Government Should Not Compete with Private Industry

Government should not engage in providing products or services that private industry can do and make a profit at.”   Charlie Colgan.  State Economist.  USM Professor.  Approximately 1990. 

He said this during one of my Master’s level classes in Government Business Relations, and I have repeated it over and over and over ever since.Some of you have heard this story:

I’ve been a landlord since 1983.  In 1995 I started work as a housing developer/grant-writer for a non-profit mental health agency in Augusta.  The agency owned a lot of group homes, and I helped create more, which of course didn’t sit too well with City Hall, as it further eroded the tax base in a city that’s already inundated with non-profits and governmental entities.

I argued with my boss, the Executive Director of the agency that the least we could do was offer the City of Augusta a PILOT – a payment in lieu of taxes – but he refused.  He said we were already doing the City a favor via our services.  I couldn’t believe the arrogance…. he didn’t say “We don’t have the funding”.  He said “We’re doing them a favor by existing”.

One of our properties was a 3 unit apartment building – two 1BRs and one 3BR.  The agency wanted to turn the 3BR into three separate 1BRs.  A sensible decision with our clientele.

However, instead of just doing it the way any other landlord would (and which might have cost $15,000 back then) I was sent to Manchester NH to learn how to apply for a specific HUD program to get free money for the renovations.The HUD program was great… it would indeed be free money.  Of course, we’d have to follow all sorts of rules, including the hiring of an architect that I priced out at something like $70,000.  For a job that you and I would have spent $15,000, the total cost of this project would have been well over $100,000.

It was at that point that I realized the taxpayers were being ripped off, and that I hated my job.  (The project wasn’t completed with the HUD money because we ran into the issue of not enough parking space for a 5 unit building. I was THRILLED.)

I’ve told this story over and over, to various Lewiston and Auburn committees I’ve sat on, to members of the Chamber of Commerce, and everywhere and every time I’ve had an opportunity.

I’ve asked the Cities to pleeeeease recognize that they are competing with private industry, and if they want to create subsidized housing, to find a way to provide loans to private landlords to renovate first floor apartments for those with disabilities.  This has been one of my mantras for nearly 20 years.

They have waiting lists while we have vacancies that can’t be filled…. It is frustrating, it is killing landlords and it is wrong.


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