Monday, October 1, 2007

DIY: Make a killing with land speculation.

This is a reprint from a 13 year old Economist magazine I found at the dentist office. I think you'll find that the path to riches is just as easy to follow today as it was in 1994... (Ed: Make sure you click on the picture to the left to check out JibJab.com and their spoof on Big Box shopping.)

The Classic Land Development Scheme

Making a tidy profit on land requires more than just smart buying and selling. The idea is to buy a frog and turn it into a prince. To make the big bucks, you need to do a complete "makeover" using the services of local government, compliments of local taxpayers. Here's an example of how it's done:

Step 1: Buy 200 acres of undevelopable wetlands outside the city limits for a song.
Step 2: Get the city to annex the land and rezone it for commercial use (but it still can't be developed, due to federal wetlands protection laws.)
Step 3: Have city planning staff conduct a costly wetlands planning process (at taxpayers expense) to enable the area's landowners to develop their land by "restoring" wetlands elsewhere.
Step4: Get the city to declare the entire area an "enterprise zone" allowing all new businesses locating there to operate tax-free for the first three to five ears. (directly increasing the value of this land, again at taxpayers expense)
Step 5: But wait, there's more! The city manager authorizes construction of $20 million in public infrastructure (sewers, roads, etc.) to serve this vacant land at no charge to the landowners.
Step 6: The local electric utility gets with the program and builds power lines and a transformer station to serve the anticipated power needs of the commercial area (compliments of the utilities ratepayers)
Step 7: Feeling that they have not yet done enough, local governments fund an economic development agency to recruit big, outside corporations to the area.
Step 8: Bingo! Secret negotiations and promises of special favors, cheap labor, and expedited building permits lure a giant retailer to buy the land for millions of dollars. The retailer announces plans for a mega-million dollar big-box retail plaza.
Step 9: Public concern about the environmental, economic, and social impacts of the commercial plaza cause city staff to work overtime to expedite permit approvals and quell citizen opposition. City hires a PR firm to advise them on how to sell the development to the public.
Step 10: Commercial plaza gets built in spite of massive public opposition

Now, does this tongue-in-cheek how-to article sound like anything that's been in the news lately?

2 comments:

BBS said...

You must have a particularly thrifty dentist - 13year old magazines in the lobby? lol

Josh Biggley said...

You know, I love the JibJab spoof on Big Box -- especially the subtle hints to Target! :)

At SDW we are particularly fond on the light-hearted view of a very pervasive and serious topic. If comedy helps people see the insanity of buying stuff just because it is cheap, then bring on the laughs!

Nice article Chris! I wonder if the councilors in Windsor would appreciate a couple of that in their mailboxes?