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Basic Cost Benefit Analysis for Assessing Local Public Projects, Second Edition by Maryann O. Keating, Barry P. Keating

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CHAPTER 10

Case Study: Cost Benefit Analysis for a Forty Acre Industrial Park Intended to Spawn Economic Development and Jobs

Nobody spends somebody else’s money as carefully as he spends his own.

—Milton Friedman

Introduction

Suppose that the City’s Redevelopment Commission’s main business for this evening is to decide whether or not to convert a presently unused 40 acre parcel of land owned by the town into an industrial park. The default position is to reject the proposal and either hold the land or sell the undeveloped property. The chosen 10-year time horizon is based on how long it would take the City to pay the principal and interest on $1,000,000 in bonds to be issued for infrastructure and development costs. Interest and principal ...

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