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Ask any MBA student. Adding capacity in a mature, slow growth market with over-capacity and falling prices does not make much sense.

Yet, the Cuyahoga County Commission is about to make a slipshod decision that will have major consequences for Cleveland and the County. The Scene magazine points out some of the challenges this week. Read more.

In the worst-case scenario (which has a relatively high probability) Cleveland will be left with two uncompetitive convention centers in about 10 years. These centers can create a huge cash drain.

In Pittsburgh’s case, public officials are scrambling to cover deficits of about $2 million a year (beyond the subsidies provided by gambling). Read more.

In Cuyahoga County, the decision to invest over $400 million is being very carefully stage-managed by the Greater Cleveland Partnership. Remarkably, the two County commissioners who are driving the political side of the equation have been compliant, even in the face of a federal investigation.

You would think that public officials in this environment would be particularly careful to document their decisions. That has not happened.

Remarkably, we have no business plan that explains how Cleveland will establish its market position. We have no market analysis to evaluate the impact of dramatically higher fuel costs (or a financial melt-down and serious recession) on the convention and meeting market.

We have no competitive analysis that clearly identifies how we will compete in this market. We have no customer segmentation analysis that even suggests a Medical Mart is an innovation that the market will accept. (Indeed, reporting by Jay Miller in Crain’s suggested some time ago that a similar effort in Birmingham was abandoned. See "Med mart plans not shaken by story of failed attempt ")

We have no sensitivity analysis to gauge the risks of the project if Cleveland fails to meet market share goals. We have no cash flow analysis to detail operating deficits. We have no management contract that we can examine to evaluate how the risks of this project will be allocated.

As the Scene article makes clear, we have no operational analysis, either. No one has explained how you get that many trucks on and off the site in a competitive amount of time. That’s a big deal. In conventions, costs are driven by logistics, the speed of moving stuff in and out.

The irony, of course, is that a bank requires a business plan for the smallest commercial loan. Yet, somehow, our County Commission feels sufficiently competent to make a $400 million decision without one. In the face of these significant questions, a reporter from the Scene Magazine cannot get a phone call returned.

Contrast Detroit: They are building their medical cluster more intelligently: through collaboration and alignment. This week they announced that Oakland County will support the development of a cluster of health care and life science companies and organizations, called Oakland Medical.

“I’m putting Mayo and Cleveland Clinic on notice that they’re going to have to look at Oakland County for competition from what we develop here,” said Oakland County Executive L. Brooks Patterson, who announced the initiative along with several health care leaders.

Read more.

As my brother points out in the Scene article:

“A public investment of this magnitude needs to be much more rigorous,” says Hunter Morrison. “There are too many unanswered questions. The taxpayers need to ask some hard questions of the county commissioners. And there are answers out there. We didn’t start studying this yesterday.”

Cleaning up the bailout mess will take hundreds of billions of dollars in a number of years.  Focusing only on repairing the balance sheets of irresponsible financial institutions means that the physical consequences of this mess will be left for the cities to sort out. Bill Callahan, our best source of clear eyed analysis on the foreclosure crisis, outlines an agenda for our political leadership to follow.

[W]e need to focus on what the banks must give in order to get the TARP [“troubled asset recovery program”] to take over their problems, and on what the TARPwill be able and required to do with the real-world assets (i.e. houses) at the heart of this transaction.

Jim Rokakis [the Cuyahoga County Treasurer] is fond of pointing out that nobody cared when financial blood was running in the streets of Cleveland, but now that blood is running in Wall Street it’s a national crisis. The deal that stops the bleeding on Wall Street and gives the banks a new start must do the same for the streets of Cleveland, Detroit, Cincinnati and Chicago.

You can read more of Bill's analysis here. You can download his memo at the base of this post. Here's his memo:

Dynamic mapping helps us understand the geographic dimensions of the fallout. You can start with the Wall Street Journal map here.

The Federal Reserve Bank of New York also publishes a dynamic map that helps pinpoint the geographic impact of the subprime meltdown. You can view the map here.

The blog Economic Populist also has a helpful set of maps.

HotPads.com provides a more useful  set of "heat maps" that enable you to identify the impact of the foreclosure crisis on Northeast Ohio. You can start with a broad search and then narrow your search to specific counties and zip codes. The hardest hit counties in NEOhio (showing darker red in the map below):

• Cuyahoga
• Lorain
• Stark
• Summit
• Trumbull

You can zoom in to see the pattern of individual property foreclosures. Now you start to see why Bill's points are so critical for the future of cities in Northeast Ohio.

If you're interested in getting more perspective on how this mess has come to be, take some time and read Kevin Phillips' Bad Money.