In a recent post, 1889 Institute expounded on the fiduciary duty of elected officials “to act in the best interest of the people of the state as a whole,” a “high duty, executed as a public trust … wherein one puts the people’s interest above one’s own.” This fiduciary duty must not stop with elected officials.
Once an elected body or an elected official – the legislature, a city council, the governor, or a mayor – has taken final action, the faithful implementation of each enacted law, policy, or program falls to an army of bureaucrats. Thus, a fiduciary duty to execute laws and policies with diligence and integrity, tantamount to that of elected officials, must extend to government employees.
Recently, I had a few moments to sit down and watch a show with my children. Unsurprisingly, my son picked a series entitled “The Stinky and Dirty Show.” I was naturally skeptical that the show would yield any real value. However, as I watched, I found myself pleasantly surprised.
Each episode is formulaic. Stinky, a jovial garbage truck, and Dirty, a thoughtful backhoe loader, must confront an obstacle or a challenging problem. Together they must be creative and resourceful to solve the problem by inquiring “what if …?” Occasionally, when the problem is especially challenging, Dirty enters deep-think mode and Stinky responds with, “I know what you’re doing – you’re thinking. Let me help!” Together they hypothesize and ultimately devise a resourceful, innovative solution to their problem and end the episode as heroes. Watching this problem-solving duo, I thought of the times in my professional career when an adult could have benefitted from this show’s moral.
As a recovering bureaucrat, I have seen a lack of experience contribute to bad deals. I have also seen the potential harm caused by jaded, entrenched, and uninspired colleagues. I have seen it in settlement negotiations. I have seen it in the procurement of multimillion-dollar public facilities. And it happens right here in Oklahoma.
To illustrate this phenomenon, consider the recent agreement concerning the Cox Center.
On behalf of Oklahoma City, the Oklahoma City Public Property Authority (OCPPA), a public trust, and Prairie Surf Media (PSM) reached an agreement in which PSM will lease the Cox Center to build a movie and television studio. The rhetoric from the city paints the Cox Center as a black hole. Reportedly, the city believes that the “Cox Center would have been a money sink . . . We didn’t want to operate it for smaller events. It wouldn’t have broken even.”
Further solidifying the city’s own dismal valuation of the Cox Center, language enshrined within the lease agreement states, “[T]he Cox Center is at the end of its useful life and will no longer be used as the City’s primary convention center and may eventually be demolished in deference to a highest and best use of the property.”
So highly (note the sarcasm) did the city value the Cox Center that they were willing to cross their fingers, utter a desperate prayer, and throw a Hail Mary in the hope of scoring some significant, though uncertain, economic gains. The agreement goes on to state:
“[I]n consideration of the economic impact potential presented by the services and the additional and new business opportunities that PSM will generate in attracting the west coast film industry to Oklahoma City, and as an incentive to encourage PSM to locate its operations in the Cox Center, OCPPA has determined that providing lease space to PSM at a rental rate that may be [which should be read as “most definitely is”] less than traditional fair market rental rate is more than adequate consideration in light of the new and additional economic benefits that will arise from PSM’s operations in the Cox Center.”
So, given the city’s faith in a future influx of wealth and how much they valued the property, at what price was the city willing to lease the Cox Center? That would be one dollar.
You read that right – one ($1.00) dollar – singular. One dollar to rent 254,500 square feet for an entire year. I can think of numerous people that would be grateful to rent 500 square feet for a dollar a day, let alone for a year. Eventually, in five years, PSM’s rental rate will increase to $250,000 per year. A quick search of leasable commercial properties in Oklahoma City leads me to believe that an annual rate of less than $1.00 per square foot is an excellent deal for PSM.
The lease goes on to make numerous other concessions – such as utilities. PSM, which will occupy more than 78% of the facility, will not pay even a 75% share until after its initial five-year lease term expires, paying only 14% of the estimated utility cost for the first two years. OCPPA will pick up the balance of the $1.1-million-dollar tab.
Is this what the city considers the highest and best use?
While I was not at the bargaining table to hear the discussions and certainly not capable of knowing the parties’ motives, borrowing a phrase/principle from tort law, res ipsa loquitur, the thing speaks for itself. Concessions as significant as those in the Cox Center agreement don’t occur, at least from my perspective, without a rebuttable presumption of questionable underlying activity. At a minimum, there appears to be a lack of creative problem solving resulting in corporate welfare.
Why this company? Why the concessions? Were there truly no alternatives? Was this lease part of the state’s effort to get California businesses to “leave the coast to get the most?” Or was it the allure of bringing the red carpets and shiny lights of Hollywood to Oklahoma City? Regardless of the motive, the city, and the people could have been better off if the bureaucrats in the room exercised a bit more creativity.
Even stipulating the property’s diminished value to the city, the public might have received a better deal had the city considered a few more hypotheses, beyond “What if I get to meet a movie star?” What if there were an entity that placed much greater value on the Cox Center? What if there were other potential lessees that did not require such significant concessions? What if the property could be sold to the highest bidder, creating immediate profit while still realizing future job creation, economic diversification, and even tourism? With a few more “what ifs,” the benefit to the public may have been much greater.
Whatever the obstacle, whether it is promoting economic development, resolving housing affordability, or determining the highest and best use of a publicly owned property, government employees have a fiduciary duty to act in the best interest of the general public. This requires thinking beyond the short term, beyond the current term of office, beyond the current administration, beyond the immediate media hype, and beyond self. Too much is at stake for myopic tunnel vision. Bureaucrats would do well emulate Stinky and Dirty – to be creative, ask “what if,” and openly explore the possibilities.
The opinions expressed in this blog are those of the author, and do not necessarily reflect the official position of 1889 Institute.