Responses to Rezoning Application

In this section, we'll discuss issues and concerns with the rezoning application documents themselves. The application documents can be found here: www.chesterfield.gov/megasite

Mangum Economic & Fiscal Contribution Report – Initial Analysis by J. Ranson – April 2018 -- Download here

Incomplete information is worse than no information at all.

“A bad economist confines himself to the visible effect; a good one considers both the effects seen and the effects that must be foreseen.” Bastiat

Cover Page is dated March 2017 (Inspires confidence already!)

Some questions and issues not addressed within the report:

• What economic activities would occur otherwise? For example, construction absorbs resources from other economic activities. These losses are not considered within Mangum’s analysis.
• Law of diminishing returns not considered – each dollar contributes same return for indefinite period of time in this model.
• Induced benefits (worker spending in the economy) - where will this employee income be spent? It is unknown how much IMPLAN calculated to be spent within the county.
• Multiplier used is unknown (requested of Dr. Mangum on 4/14 & denied)
  • Without knowing what multiplier was used, we have no idea if net benefits are under- or over-estimated.
  • Use of the automaker multiplier (considered one of the highest) would over-estimate benefits should any other industry come instead. Based on report footnotes, we must assume this extremely high multiplier was used.
• No accounting for potential negative effects such as:
  • Reduced quality of life for residents (noise, traffic, pollution)
  • Reduced home values near megasite
  • Fiscal and health costs from traffic and manufacturing pollution and/or accidental pollution cleanup
  • Because these potential negative effects are ignored, this analysis does not reflect realistic potential net benefits

Myth of the Multiplier Effect:

• Money spent by government is less money for the citizen to spend, invest, save.
• In Keynesian effect, government involvement to increase demand increases output by a multiple, i.e., something is created out of nothing.

Alternative 4: Residential Project with ~5,000 homes

• Where are cash proffers calculated? (Table 7, Page 15) (requested of Dr. Mangum on 4/14 and denied)
  • Based on conversations with County staff, cash proffer income is NOT calculated in the fiscal analysis
• Missing the economic impact of home construction-related economic activity (included for manufacturing alternatives 1-3)
• Missing annual operational impact of schools – jobs created, labor income
• County already projects continued population growth; the population increase and related increase in county services costs calculated by Mangum will be incurred anyway.
• Unknown how multiplier effect was applied to home construction jobs, other construction-related fiscal impact, job growth in county services , and family spending, for example.

Alternatives 1, 2, and 3 – Automobile Manufacturing

• Assumptions are fixed in time and extremely unrealistic. Facility will employ 2,000, 3,000, or 4,000 workers on day one?
  • Study includes no realistic scenarios about facility construction, production start and ramp-up timing, and possible layoffs that occur in most business cycles.
• Inconsistent with facility detail provided in Alternative 4 (Residential) – cost of water tower, wastewater pump, and industrial-fitted fire station are not itemized costs (though infrastructure were itemized for Alternative 4).
• All costs and incentives detail for manufacturing scenarios is missing (requested of Dr. Mangum on 4/14 and denied) Page 16 Footnote Quote:” ³⁰ For Scenarios 1 through 3, estimated capital costs and incentives are based on available data and previous experience.” (data requested of Dr. Mangum on 4/14 and denied)

Regarding missing data and unknown assumptions, I made multiple FOIA requests of the county for this information to no avail. Upon my initial request, I was told it would cost me $648 to procure that information. Hence, I reached out to Dr. Mangum and was also denied.

Without some additional transparency about the data and the embedded assumptions, this report is quite useless, to be blunt, and its projections should be met with serious misgivings.