Elk Grove City Council to Open the Spigot Once Again - Follow The Money...If You Can?



By An Elk Grove Taxpayer and Registered Voter | January 26, 2016 |

This is in response to the EGN article "Elk Grove to Consider $81,000 Incentive for Prison Health Authority" posted earlier today (see above). 

Shedding for a moment the likely typecasting of any skeptic who questions these gifts as being anti-economic development, I truly wonder whether any of those aforementioned Elk Grove public sector deals could pass the muster of most private sector corporate Board of Directors? My conclusion is no. 

I recall during the hearings of 2011, the City Council was practically falling out of their chairs over the prospects that $3.3 million to essentially cannibalize 1,500 state jobs from other areas of the regions was the godsend that they had been striving for since cityhood. The reduced commuter traffic on Highway 99 and added sales tax from employees buying stuff in Elk Grove was just too hard to resist. I recall one Council member even implying that employees would purchase new vehicles during their lunch break!

The private sector analyzes any potential "investment" in terms of the "Return on Investment" (ROI). Measuring such deals is vital to determine how much will be spent, how much will be returned, and how long will it take. Once again, the current City Council staff report is heavy on describing the cash outlay, but light on the investment return side of the equation. And in fact, you could argue that while the original 2011 report attempted a feeble analysis of sales tax generation, the current report sidesteps that whole issue altogether. 

Want to know why the recent incentives are light on the ROI analysis? Because unless you pay each employee in "marked bills", it is impossible to determine whether the incentive has, or will ever pay off, especially since the occupancy is based on leases with early termination clauses. The City Council staff report accurately describes the original incentive of $3.3 million as equating to $1,266 spent per job. How has that investment paid off so far? Not mentioned.

With respect to the $3.3 million in past outlays, the new request for $81,000 would almost seem like chump change. However, the private sector CEO would treat every dollar the same regardless of the total package cost. In this latest case, the staff report doesn't even pretend to talk about return on this investment--it can't be quantified. So, are we left to just give a nod and let the deal grow into the gift that never stops giving?

Is it unreasonable to question why the Prison Health could not pay for its own sheet rock and 64 desks, or even ask Pappas, the landlord who stands to gain millions in lease payments, to extend the incentive out of his pocket? Once again, the deep pockets of the taxpayers are here to make a deal that would make Monty Hall proud.

 In San Antonio they say Remember the Alamo? In Elk Grove, Remember the Ice Rink? I'm afraid Elk Grove has become an easy mark, and if not for reasons of principle, can't we just take a pass on this one? 



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4 comments

Anonymous said...

At the last city council meeting I thought that spigot had slowed to a drip and Laguna Ridge got hit with a biggie. But low and behold, suddenly they found $81,000 laying on a shelf and couldn't wait to spend in on some state project. Wondering how they're going to explain that to those Laguna Ridge people....what, the states more needy? The Governor just said the state was loaded.

Anonymous said...

Just a small business owner here in EG that needs to expand by adding some more work space and 5-6 employees. My needs are small compared to the state, just need $5 - $6 thousand. Where exactly does this line form at city hall tonight?

Anonymous said...

.


$81,000 is small change compared to the $50 million that they want to spend on the Civic Center including the Olympic Caliber Mega Water Park project.

Connie said...

To Anon at 7:48:

We, meaning our community group, submitted a small business incentive program to the Elk Grove City Council and staff for consideration. After the success of the auto mall gift card program we proposed and was passed by the Council, we were looking for ways to help our small businesses.

While the program was altered in its final submission for approval, the city does have a small business loan program.

http://www.elkgrovecity.org/city_hall/departments_divisions/economic_development/incentive_programs/small_business_loan_program/

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