Why small rural towns turn down economic development opportunities

Not every rural small town wants to add a meat processing plant:

Regional economic development officials thought it was the perfect spot for a chicken processing plant that would liven up the 400-person town with 1,100 jobs, more than it had ever seen. When plans leaked out, though, there was no celebration, only furious opposition that culminated in residents packing the fire hall to complain the roads couldn’t handle the truck traffic, the stench from the plant would be unbearable and immigrants and out-of-towners would flood the area, overwhelming schools and changing the town’s character…

The village board unanimously voted against the proposed $300 million plant, and two weeks later, the company said they’d take their plant — and money — elsewhere.

Deep-rooted, rural agricultural communities around the U.S. are seeking economic investments to keep from shedding residents, but those very places face trade-offs that increasing numbers of those who oppose meat processing plants say threaten to burden their way of life and bring in outsiders…

Nickerson fought against Georgia-based Lincoln Premium Poultry, which wanted to process 1.6 million chickens a week for warehouse chain Costco. It was a similar story in Turlock, California, which turned down a hog-processing plant last fall, and Port Arthur, Texas, where residents last week stopped a meat processing plant. There also were complaints this month about a huge hog processing plant planned in Mason City, Iowa, but the project has moved ahead…

The question of who would work the tough jobs was at the forefront of the debate, though many were adamant they aren’t anti-immigrant. Opposition leader Randy Ruppert even announced: “This is not about race. This is not about religion.”

On one hand, not all jobs are necessarily good jobs. On the other hand, there seem to be larger issues at play: who will get these jobs? What happens when all the workers – who may not share the background of the small town – show up? It would be intriguing to explore what changes to the processing plants would lead to support from community members: guarantees of local hires? Higher wages? No minorities hired?

It would also be worth tracking where these processing plants end up. What one community turns down may be seen as an economic savior in another area. For example, scholars have noted the rise of immigrant populations in American rural areas in recent decades including places like Iowa and Georgia which don’t have the traditional immigrant gateway big cities.

Ferguson doesn’t get much revenue from the Fortune 500 companies in town

Many suburban communities give tax breaks to corporations so that they locate in their community. Ferguson, Missouri is one such case where Emerson Electronics and other businesses don’t pay as much as they might in local taxes:

In 2014, the assessed valuation of real and personal property on Emerson’s entire 152-acre, seven-building campus was roughly $15 million. That value has gone up and down over the last five years as Emerson has sold off some buildings and built others, but it has not exceeded $15 million in the period since the data center was completed. So what happened to that brand-new $50 million dollar building?…

For tax purposes, Emerson’s Ferguson campus is appraised according to its “fair market value.” That means a $50 million dollar solar-powered data center is only worth what another firm would be willing to pay for it. “Our location in Ferguson affects the fair market value of the entire campus,” Polzin explained. By this reasoning, the condition of West Florissant Avenue explains the low valuation of the company’s headquarters.In fact, the opposite is true: The rock-bottom assessment value of the Ferguson campus helps ensure that West Florissant Avenue remains in its current condition, year after year. It severely limits the tax money Emerson contributes to the Ferguson-Florissant district’s struggling schools (Michael Brown graduated from nearby Normandy High School, a nearly 100 percent African American school that has been operating without state accreditation for the last two years), and to the government of St. Louis County more generally. On the 25 parcels Emerson owns all around St. Louis County, it pays the county $1.3m in property taxes. Ferguson itself receives far less. Even after a 2013 property tax increase (from $0.65 to the state-maximum $1 per $100 of assessed value), Ferguson received an estimated $68,000 in property taxes from the corporate headquarters that occupies 152 acres of its tax base—not even enough to pay the municipal judge and his clerk to hand out the fines and sign the arrest warrants.

St. Louis County doesn’t just assess Emerson a low market value. It then divides that number in three—so its final property value, for tax purposes, ends up being one third of its already low appraised value. In some states, Ferguson would be able to offset this write-down by raising its own percentage tax rate. Voters would even be able to decide which services needed the most help and raise property taxes for specific reasons. But Missouri sets a limit for such levies: $1 per $100 of property. As Joseph Pulitzer wrote of St. Louis during the first Gilded Age, “millions and millions of property in this city escape all taxation.”…

Emerson Electric isn’t the only business on Ferguson’s West Florissant Avenue. The street is also home to a number of big box stores including a Home Depot, a Walmart, and a Sam’s Club, located at the city’s northern limit. These companies all came to town in 1997 through something called tax increment financing—known (to the extent it’s known at all) by the acronym TIF. Along with low appraisals and tax abatements, TIF districts are one of Missouri’s principal tools for encouraging new development.

The conclusion here is that these tax policies reproduce the economic inequalities in Ferguson. Hence, the community has to find alternative sources of revenue, such as targeting motorists.

Here is where this gets trickier: if Ferguson didn’t offer these deals, could it have attracted these businesses? If many suburbs participate in the game of tax breaks, wouldn’t someone else offer good tax breaks? Where race matters here is that communities like Ferguson – lower income, transitioning from white to black over recent decades – have to offer even better tax breaks to compete. But, for all of these communities, it is a race to the bottom as a better deal to attract a corporation means less revenue for the city. Still, local politicians can sell the jobs created or the prestige generated. But, as this article points out, the jobs and prestige may not help much in the long run.

What you might need here is a metropolitan wide policy against such tax breaks or TIF districts to reduce the competition. Or, perhaps some tax revenue sharing program where sales tax and property tax dollars are partly redistributed to reflect who shops at or works at these facilities (they all don’t come from the community in which the firm is located). Yet, such policies require a lot of political will and again encounter the problem of race as communities, especially wealthier ones, will not want to share their revenues with others.

“Robber barons would have loved Facebook’s employee housing”

Facebook’s new campus includes more residential units. This leads one writer to compare the development to a company town:

Company towns of this era had a barely-hidden paternalistic agenda. Wealthy businessmen saw their workers as family, sort of, and they wanted to provide their wards with safe, modern housing. But many were strict fathers, dictating the minutiae of their grown employees’ lives, from picking the books in the library to restricting the availability of alcohol. It’s hard to imagine Facebook going that far, though the company does try to subtly influence its employees lives by offering such healthy freebies as on-site gyms, bike repair, and walking desks. It’s a strategy that mimics what happened with some later company towns, which employed paternalism to better the company, not just employees’ lives. “Company welfare was seen as an important strategy to promote company loyalty and peaceful relations,” Borges says.

Of course, Facebook isn’t exactly like the Pullmans, Hersheys, and Kohlers of olden times. For one, those were all built on what developers call greenfields, or land which hadn’t been previously developed for housing or commercial uses. Borges also points out that they didn’t have to deal with any existing municipal governments, either. Such greenfield freedom allowed industrialists to maintain a level of autonomy that would make even the most libertarian techies blush. Today, in Silicon Valley, there’s not much of undeveloped land left, so Facebook will have to renovate or demolish to accommodate its plans.

Those discrepancies means Facebook won’t be creating a company town from whole cloth, but slowly taking over the existing city of Menlo Park and re-envisioning it for their employees. The Facebook-backed Anton Menlo development, for example, will consist of 394 units when it opens next year. Just 15 of those are reportedly available for non-Facebook employees…

So maybe Facebookville is an arcology—a political one. What Facebook is building is both entirely similar and completely different from Pullman, Illinois, and its turn-of-the-last-century brethren. It’s a 21st century company town—built by slowly, occasionally unintentionally, taking over a public entity, and building a juggernaut of a private institution in its place.

As noted in an earlier post, this isn’t the first time the concern has been raised that Facebook employees or the company could wield political power over the official municipality in which it is located. Does it matter here if the company is perceived differently than previous company towns from manufacturers like Pullman? Does Facebook exploit its workers in the way that some thought manufacturers and robber baron era corporations exploited their workers? What if the tech employees of today don’t mind this arrangement? Perhaps the pricing on these units is a lot more reasonable than the rest of the Bay Area. In the end, are we sure that company towns are doomed to fail or that it represents an inappropriate mingling of corporate and civic interests? It is not as if Facebook or Google or other major corporations don’t have political power through other channels…

 

“We don’t lie to our search engine. We’re more intimate with it than with our friends, lovers, or family members.”

Wired has an interesting excerpt from a new book Data and Goliath:

One experiment from Stanford University examined the phone metadata of about 500 volunteers over several months. The personal nature of what the researchers could deduce from the metadata surprised even them, and the report is worth quoting:

Participant A communicated with multiple local neurology groups, a specialty pharmacy, a rare condition management service, and a hotline for a pharmaceutical used solely to treat relapsing multiple sclerosis…

That’s a multiple sclerosis sufferer, a heart attack victim, a semiautomatic weapons owner, a home marijuana grower, and someone who had an abortion, all from a single stream of metadata.

Web search data is another source of intimate information that can be used for surveillance. (You can argue whether this is data or metadata. The NSA claims it’s metadata because your search terms are embedded in the URLs.) We don’t lie to our search engine. We’re more intimate with it than with our friends, lovers, or family members. We always tell it exactly what we’re thinking about, in as clear words as possible.

The gist of the excerpt is that while people might be worried about the NSA, corporations know a lot about us: from who we have talked to, where we have been, who have interacted with through metadata and more personal information through search data. And perhaps the trick to all of this is that (1) we generally give up this data voluntarily online (2) because we perceive some benefits and (3) we can’t imagine life without all of this stuff (even though many important sites and social media barely existed a decade or two ago).

The reason I pulled the particular quote out for the headline is that it has some interesting implications: have we traded close social relationships for the intimacy of the Internet? We may not have to deal with so much ignorance – just Google everything now – but we don’t need to interact with people in the same ways.

Also, this highlights the need for tech companies to put a positive spin on all of their products and actions. “Trust us – we have your best interests at heart.” Yet, like most corporations, their best interests deal with money rather than solely helping people live better lives.

California doesn’t know what safety standards to adopt with driverless cars

Who should certify the safety of driverless cars? California is considering this question:

DMV officials say they won’t let the public get self-driving cars until someone can certify that they don’t pose an undue risk. The problem is that the technology remains so new there are no accepted standards to verify its safety. Absent standards, certifying safety would be like grading a test without an answer key.Broadly, the department has three options: It could follow the current U.S. system, in which manufacturers self-certify their vehicles; it could opt for a European system, in which independent companies verify safety; or the state could (implausibly) get into the testing business…

Manufacturers generally would prefer self-certification. That may be where California ends up, but for now the DMV is exploring independent certification — something that doesn’t exist for driverless cars.

In July, the DMV asked third-party testers whether they’d be interested in getting into the game. The department doesn’t have the expertise to create a safety standard and testing framework, so “the department wanted to get a very good sense of what is out there in the market,” according to Russia Chavis, a deputy secretary at the California State Transportation Agency, which oversees the DMV and requested a deeper exploration of third-party alternatives to self-certification.

 

I can’t imagine California or another US state allowing corporations to do this on their own. Perhaps it would be allowed if they agreed to provide generous payouts if their products failed? Yet, given the hubbub about Toyota and its stuck pedals as well as the Takata air bag scares, this is a public safety issue.

I wonder what the public would want. Americans like progress and like cars. But, there would be some fear regarding the safety of driverless cars until they have some sort of independent certification. And how would Google’s reputation these days affect perceptions of these cars?

Quick Review: Cubed

The book Cubedtackles what has become a ubiquitous space in today’s America: the white-collar office. Here are some thoughts about the book:

1. While the book might appear at first glance to be about office spaces, it is largely about the development and evolution of white-collar workers in the United States. This shift from farming and manufacturing in the late 1800s to office and clerical work was a profound shift in American society that affected everything from women in the workplace to educational aspirations to what it means to be middle class to what urban downtowns look like. It isn’t just about cubicles or desk chairs; it is about a shift toward knowledge workers increasingly laboring for big corporate America. It may seem normal now, but it is a remarkable shift over roughly 100 years.

2. While this shouldn’t be surprising given the field of architecture and design, it is still remarkable how much of office design was about trendy ideas and theories than on-the-ground information about what makes offices work. Thus, a history of American offices includes Taylorism, Le Corbusier, and Peter Drucker. Have a new idea about the intersection of work spaces and human interaction? If it is popular enough, it is likely going to going to be translated into office designs. Unfortunately, some of this theorizing comes at the expense of workers who were guinea pigs.

3. The book does well to include plenty of sociology, particularly picking up after World War II as sociologists like C. Wright Mills noticed the big shifts in society. At the same time, it strikes me that there isn’t enough well-known sociology about office life and American businesses more broadly. This may change in the near future with more economic and organizational sociology but it seems like a missed opportunity in the past from a field that focused on other topics.

4. This is the sort of book that would benefit from more pictures and architectural plans. There are some scattered throughout the book but I could easily imagine a coffee table companion book with rich photos and designs of iconic office arrangements. It can be hard at times to visualize the major patterns.

All in all, the book is a nice overview of American offices in the last 100+ years. There are numerous places where this book could have ballooned to many more pages but it doesn’t feel like the author is painting with too broad of strokes. Indeed, if we want to understand America in 2014, perhaps we should look less to Washington, glittering skylines, and the entertainment industry but rather examine what millions of Americans experience regularly in their offices.

Fighting to protect Chicago’s parks from mini-banks, tea stores, and the Lucas Museum

Curbed Chicago sets up the likely coming battle over using public space for the Lucas Museum:

Since late Spring, a small “pop-up bank” operated by PNC Bank has sat in Grant Park. It’s a bright orange and blue shipping container with doors and windows and an ATM. The park district earns $120,000 annually from the small structure, but many folks are not happy with its location in the park. DNAInfo has reports of numerous complaints about the very idea of a bank opening “It seems to go against the nature of the park itself,” a citizen tells DNAInfo.

The Park District is okay with it, obviously, in part because of the payola but also because, according to them, it’s not a permanent structure. In their mind, it’s a temporary vendor like you might find several dozen of in the park during Taste of Chicago. But is it the same? And where are the limits? What if Starbucks wants to open a mini-cafe right next to the PNC to capture the millions of visitors Grant Park will receive this summer? Why wouldn’t they?…

And consider Connors Park, to the north of downtown a few blocks from John Hancock tower. The squat little park is now home to an Argo Tea pavilion which just celebrated its one year anniversary of the location. Initially there was confusion about whether the park was still a park, and if it was okay to sit and enjoy the park without buying a tea. At a celebration for the one year anniversary, staff told us that with recent changes to the signage that confusion has dissipated and that neighbors know they’re welcome…

But the fact that these two issues are even issues at all speaks to the city’s constant vigilance against abuse of the parks, and it explains why despite being a seeming “slam dunk,” the Soldier Field parking lot location chosen for the Lucas Museum won’t come without a fight. This isn’t a quarter-block tea house or a 160 square-foot mini-bank, it’s a massive, multi-million-dollar development that has already captured the attention of the nation. As Chicagoist puts it, The Debate Over The Lucas Museum Has Only Started.

There are two levels to this:

1. What seems like an increased interest in many cities in ensuring that public spaces stay public. What can happen in these parks? Is there enough public space as opposed to private space masquerading as public space?

2. The special circumstances in Chicago that suggest the land near the lake needs to remain for public use. All sorts of ideas can pop up for a lakefront – I was reminded again recently about the older Mayor Daley’s suggestion that Chicago should build a major airport out in Lake Michigan – so having these guidelines has been a big boon. Yet, it is hard for a city that is chasing elite status (perhaps due to its own insecurity) to turn down a figure like George Lucas in such a location. Additionally, such a battle could give opponents of Rahm Emanuel an excuse to pick a battle.

Maybe all this represents one of the major trade-offs in today’s world: just how much do want corporate interests or the interests of powerful people overrule the rights of others? Constructing a museum like this isn’t the end of the world for Chicago but it may seem like another event in a long line of concessions to growth machines.