Why City Governments Fail

Member Group : Salena Zito

HARRISBURG – A cheery but worn yellow sign announces that "Paxton Commons Retail Complex" is in the works along North Cameron Street in the state capital.
The sign, trumpeting "Another Enterprise Community Project," leads a casual observer to conclude that big plans are in the near future for the 100-year-old structure.

A closer look reveals that this particular "enterprise" dates to the 1990s. In fact, President Bill Clinton’s and Vice President Al Gore’s names proudly appear across the bottom of the sign.

The Inez Building was one of Clinton’s "empowerment zone" projects, created to stimulate activity on blighted city blocks.

Unfortunately, the money went to mostly Democrat-run city treasuries, and the projects often became victims of the usual antics of machine politics: Oversight boards took years to get off the ground and even longer to produce results; recipients of the funding or the tax breaks tended to be fundraisers or cronies of local elected officials; sometimes the funded projects just sat there, as this one apparently did.

Who knows where the money went? Harrisburg – which is "distressed," under a state law known as Act 47, because of its soaring debt and mismanagement – still owns the boarded-up building, but the city department in charge of the decades-old project did not return a phone call seeking answers.

Next door, you find a completely different story.

Appalachian Brewing Company has been flourishing and growing since it moved into the Inez Building’s equally blighted neighbor in 1997. Company partners Artie Tafoya, Jack Sproch and Shawn Gallagher bought the vacant, fire-damaged building from the city for $1, undertook a complete renovation, and built a business that has expanded to six facilities and is bursting at the seams of its original location.

They sure would like to buy their beat-up neighbor to expand the flagship operation, said Tafoya, the brewery’s director of operations. It’s a plan they’ve been trying to pursue for nearly ten years.

Part of the problem is that city officials want to recoup the original amount they paid for the Inez Building. That figure would make an expansion project financially unfeasible for the brewing company (and probably for anyone else who might want to buy the building) because of numerous structural issues; the roof collapsed more than 40 years ago, the last time a business was located there, and heavily damaged the interior.

A quick calculation shows that the city, county and school district have missed out on $166,144 in taxes since 1997 because of the building standing vacant. In the same period, Appalachian Brewery has generated more than $700,000 in taxes and employs more than 80 people who live, spend money and pay taxes in the city.

In October 1906, President Teddy Roosevelt rode past the Inez Building on his way to dedicate the new state capitol. News reports of that day tell of people standing here five deep to cheer on the young president who began his political career as a New York state assemblyman who championed the citizenry against corrupt, lazy, machine-run local government.

"We need to check the forces of greed … to prevent any man from doing wrong," Roosevelt said about the danger of ignoring local governments’ misdeeds, in a speech delivered on the capitol stairs. Each citizen should be a check on government large and small, he added.

The story of the Inez Building can happen anywhere in America – and more than likely does – when local officials are sloppy or corrupt, allowing cities and towns to acquire disabling debt.

How, then, can we expect the bigger decision-makers at the state or federal levels to perform any better?

As Roosevelt said, we as individuals must keep these officials in check. If not, then 20 years from now you might be jolted by a beat-up, left-over sign in your neighborhood promoting the American Recovery Act, "Putting America Back to Work."

The best that Washington’s latest recovery program did was to put part-time folks to work, and the worst it did was to dump millions of taxpayer dollars into non-job-creating "shovel-ready" projects – which explains why, four years later, millions of Americans still have not returned to the workforce.

Salena Zito