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How Best to Incubate a Downtown? April 16, 2008

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The proposed new baseball stadium in downtown St. Petersburg is creating quite the controversy.  Not surprising given the budget cuts coming down the pike because of the new homestead amendment and lowered real estate values.  But, I’ve noticed there is a real divide in the thinking of the folks for and against the proposal.

This is a gross oversimplication but I believe holds much of the truth in it.  Folks who are against the project tend to think in terms of scarcity, competition for limited resources and “us against them.”  They tend to think that there is a limited supply of wealth and they are against the Ray’s getting any more, especially if it might take a little tax money for it to happen.  Whether its parking or consumer dollars spent, or tax money they look through the glass of scarcity.  Parking is limited, so the Ray’s will overwhelm the available parking. Consumer spending will all go to the baseball team, starving the other businesses.  Better spend our tax money on helping the poor not on helping the Ray’s.  We don’t trust the mayor, City and/or the Ray’s.

Folks who are for the project tend to see abundance and creativity.  This will only enhance the downtown business community by bringing in more folks and making them walk or take the trolley to get to the field.  A successful baseball franchise will carry over to other successful enterprises.  If more parking is needed, then more parking will be built creating more profitable enterprises.  $1.3 billion in constuction can only be good for the economy.  The additional taxes from the redeveloped current baseball site will help keep my taxes in check and make available more to help the poor.  Cooperation between City, private enterprises, and citizens is the key to keeping the City vibrant.

Folks, two different orientations to reality.  Two different paradigms.  One falling apart, the other gaining steam.  What you see is a blending of the old conservative/liberal categories into something unrecognizable by their adherents.  The under 40 crowd gets it inherently, while the over 40 crowd hangs on to their way of seeing the world by their fingernails.

Now, I have repeatedly pointed out that wealth creators see the world in a very different way than others.  This is a perfect example of the difference!  The real question for St. Petersburg is how best to incubate a vibrant downtown?  By assuming scarcity or cooperative ventures?

Why do sometimes we ignore evidence that is right in front of us? April 8, 2008

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Last night I was given a lesson in social-psychology that really hit home.  As some of you know, my Ph.D. is in that discipline so it is interesting when the lessons learned are played out in front of you.  Perhaps some of you have wondered the same thing as myself.  When it comes to making decisions, how is it that people can ignore evidence that is right in front of their face.  In order to get to that answer we need to have a little understanding of how our brain works.  Our brain can be understood as a complex sorting device, looking for sensory input (information) that reinforces our ego or self conception.  We understand the world through simple paradigmatic webs.  These webs can be as complex as a religious belief or as simple as a distrust of corporations.  This is how we get people who see the same information, perhaps on a jury, to disagree over its meaning.  In its most intense form we have mental illnesses like eating disorders where people see themselves as overweight despite wasting away. 

The result is that information that doesn’t fit into these carefully structured webs are set aside into other parts of the brain that work unconsciously.  These bits of information do not become conscious until a breech of the web recalls thems.  The breech can almost anything, but for most of us it is a traumatic event like a divorce, job loss, etc.  

Last night I met with a subcommittee I am engaged in that is looking at the proposed new baseball stadium for St. Petersburg.  We were going over the recommendation report of which I am in a minority opposing the recommendations.  We were going over the part of the report where the committee was stating the reasons why the parking and traffic plan paid for by the Rays was not correct and the committee thought there would be a terrible lack of parking and traffic issues.  Funny thing is that last weekend the St. Pete Grand Prix (a road race) took place.  Each of three days more people came to downtown St. Petersburg than would come for a sold out baseball game.  So we had evidence right in front of us as to the parking situation.  The other dissenting member pointed out that one parking garage was never sold out and further there was no issues for any of her friends coming from Tampa to get to the event and find parking.  So here I was listening to someone insist that there would be large parking and traffic issues on baseball game days, while the evidence pointed out a general lack of problems and points to the accuracy of the Ray’s parking and traffic report.  Now the majority behind this report were already against the proposed stadium from day 1.  Their web had already been created to catch evidence against the proposed stadium.  This is why they were unable to process the contrary evidence.  When I repeated the evidence, they found all sort of creative ways to downplay it.  The report will go out with this section about parking and traffic problems unchanged despite evidence to the contrary. 

Ignoring the evidence is a problem for us all.  Take the financial service business for example.  The evidence is usually easily found.  Yet, most people fail to accept it.  How often do salesmen in the financial services industry claim they can or a money manager can beat the market?  Quite often, right.  Do we believe them?  Well, often, yes we do.  What is the evidence?  The amount of people who have been able to beat the market over a 15 year period is very select, perhaps only a handful.  But we want to believe that salesman when he tells us about his or the fund’s stock picking ability.  Or, take the claim that wealth can be created by investing small sums over a long time into mutual funds.  Do we ever investigate this claim,  run the numbers, look at the assumptions?  Generally not, because we want to  believe it can be done.  When defined benefit pensions are scarce, we want to believe there is a easy alternative for us to create a pleasant retirement.  So we set the web up to remember the salesmen claims, but not to retain the contrary evidence.  It is the way our brain works.

Then something happens.  Perhaps we hit 50 years old or we have a medical emergency that requires cash.  We look at our investments and panic at its low amount.  So sometimes we simply increase the amount we send each month to the 401K assuming it is our lack of funding that is the problem or sometimes we get involved in extraordinary risky investments to try to catch up or sometimes we sink into depression.  The suppressed evidence has now caught up with us.

The hard thing to do is to disentangle the web and create a new web that incorporates all the evidence hidden in our unconcious mind.  However, that is what is required to progress, to become whole.  Difficult to do, but not impossible as many do it every day.  Shafer Financial wishes everyone good luck in untangling their financial webs and creating one based on the evidence.  This is what this blog is dedicated to help people do. 

Baseball Stadium Proposal; A good deal? February 25, 2008

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Here in St. Petersburg, the baseball team is proposing a new stadium.

I thought I would post on this as an example of how value can be released from real estate and for those local why I support this proposal.

First off, this is not your typical get the locals to build us a sports stadium play by a “rich sport team.”  The existing stadium built in the early 1990’s sits on 86 acres of prime downtown land.  It is used aproximately 90 days a year for about 4 hours or 360 hours a year.  We have another site with a baseball stadium on it of aproximately 14 acres that is used even less (for spring baseball).  So we currently sit with about 100 acres dedicated to baseball and it generates about $1 million for the city.

The proposal is to move the stadium to the site of Al Lang which is currently a 7000 seat spring training baseball stadium that sits on 14 acres.  It will cost $450 million of which $150 million will be put up by the baseball team.  The other $300 million will be generated by the development of the 86 acre site that is now Tropicana Field.

This is really the central point of the proposal.  St. Pete has 86 acres of downtown land that generates less than $1 million in city revenue.  Proposals  for redevelopment will be mixed used commercial and residential and will dramatically increase the amount of tax money collected.  Over the likely 30 year lease the rays will sign for the proposed stadium it is likely that between $500 million and $1 billion in ADDITIONAL tax revenue will be collected.  A developer will pay at least $150 million dollars for the land.  That is a lot of value released to the city.  So here is the math; a minimum of $650 million of value released to the city in exchange for $300 million to build a new stadium.  Now this does not include any additional revenues that might be generated to businesses in the vicinity.  The bottom line is that the current stadium is built as a surburban stadium which does its job of bringing people directly off the highway to the stadium parking lot and into the stadium then back to the parking lot and home.  The new stadium design is a different model which would require folks to walk or take public transportation a short way from dispersed parking lots to the stadium.  In other cities, with this model, local businesses see a increase in their revenues from having millions of fans walk by their buisness.  So it is likely that additional sales tax revenue as well as successful businesses will materialize.

So is this proposal in the best interest of the citizens of St. Petersburg? Let me add these facts:

Minimum of $350 million in additional city revenue;

15,000 temporary construction jobs;

2,000-3,000 permanent jobs;

Additional revenue captured by local business;

Public transportation built up;

Additional commitment from Ray’s (Both $$ and time);

$1 Billion dollars in hidden value released by redevelopment of current field site; and

Continuation of a 80 year history of baseball on the Al Lang site.

These reasons give me confidence in supporting this proposal.  On top of all this we are in a recession of undetermined length with our two biggest industries suffering (tourism and real estate).