My mother once told me about her first gambling experience.
She was 21, newly married, and she and my father spent an afternoon at a racetrack in New York.
An elderly, grizzled denizen of the track sat next to them and noticed my mother’s increasing frustration as she lost race after race.
“It’s good that you lost,” he told her after the day’s program was over. “This way, you won’t come back.”
The old guy was onto something. He understood the allure of gambling, even if he couldn’t resist it himself. Once in, it’s hard to get out, as the gambler keeps trying to relive the thrill of the big win, hoping it will happen again.
When I look back at the history of Harrisburg, I see bets all over the place. The Reed administration was a 28-year, high-stakes game, one that followed the pattern my mother was warned about.
Former Mayor Steve Reed had some significant early victories, betting big and coming up with a winning hand on things like attracting a minor league baseball team to Harrisburg and deciding where to locate a new downtown hotel.
In those early days, he seemed to win even when he lost. Reed never got his hydroelectric dam across the Susquehanna built, but invested the project’s $391 million at a higher interest rate than was paid out to municipal bond-holders, earning enough money to build a baseball stadium and make other improvements to City Island.
Over time, though, the odds turned against him, as they do every gambler. By the 1990s, his overspending and refusal to raise taxes began to catch up, requiring constant scrambles and financial gimmickry to fill budget holes. His $6 million revolving loan fund never bore much fruit, with many businesses refusing to pay back their loans. And his big economic development initiative, building, in his words, “five nationally scaled museums,” thus turning Harrisburg into a museum mecca, largely flopped at a very high cost.
Reed’s biggest mistake, however, was a classic gambler’s error—chasing your losses. Faced with a broken-down incinerator, Reed kept doubling down on a bad hand, taking greater and greater risks to make back the money he already had sunk into it. He couldn’t bring himself to abandon the project and eat the losses when they reached $50 million, $75 million, $100 million. Finally, hundreds of millions in the hole, he was removed from the table by the city’s voters.
But why am I revisiting the Reed years?
In March, now-Mayor Eric Papenfuse made a wager of his own. He placed a bet that some tweaks to Harrisburg’s hated parking system would deliver more people to downtown businesses, some of which say they’ve suffered after the cost of on-street parking doubled last year and paid parking was extended to Saturdays.
In a deal with Park Harrisburg, “happy hour” rates were cut by $1 an hour and, through the Pango mobile app, parkers can get four free hours on Saturdays. To pay for this, Harrisburg staked up to $285,000 in unspent hotel tax funds set aside for marketing, money that will be used to cover any losses that Park Harrisburg might incur because of the lower rates.
Papenfuse believes that the cost to the city will be “much, much less” than the amount committed, perhaps nothing. In a best-case scenario, lower rates will lead to more customers and greater revenues for Park Harrisburg, which might lower parking fees permanently.
In general, I don’t believe in taking undue risks with taxpayer money. However, I think that Papenfuse’s bet is a good one, as it has limited downside and potentially significant upside. In a way, it reminds me of the dam-money arbitrage from Reed’s early years. Both men were faced with what appeared to be intractable problems—the decrepit, embarrassing state of City Island for Reed and onerous parking fees for Papenfuse. Both then employed highly creative solutions that also made financial sense.
Now, Eric Papenfuse is no Steve Reed. While quite confident, he lacks Reed’s dismissive arrogance and take-no-prisoners approach to governing. While a risk-taker, his risks, so far, have been calculated and limited. He shows far more respect for the public dollar and seems less likely to become addicted to the allure of creative financing. I also don’t think Papenfuse will serve in office for nearly three decades, which compounded the severity of the errors that Reed made.
Nonetheless, it’s worth remembering that there’s danger in a winning bet. The peril is over-confidence, in believing in your own infallibility, of thinking that great victory requires great gamble, of wishing to relive the rush of the big score.
So, we’ll see what happens with Papenfuse’s roll of the dice. For the sake of Harrisburg, I hope it pays off and, by this time next year, we’ll have lower parking rates, more customers downtown and $285,000 still sitting in the bank. Unlike my mother’s acquaintance from the racetrack, I can’t silently root for failure, even if, as the old man knew, when it comes to gambling, we often win most when we walk away dejected the first time out.
Lawrance Binda is editor-in-chief of TheBurg.
