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Wednesday, January 14, 2009

Research: LAIC Needs Openness, Local Ownership

While working on some potential dissertation material yesterday, I read an academic paper (you know, real research, egghead stuff that MBAs and MPAs read) that put into perspective what the Lake Area Improvement Corporation does wrong as it tries to stimulate the Lake County economy. Short form: the LAIC follows a top-down management model that avoids openness and broad participation. This exclusionary technocracy, a presumption that the inner circle and experts know best and that involving the public only gums up the works, hurts the sense of local ownership and the credibility of the organization and its efforts.

Deborah Bräutigam's 2004 paper "The People’s Budget? Politics, Participation and Pro-Poor Policy” looks at the effectiveness of participatory political efforts in promoting the interests of the poor. Reviewing the recent history of development policy at the macroeconomic level (big national programs, World Bank projects), Bräutigam finds exclusionary technocracy was assumed to be a good thing in the early 1990s. Get some experts, insulate them political pressures (e.g., the existing government and bureaucracy, elections... public oversight), let them undertake projects by decree [p. 655].

This exclusion of elected officials and the public triggered calls for more openness, transparency, and participation. Bräutigam quotes former Brazilian finance minister Luiz Carlos Bresser Pereira from a 1993 paper:

...if democracy is not to be undermined as a consequence of economic reforms, the representative organisations and institutions must participate actively in the formulation and implementation of the reform program, even if this participation weakens the logic of the economic program or increases its cost [Luiz Carlos Bresser Pereira, José Maravall, and Adam Przeworski, Economic Reform in New Democracies: A Social-Democratic Approach, Cambridge: Cambridge University, 1993].

Bräutigam also notes that other researchers have found increased participation makes policies more sustainable, better designed, and easier to implement. Involve interested parties, and they're less likely to raise hell (or write cranky blog posts) when you implement your program.

Bräutigam cites World Bank research that finds increased participation boosts the sense of public ownership and credibility of the organization and its policies. By World Bank standards, studies of areas where policies are to be implemented "are supposed to be 'locally generated' and 'owned' by the country concerned" [p. 656].

Meanwhile, our LAIC still thinks it's 1990. How does the LAIC fail to follow the open, participatory principles that are being adopted by organizations all the way up to the World Bank and International Monetary Fund?
  • Openness: I still can't find a roster of the LAIC board on its website. Online I have to go to the Secretary of State's archive of corporate annual reports to find out who's calling the shots.
  • Local studies: The LAIC consistently hires out-of-state consultants to study the local economy.
  • Openness: The LAIC keeps the results of those studies proprietary instead of sharing the data freely with the public to help everyone make better decisions.
  • Participation: The LAIC promised to roll out a Main Street program last year, complete with "a few meetings to bring all interested parties together in one place to establish our vision and mission statement." I know interested parties who have volunteered to participate in that effort. Those parties have not heard anything from the LAIC on when those meetings will take place.
  • Openness: The LAIC-ICAP housing partnership didn't hit the papers until this week, after the building permits were filed and the first hole was dug—in other words, until the LAIC couldn't keep the plan quiet any longer. There doesn't seem to be any reason to have kept the plan quiet. Putting up two affordable spec houses to address the needs identified in the housing study seems perfectly reasonable. If the LAIC had stepped forward with this plan right away in 2007, their openness might have inspired greater confidence in the whole tax increment finance district plan and drawn useful public feedback that might have made the plan even better.

Research and experience say that if you want a plan to work, you have to involve your stakeholders. In the LAIC's plans, we are all stakeholders. Let's hope new LAIC board members Jeff Bloom and Chris Giles will promote a more open and participatory LAIC.

* * *
Read the full paper: Deborah Bräutigam, “The People’s Budget? Politics, Participation and Pro-Poor Policy,” Development Policy Review ( U.K.), 2004, v. 22, n. 6, pp. 653-668.


  1. After the city paid 400K for the Rosebud building the LAIC did the marketing. Why, if that was city property? I remember Jon Hunter wrote the city should list the buildings with a realtor (a fair marketing practice). Did anyone see for sale signs? In December ICAP signed a contact with the city for 350K for the site (city to remove building), so the city quickly lost 50K plus. Either the city paid Rosebud too much or a very good deal was given to ICAP. I thought Randy Schaefer was going to get financing and be the developer. It looks like the TIF would fail and they needed to find some partners. Why does this go on when Mike McDowell makes the LAIC goal clear in the December Chamber Newsletter? "The main responsibility of economic development organizations is to facilitate the preservation and creation of quality jobs." John Hess

  2. I wonder what they are hiding...

  3. You know, Anon, it could very well be that they aren't hiding anything. But if they just operated openly in the first place, you wouldn't be wondering that!

    Maybe the LAIC needs a blog of its own... :-D

  4. LAIC sold the Rosebud Bldg on the corner east of Jack's Cold Storage for $38,000 to Rick Barger. A private sale for a building that is a half-block long. That building would have attracted several buyers if anyone knew it was available, and it would have brought more money, at least $65,000 or more. Private deal using public money. Might even be illegal as far as disposal method.


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