People’s Alliance Economic Justice Committee Report on Jordan Lake Development

The Economic Justice Committee of the Durham People’s Alliance has researched the supposed economic benefits of the 751 Assemblage, the proposed mixed-used development in southern Durham County. Its proximity to - and environmental impact upon - Jordan Lake and the region's drinking water supply is reason enough to halt this project, but the PA Economic Justice team debunks the economic benefits that the developers are touting.

The core question over the past year has been whether to approve the developer’s application to redraw the critical watershed area in order to permit a dense development on this property.  Logically, this should be a question of whether the UDO permits this, what precedent it sets for the rest of our drinking water reservoirs, and how this fits with our long-term water planning.

But let’s face it – the real discussion has centered on the promise that county residents will get jobs and grow our tax base if only we’ll move that watershed boundary.  With that in mind, the People’s Alliance Economic Justice Committee, co-chaired by Carl Rist of the Corporation for Enterprise Development, gathered a team of economists and other individuals with experience in this area, to give a close look at that promise.  Mr. Rist, for example, is an expert on business climate issues and is a co-author of CFED's widely acclaimed 1994 report, Bidding for Business: Are Cities and States Selling Themselves Short?

The team finds that the developer’s economic projections have some big holes.

  • The developer expects to directly employ 2,400 people in construction jobs over the 10 year buildout period, paying $110 million.  But these aren’t jobs that last 10 years – each trade comes for a little while, does its part, and is finished.  The mean wage for a construction job in Durham County is $33,520.  At that rate, each of these jobs lasts just over a year, or the developer is counting each job that lasts more than a year as two jobs.

  • This kind of double counting shows up again and again in the developer’s economic projections.  They assume that their project won’t take business from downtown or other parts of the county.  Unless there is some pent up demand for office/retail/residential space, we must expect the 751 development will compete with downtown revitalization efforts.

  • For example, the developer projects that it will create almost 3,000 all-new jobs.  If 3000 people dropped out of the sky and started working for businesses that also appeared from thin air this might be the case. In reality, some of the jobs will go to people who now work downtown or other parts of Durham.

  • The developer also double-counts when they project new consumer spending in the shops they plan to build.  To the extent that the residents of the new development are folks who live in Durham already, those people are already doing their buying at the stores we have now.  Those stores will lose business to stores at the new development, and Durham’s sales tax revenue just moves, rather than getting an all-new source.

  • The developer’s consumer spending projections also depend on their assumption that household incomes for the single-family houses will be $235,000 a year, $145,000 a year for the townhouses, $116,000 for the condos, and $62,500 for the apartments. These numbers are awfully high in a county where the household median income is $48,830.

  • Along the same lines, if current Durham residents buy the new houses, what will that do to the market for existing housing stock?

  • On top of this double counting, the developer claims that there will be a multiplier effect increasing the benefit of the construction, office and retail jobs, by more than 50%, and increasing the benefit of consumer spending by a third.

  • While the developer double-counts the projected upside, it has ignores the costs to county taxpayers.  Taxpayers will have to foot the bill to extend massive water and sewer infrastructure -- not to mention roadways, traffic improvements, and additional school and police/fire service -- to supply the proposed 1,200 homes and 500,000 square feet of commercial space.  The developer promises a tax contribution of $7 million from the project – but the new infrastructure will cost many times this much. The proposed school alone will cost approximately $50 million.  Why would we approve such costs at the same time our County Manager is anticipating the need to cut county staffing for next year’s budget?

  • Ongoing services for the proposed high-density development will further drain our tax base.  Cost of community services studies in the Triangle show that residential developments cost more than $1.40 in taxpayer-funded services for every tax dollar they contribute.  In other words, the developers of this project would make money, while the taxpayers foot the bill.

  • We could be spending this money to continue our good efforts to boost downtown and Southside, where we already have the water and transportation infrastructure.

  • There’s plenty of history to guide us.  Last week, as you may have heard, Dell announced that it is closing its North Carolina facility – which came to the state just two years ago, after the state awarded it $250 million in various incentives, based on Dell’s promise that the facility would generate 8,000 direct and indirect jobs.  The plant ultimately employed only 900 employees, and those jobs will be gone in a month.


Durham needs more than empty promises – it needs smart growth that uses our existing infrastructure, rather than costing taxpayers more to build a new hub to compete with downtown.



Contacts:

Carl Rist, co-chair; (202) 466-5923; crist@cfed.org

Kathryn Spann, member; (919) 477-5653; kathryn6668@yahoo.com

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