Taco Perrito

or: How Millionaires Make Money While Puppies Suffer Texas Heat.
or: How Austin Isn’t as Blue as It Pretends to be.

If you’ve been living under a rock, then you might not know that a local animal shelter has a problem with its air conditioner.

That’s news to you?

What about the $750,000 loan from the city to a local restaurant to relocate down the block? Oh, and it’s not so much a loan as it is a $700,000 grant established under the Texas Local Government Code. And, the restaurant is moving to a building the owners already own!

I didn’t know the city was also a bank!?! I’m reminded of a sign at the motorcycle shop where I bought a bike I used while in college. It was hand-written, and scribbled above the main desk. It said:

The Bank and I have an agreement:
I won’t lend money to my customers,
And they won’t sell motorcycles to theirs.

The City of Austin is so scared of its constituents, that it can’t do anything but make concessionary agreements like this. The Keep-Austin-Weirdophiles would die without their yummy tacos from Congress Avenue! We mustn’t inhibit the little guy! It’s just not right to push them out of business so a giant hotel chain can build “the largest hotel development in Austin history.”

It turns out there’s a lot more involved. Mostly what’s involved is money changing hands. But one thing is certain… the owners of Las Manitas surely don’t need a forgiveable loan to upgrade the kitchen, right?

Ah, but there’s more to the story. It’s seems there was a bit of an impasse.

Why is it that in these situations, such negotiation always seems to make everybody else in the world upset. I’ll stop with all the linking (mainly because I’m tired of doing the searches and my browser is getting slow from all the open tabs), but you don’t have to look far to find apologists and rationalizers who talk about how this is “good for the city”.

Mostly, I think it’s good for the rich people who were already rich when the negotiating started. Sure there will be more jobs, and yes, an iconic part of Austin is saved (Oh, yay). But I’m guessing Las Manitas is not really in any sort of real, financial trouble. According to some accounts, the owners of the restaurant are millionaires. Of course they are. They’re shrewd business people who’ve been operating for over 25 years.

But enough griping about that. What really bugs me is that these businesses seem to fall into piles of money and all the while, non-profit organizations such as the Austin Humane Society have to beg and plead for every single penny they receive. The news from their website says that the AHS has managed to scrounge together temporary cooling and they might have some idea of how much the repairs to their HVAC will cost sometime this week.

Are there any such economic development programs that are going to grant the AHS a $200,000 forgiveable loan to replace its chiller?

I doubt it.

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1 Response to Taco Perrito

  1. Jeff says:

    You say “sure there will be more jobs”. But don’t be. It seems that governments love to use the “more jobs” rationale for such decisions as a matter of course, but never are challenged on their underlying assumptions.

    The flaw with the reasoning is that it is generally assumed that all revenues will be “new” revenues, and therefore all jobs to provide for those revenues will be “new” jobs. But in too many cases, that turns out not to be true. In the case of the restaurant, if it were to shut down, it’s hard to make the case that its former patrons wouldn’t go to other area restaurants. The loss at the one restaurant, when looked at from a city perspective (as opposed to a perspective of maximizing profits to a particular person) would be compensated for by gains at others. A similar question should be asked of the hotel – great that it’s a new hotel development, but how much of its revenue will be net new? Or will it just take customers, and therefore jobs, away from other hotels around town? If the latter, not only does the city as a whole gain no benefit from the money its giving away, but it actually loses – as it establishes a precedent of discrimination against existing businesses in favor of new entrants.

    On the bright side, it’s less than $1M we’re talking about here. The real criminal giveaway is at the Domain (see e.g. http://en.wikipedia.org/wiki/The_Domain_%28Austin%29) – per Wiki, the city (which is to say, the taxpayers) granted a subsidy to the developers worth as much as $60M – including both sales and property tax rebates. Exactly what is the city getting for that money? How much net new revenue is being generated there, as opposed to money that would have been spent in other stores and restaurants around the city (or in many cases the same store elsewhere in the city for those that moved from other locations to the domain)? $60M is a mighty high cost to simply move commerce and jobs from one part of the city to another. Don’t we have better things that we could be doing with that kind of money (and if not, why aren’t we rebating it to the taxpayers)?

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