Bundling of Public Projects Masks Accountability of Public Finance

By: Joe J. Wallace

Bundling is a commercial tactic that has been perfected by software companies such as Microsoft to sell products and features that are not necessarily things that people would actually choose on an individual basis. Bundling increases prices and provides marginal if any value to consumers but it does increase the profits of the companies that engage in the practice while enriching their shareholders.

It has often been asserted that effective government works in countercyclical ways to the commercial sector. In the case of bundling this seems to be true when it comes to government. Government at all levels has taken the seminar on bundling from the “Bill Gates Academy of Bundling” and has used this practice to daze and confuse the electorate in an expensive game that does not enrich the shareholders of government the way that the shareholders of Microsoft are enriched by bundling products. The recently maligned practice of earmarking and the long term practice of pork barreling are nothing but government bundling. In the case of government bundling, the citizens of this country are continually extorted into borrowing money to buy things they need that are not available unless they agree to buy a bunch of programs or projects that have minimal value or benefit a small select group of self serving elected officials.

Why is it that we are always presented with legislation that essentially says “you can have that highway that you need, but only if you buy a bridge to nowhere, a boatload of $100 hammers, and endow a museum dedicated to buggy whips in the small town where a Senator grew up”? Why do we as citizens tolerate this destructive form of bundling? Maybe it is because in exchange for buying all of the junk associated with a good project that we get to hire someone to watch the grass grow in our little hometown too. Maybe we like the pork from the public barrel or are confused by the complexity of the legislation that we just give up.

There have been two bundled projects floated in Evansville during 2010 that have essentially been ridiculed out of consideration for the cost and lack of practicality that were exposed by the City County Observer and most other local media outlets. Evansville’ bundling projects are of course the Roberts Stadium Ballfields and the recently proposed $2M bond issue.

The Roberts Stadium Ballfields proposal by the Evansville Convention and Visitors Bureau was essentially a project where the City of Evansville told the ECVB, “We will let you build 8 ball fields if you tear down Roberts Stadium, repair some things in Wesselman Park, and make some infrastructure improvements for the City”. That one for the price of three deal was called out by the media and rejected by the people that lived in the Roberts Stadium neighborhood. It is quite clear that bundling is what raised the price of a ball field to $2 Million in Evansville and it is also clear that this attempt at bundling is what ultimately led to the postponement or rejection of the entire project. This bundling was also a powerful issue in the 2010 elections.

Bundling was recently attempted in a proposed $2 Million bond issue. This time needed parking garage repairs were piled on with three Front Door Pride houses, and a refinancing of some existing debt. This attempt to bundle projects has already had the negative effect of deferring already deferred maintenance that really is needed to make the Downtown Evansville parking garages Arena worthy.

Why were the parking garages and Front Door Pride bundled together with a third refinancing deal? These are separate issues and should have separate financing. Bundling confuses the public and obscures the eventual accountability. Why were repairs to parking garages not included in the budget for the Evansville Arena? The parking garages stand to see a revenue increase when the Arena opens so let the Arena pay for their repairs. Do the garages really only need $500,000 to make them new again or is this another minimally thought through band aid approach to a much bigger need? One thing is for sure and that is that bundling confused the issue to the point that the City Council was not convinced that the proposed financing was the right thing to do. The City of Evansville is now “back to the drawing board” on how to finance the parking garage repairs.

As a customer of the downtown parking garages I can attest to the need for both maintenance and upgrades. My expectation is that to get the City of Evansville garages into Arena worthy condition will be more than a $500,000 proposition but for purposes of the following proposed financing solution I will assume that the powers that be have their planning in order and the list of repairs and upgrades are all that are really needed.

My proposed solution is to charge $5 to park in the City of Evansville garages for Arena Events. Then pledge the incremental revenue for the first 120,000 arena related parking fees to pay off these repairs as collateral for a loan to fix them up. Assuming the attendance numbers that have been predicted the payoff time will be less than 100 events or about 8 months.
This plan would get the garages fixed before the Arena opens, offer an investor 20% return on the $500,000 and avoid adding to the long term debt of the City of Evansville. It also stops the bundling trick before it expands.

Think about it, here is a solution that is cheap, easy, and meets the current needs. What is keeping the City of Evansville from going forward with a common sense solution that meets their stated needs for getting the parking garages into Arena worthy condition?