City-owned land should maximize resident happiness.

The City of Austin’s Hancock Golf Course, located in central Austin. Image courtesy of Brandon Tucker. 

The ongoing debate about the best future use of the former Reichhold Chemicals site at McKalla Place highlights two important policy gaps City Council should address: (1) the lack of a consistent policy on the use of City-owned land and (2) the City’s missing methodology for assessing the well-being effect of major policy choices.

Priority Posturing

Deliberation about the best use of the city-owned land at the Reichhold Chemicals site features a back-and-forth about a shifting mix of benefits across different categories: economic “development”, tax revenues to the city, income-restricted housing, traffic externalities, community “unity”, wealth inequality, and so on. It is difficult to ascertain whether a soccer stadium or mixed-used proposal is the best path forward because there are too many different units referenced, and no shared methodology for converting one unit type into the other.

At times, arguments made by Council Members and advocates take on a categorical tone. “Public land concessions should always be put out for a competitive RFP!”, “Public land needs to be prioritized to fix the housing crisis first!”, “Public resources should never enrich plutocrats!” are distillations of some of the most common sentiments.

But these types of statements seem to ultimately be performative wrangling given the City’s actual state. This Council does not always prefer to put City property concessions out for an RFP, as this discussion about the Waller Creek Boathouse demonstrates. We are obviously not re-developing lightly-used golf courses into income-restricted housing. Regardless of whether the Reichhold Chemicals site is leased for soccer or some other commercial purpose, private capital is going to get a return.

Council and City executive decisions about publicly-owned land do not follow a consistent strategic policy that tries to create the most public value based on agreed-upon metrics. The decisions are idiosyncratic, reflecting the tastes of policymakers and top City management. This leads to confusion within the bureaucracy and with external parties, as was the case with the delayed pursuit of a mixed-use development partner at the Reichhold Chemicals site after City Manager Marc Ott’s departure.

Presently, there are no timely and complete public data sources that help verify what percentage of overall City-owned land the Reichhold Chemicals site constitutes, or the share of use-types across the City’s overall property portfolio (parks, golf courses, parking, offices, land trusts, etc.).  Is it a substantial portion of City land assets or one of many sizable City-owned parcels? The table below from City staff’s parcel evaluation memo (PDF) only lists the filtered list of politically-selected parcels, not the entire portfolio:

Note McKalla Place’s modest share of the overall land portfolio even within this highly-filtered list. Without data-driven context of the City’s land asset situation or a thoughtful strategy of what we want to achieve with those assets, it’s essentially impossible to conduct a rigorous assessment of how the proposed uses for the Reichhold Chemicals site furthers public value for the City.

The much-needed official strategy on City-owned land could have a simple goal: maximizing long-term dollar-based financial return to the City, as this Scandinavia-inspired approach recommends. Or it could be a blend of objectives that ranks specific outcomes such as tax revenue, park equity, and income-restricted housing in a clear manner.

Measuring Benefits

The Reichhold Chemicals site allocation decision is a lease deal, even if the discourse of stadium-driven economic development policy is often injected into the debate. The City is not a mortal human investor, and therefore, the idea of “a dollar today is better than a dollar tomorrow” from investment finance doesn’t neatly apply.

As Council Member Tovo has pointed out during this process, selling the Reichhold Chemicals site would be a mistake since it undermines the public’s long-term ability to shape development. It would also likely reduce the City’s long-term financial return, as we are probably not at the demand apex for that parcel.

If the City’s official strategy was simply to maximize income into the General Fund from its undeveloped land assets, then the path forward would be clear: the concept with the highest net revenue wins. However, a pure implementation of that strategy would likely mean bold changes to the use of our parkland and City-owned structures. And given that there is in actuality no official strategy for City-owned land, the debate is likely to hinge on the individual amenity tastes of Council Members, and how they perceive the community utility of soccer versus a mixed-used development.

Leaving decisions about whose utility is subsidized up to a matter of policymaker taste is unlikely to yield the highest public value and could impede equity. To use the aforementioned example: why do rowers deserve to have their happiness subsidized more easily than soccer fans? Should any happiness from sports and physical activity be subsidized by City-owned land during a housing crisis? And how do we measure well-being outcomes (more happiness, less misery), anyways?

Unlike cities like Somerville and Santa Monica, Austin does not have an effort to measure and analyze resident happiness or evaluate policy impact on happiness.  While happiness measurement is still an emerging field, there are existing approaches (PDF) that allow the comparison of estimated happiness to dollar amount, which is necessary for the balancing act policymakers undertake.

These methods, unsurprisingly, have been applied to discern the well-being effects of soccer. One evaluation based on Eurobarometer data (PDF) found a “significant and positive” short-term boost in happiness in European countries that hosted major soccer events. The short-term effect was comparable to the well-being benefits of a lasting marriage, which research by Blanchflower and Oswald estimated at $100,000 per year (PDF).

The point here is not that having an MLS team in Austin will endow its supporters with happiness benefits equal to $100,000 a year. Rather, the point is that measurement of subjective well-being that helps reduce arbitrariness in policy evaluation is possible.

Crafting an official strategy on City-owned land will require estimates of the policy impacts on well-being for each of the use-types considered. Should we use land for a dog park, or income-restricted housing, or a baseball field, or a mixed-use development? Should we have 10% fewer income-restricted apartments at a ceiling of 60% MFI or the higher unit count with the ceiling at 80% MFI? These are the types of questions measuring happiness can help resolve in a more rigorous fashion.

Transfer Window

As Council Members ultimately decide the fate of the Reichhold Chemicals site, they will not have the time to develop an official strategy for City-owned land or to initiate a happiness measurement initiative.

Fortunately, they have wisely decided to avoid focusing on a fake debate about economic development and instead attempt to assess the community value of a soccer team against the unique, marginal benefits of mixed-use development. They are following this helpful advice from Andrew Zimbalist, one of the most prominent sports economists in the field and a skeptic of pro sports as an economic development strategy:

If pro sports teams cannot be relied upon to promote economic development, as the literature suggests, is it still sensible for a community to provide public funding to support the facility construction? It depends.

Cities spend millions of dollars to support a variety of cultural activities that are not expected to have positive economic effects, such as subsidizing a local symphony or maintaining a public park. Sports teams can have a powerful cultural or social impact on a community. If that effect is valued by the local residents, then they may well decide that some public dollars are appropriate. However, if the public or its political representatives are trying to make the case that a team or a facility by itself will be an important development tool, then the electorate should think twice before opening its collective wallet.

There is an important asymmetry in the value of the Reichhold Chemicals site for a soccer stadium versus a mixed-use development.

City Council has the power to enable land-use entitlements to encourage the mixed-used development being proposed at the Reichhold Chemicals site at comparable locations throughout the City. There’s nothing that endows the site as a particularly well-placed location for offices and residential. The Columbus Crew’s annual revenue roughly approximates that of a sole Trader Joe’s location, so it is unlikely to have the purchasing power to assemble a sequence of private parcels individually. The greater constraint alleged by PSV are the temporal deadlines imposed by MLS to prepare for the next season. So, the notion that this site is the only viable parcel is credible. This is not a decision that City Council should postpone, as is their oft-criticized modus operandi.

The two main unique marginal benefits that a mixed-use proposal can feature are a higher amount of income to the City (in the form of rent and special funds, such as transportation improvements) and a greater count of income-restricted units at deeper affordability levels. On the other side of the ledger, the unique well-being effects of a soccer team should be accurately accounted for in terms of dollar value and not simply mentally accounted for as fuzzy concepts. Happiness does indeed have a dollar value. Proponents can make the case that sports – like parks or the architectural embellishments to signature public buildings –  are a relatively cost-effective way of generating mass happiness, even if they don’t make sense purely from a dollars-in-the-bank perspective. Existing research, while not specific to Austin, can provide a starting point for the dollar-focused accounting estimate.

Ensuring a proper accounting of the benefits from a soccer team will also ensure policymakers reap the most benefits from mixed-use proposals.

Moving forward, Council should allocate time to developing a coherent and comprehensive strategy for City-owned property, as well as evaluate how a happiness measurement initiative can serve their policy evaluation needs.