These questions normally were not a big concern to most, since such business decisions were carefully calculated by profit-oriented businessmen and their financial backers. Before large sums of money – known in financial circles as “capital” – were invested, a lot of deep thinking was done to insure their money made a return. Hence, high-risk investing was minimal.
A major change in the business world has occurred over the last 30 years or so, as state and local governments have entered into the “redevelopment” business. Rather than the business decisions being made by hard-headed, profit-motivated capitalists, elected officials — politicians — started using tax dollars and the good faith and credit of their city/county/state to attract and even finance various businesses to stimulate business, generally in older and often “blighted” areas.
This is a slippery slope; government is not exactly well known for fiscal prudence and wise capital investment. In the absence of the “profit motive” and with re-election prospects always in the back of their minds, wise financial decision-making was not paramount.
Here in Sparks, the City has diverted taxes for over 30 years into various redevelopment projects. The total is well over $100 million, most spent on rejuvenating Victorian Avenue (B Street to us older Sparks folks). This has been partially successful, yet the city failed to attract the much coveted “anchor store” to create a self-sustaining business boom.
The City has shifted its hopes and dreams eastward, and areas near the Sparks Marina and the now-gone Sparks Outlet Mall has become the new focus. The “mall” was a miserable failure and the City acquired the property and then sold off one of its choice assets, the Don Mello Sports Complex, to make way for its new dream, the Legends project. Scheels All-Sports is the anchor store and a huge new shopping/recreation mall is on the drawing boards, built right on top of the now-plowed-under Mello Complex and Sparks Outlet Mall.
Fine and dandy, though I deeply resent the City’s short-sighted decision to sell off a park given for free by the very generous Robert Helms for the children of Sparks “in perpetuity.” The real issue is how the City — and hence you, the taxpayer — are on the hook to finance the Legends project.
The City has entered into a series of financial arrangements with RED Development to basically underwrite the project. In a nutshell, Sparks is a co-signer on the loan documents and if the project succeeds, no problem. But if the market is, as I am worried about, reaching a point of over-saturation, RED Development can skip town leaving the City in one big financial mess.
Which brings me back to my original point. How much “consumer spending” will the future hold? Currently, we have had an artificially stimulated economy based — exactly like the recently popped housing bubble — on excessively high levels of credit. Credit cards have been generously doled out and credit card “spending” (borrowing really) has everyone in debt up to their eyeballs.
Nevada leads the nation, with average credit card debt here in the $20,000-$30,000 range per household.
I see high vacancy rates in already built new shopping centers, such as Sparks Crossing on Pyramid Highway. If such privately financed projects are struggling, how many more can the local market absorb? If Legends is being built using spending patterns of the last decade for future revenue projections, what happens if the credit card financial binge behaves like the housing market has? Kind of scary to consider; I hope for the taxpayer’s sake someone at city hall is paying serious attention to someone other than their old friend, Rosy Scenario.
Ira Hansen is a lifelong resident of Sparks, owner of Ira Hansen and Sons Plumbing and his radio talk show can be heard Monday through Friday from 3 to 6 p.m. on 99.1 FM.