first place; and they don’t believe the numbers, in the long run, add up for anyone but the developer – and certainly not the taxpayer.
Officially titled “The Economic Impact of the Transformation of the Bull Street Property,” the report by Columbia-based Miley & Associates Inc. was paid for by the Greater Columbia Chamber of Commerce. It paints a rosy picture of a potential economic boom that to critics appears almost too good to be true, projecting a hefty $1.2 billion impact over the 20-plus-year life of the proposed build-out of thousands of news homes, stores and offices.
Former S.C. Secretary of Commerce Joe Taylor doesn’t buy the study’s findings.
“The first thing to understand about reports like this is that they say what the people who pay for them want them to say,” Taylor told The Nerve. “They’re mostly works of economic fiction versus actual fact.”
Taylor points to Texas A&M tourism professor John L. Crompton’s article in the August 2006 Journal of Travel Research for a primer on common errors in such reports. The article focuses on the 10 most egregious errors: including local residents; inappropriate aggregation; inclusion of time-switchers (people who had been planning to move already, not because the development was built) and casuals (visitors already in the community); abuse of multipliers; ignoring costs borne by the local community; ignoring opportunity costs; ignoring displacement costs; expanding the project scope; exaggerating visitation numbers; and inclusion of consumer surplus.
“You go down that list, and the Miley report violates almost every one of those,” Taylor told The Nerve. “In the world of economic development, even on small projects, you hire a team of experts to fine-tooth-comb every aspect of a deal with realistic projections before you make a decision.”
“With this thing,” Taylor continued, “it’s pie-in-the-sky stuff that was sold on the quick to people. It’s fantasy land, and it refuses to take into consideration the most important questions, like what’s the cost, how is it going to be paid for, and what’s the burden going to be on taxpayers?
“None of that is in there. The same guy (Harry Miley, founder of Miley & Associates) did the same thing for the (Richland County) penny-sales tax folks, and it’s the same shell game in this that was in that. You put those two forecasts together, and you’re projecting a growth rate over the next 10 years that makes the Chinese economy look sluggish.”
A Miley & Associates study projected 9,000 jobs and a $1 billion impact with the proposed Williams Street expansion, and 1,300 jobs and a $900 million impact with planned development on Shop Road. Combined with the $1.2 billion impact estimated for the planned Bull Street project, the total estimated benefit comes to $3.1 billion.
“Three billion dollars (is) supposed to be realistic for Columbia, South Carolina?” Taylor said. “And all of this amazing development is supposed to be happening in all these different areas of town at the same time?”
One major flaw of the report, Taylor contends, is that it assumes all development will be imported to the region.
“For example, a person who goes and buys groceries at a grocery store on Bull Street, if Bull Street weren’t there, he’d go buy groceries somewhere else,” Taylor said. “That’s not new money; it’s a shifting of existing money. It also counts the relocation of a doctor’s office from one location in town to Bull Street as new development, which it isn’t. Same with people moving into residential units. It treats them as if they’re all new to town, which obviously they won’t be.”
It’s precisely the costs associated with residential issues that concern former City Council member and current S.C. Rep. Kirkman Finlay, R-Richland. The plan calls for 3,558 residential units, “including apartment/condominium units, townhomes and single-family homes,” the Miley report states.
“For every man, woman and child they project living there, for police, water and fire and trash pickup you’re talking between $600 and $700 a person per year,” Finlay, who served on council from 2006-2010 before running unsuccessfully for mayor against Steve Benjamin in 2010, said when contacted by The Nerve. “You’re talking about an additional $2.2 million.
“And since this is being paid for with a TIF (tax increment financing bond), you don’t have property taxes to pay for these services because that money is going to pay the bond. Where are you going to get the money? There’s no answer to that that doesn’t greatly imperil the general fund.”
Another flaw in the Miley study, Taylor contends, is that it projects average wages that seem excessively high. The report claims the construction phase of the project will produce 760 direct jobs with an average annual wage of $47,500.
A review of the most recently available quarterly census of employment and wages by the U.S. Bureau of Labor Statistics shows that the average annual wages for construction workers in Richland County in 2011 was $44,152 and $41,008 for all private-sector jobs. Statewide, those numbers in 2011 were $41,959 and $37,734, respectively.
The latest Miley report is silent on why its numbers outpace both Richland County and the rest of South Carolina, which troubles Daniel Rickenmann, who served on City Council from 2004-2012.
“Unless Microsoft is coming in there, there’s no way those numbers make sense,” Rickenmann told The Nerve. “Or if there are several high-wage jobs that aren’t listed for certain individuals, that would skew the numbers up. Otherwise, there is no reason to assume those jobs will pay what they’re projecting, which of course is just another place in the study to artificially inflate the impact while ignoring the costs.”
Should the project produce 760 jobs with an average wage of $47,500, the total wages generated would be $36 million. Those numbers would represent 12.5 percent of all construction individuals employed in 2011 and 13.5 percent of all construction wages in Richland County for 2011, according to data from the Bureau of Labor Statistics.
Additionally, the projected $1.2 billion in total economic output would represent 4.8 percent of all private economic output in the six-county Columbia metropolitan region (Calhoun, Fairfield, Kershaw, Lexington, Richland and Saluda counties), according to data from the U.S. Bureau of Economic Analysis.
Such percentages simply are too great to believe and too large to absorb or sustain, Finlay says.
“Where we see successful economic development right now is in the private sector,” Finlay said. “Look at Whole Foods, look at redevelopment of Trenholm Plaza. All of those are redevelopments that occurred with private money, not public.”
“I don’t think the city can pay for it without hitting the taxpayers hard,” Finlay continued. “I understand that development, by nature, has to be optimistic. But you’re investing an awful lot of money, and you’re doing it based on unrealistic expectations.”
Efforts Thursday by The Nerve to reach Miley were unsuccessful. The firm describes itself on its website as “one of the Southeast’s leading economic and financial consulting firms.”
“The firm specializes in economic impact analyses, fiscal impact analyses, feasibility reports, impact fee studies and benefit/cost modeling,” according to the site. “Our clients include national and major local real estate developers, school districts, local governments, regional development agencies, and other private sector development firms.”
The Nerve in 2010 reported about another Miley study that touted the benefits of taxpayer-funded incentives for aerospace giant Boeing’s assembly plant in North Charleston.
Contacted recently by The Nerve, Mayor Benjamin said while he appreciates the views of critics of the latest Miley report on the planned Bull Street project, he has a simple message for them.
“That ship has sailed,” Benjamin said.
Reach Aiken at (803) 200-8809 or email him at email@example.com. Follow him on Twitter @RonAiken. Follow The Nerve on Facebook and Twitter @thenervesc.