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May 20, 2012

Misplaced Incentives?

     When business owners are trying to convince governments to give them money to help pay for their projects, they sometimes promise there will be increased taxes paid by customers, thus justifying the use of taxpayers money.
     For example, the folks who want the City of Birmingham to provide funding to help convert the empty former Regions Bank Building on 20th street to a hotel.

"There would be nothing like it in Alabama," he said. "It would pump about $1.5 million in property and lodging taxes a year into the city."

      But isn't that money already being "pumped" into the city? And aren't the guests who will be staying at the proposed new hotel staying there instead of at one of the existing hotels in Birmingham?

"It would cater to corporate travelers....our research has shown it would have a guaranteed occupancy of 10,500 room nights a year. Our goal is to open it by January 2014."

      Aren't those business travelers coming to the city because they have business there? Not because there is a new hotel? Sure there's the advantage of the empty Regions building being occupied, but..
     OK, perhaps I'm missing something? Read The Birmingham News story and explain it to me please.

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