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So why don’t they do it?

This weekend’s Wayne Hoffman column in various Idaho newspapers concerns an upcoming election issue – two local issues, with the same idea – in Idaho Falls and Nampa: Setting up a new auditorium district in those places, as Boise did a generation ago (and has operated since).

The district has a misleading name (not so much when the term was coined a long time ago, as it is now). Its main purpose is to create a marketing center for a local area, and (generally) build a community convention or meeting center, like the Boise Centre on the Grove. It does this by adding to the local room tax, imposed on people who stay at motels and other lodgings. The approach has its pluses and minuses, and the Boise district has attracted a number of critics over the years.

This being a government agency, Hoffman’s opposition is locked in advance (the Idaho Freedom Foundation, which he runs, is supportive of market solutions and “limited government”). After calling a voter-approved (if the voters do approve, which may or may not happen) district creation a “crime” – as he does before in his first paragraph – he goes on to say this:

“The defenders of auditorium district taxes are opting to create a new taxing district and companion government bureaucracy despite less expensive, less intrusive options. For example, there’s nothing prohibiting local hoteliers, restaurateurs, chambers of commerce and other businesses from using their own resources, individually or collectively, to market the community or their own industries. If they really wanted to, those businesses could do it tomorrow in a way that does not require the creation of a new taxing district. They are instead opting to use the power of the government to extract wealth from people because they can and because it’s easiest.”

Hoffman’s point that local private businesses could get together and build their own convention center and marketing entity is absolutely right. They could do it tomorrow. Would the auditorium district option be “easiest” in comparison? Local businesses would have no direct control over such an agency – its governing board would be elected by the voters (as it is in Boise), who would retain control over many of the major decisions. Its books and activities mostly are open to the public, as a private entity’s would not have to be. A district has to jump through all kinds of legal requirements and adhere to limitations that a private corporation doesn’t have to. It would be a slower option (as anyone familiar with the Boise district’s history could tell you) to get things set up.

And besides all that, this point from Hoffman that sounds highly compelling: “In creating a taxing district, the government will collect money that otherwise would be spent in the private sector. This is money that might have gone into the coffers of local restaurants, coffee shops, movie theaters and other establishments.”

This is where the “market solution” logic starts to run into problems. Because if you assume that Nampa and Idaho Falls do need this kind of organized convention and visitor effort, whether public or private, then someone will have to pay for it. If a coalition of motels, restaurants et al wanted to undertake the effort, it would cost them. And they would have to do what businesses usually have to do under such cases when their costs of doing business rise: In this case, raise room rates and meal costs. Same end result. Except that the businesses would have to be responsible for making the tourism effort work – the risk would be concentrated among them, rather than spread through a community that would broadly, one would think, be getting some benefit from larger visitation.

There are, after all, reasons why these business people aren’t doing it. It may not pencil out as an immediate profit-generator. There may be difficulties getting the various businesses to work together in a mutually agreeable way. Plenty of reasons come to mind, but most of them wouldn’t advance the case of the one-size-fits-all “market solution.”

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