The Corner

Cities Are Selling Assets to Meet Budget Gaps

According to the Wall Street Journal:

California is looking to shed state office buildings. Milwaukee has proposed selling its water supply; in Chicago and New Haven, Conn., it’s parking meters. In Louisiana and Georgia, airports are up for grabs.

About 35 deals now are in the pipeline in the U.S., according to research by Royal Bank of Scotland’s RBS Global Banking & Markets. Those assets have a market value of about $45 billion—more than ten times the $4 billion or so two years ago, estimates Dana Levenson, head of infrastructure banking at RBS. Hundreds more deals are being considered, analysts say.

For more examples, read the whole article here.

One of the most interesting questions about the sale of public assets is their real value. I can see why metered-parking rights could be profitable; same for a bridge or a highway. But I wonder what the value of, say, a stadium really is. Stadiums are often built on faulty premises: that the stadium will be profitable, that people and business will come to the area, and that jobs will be created. The reality is often quite different. An attempt to revive a city’s economy with a stadium, a theater, or an opera houses will end in failure; Cleveland is a good example. (And see here for an illustrated explanation of how cities decline.)

In any case, if selling these assets gets the government out of activities that should be in the private sector’s hands, there’s value in that. Good for the cities if they can get money in the process.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University.

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