Presented as the general rationale for essentially giving developers a free ride, hereabouts, “Velocity of Money” is an economic theory regarding the rate at which money circulates in an economy. Proponents of the EDP claim that, creating incentive to build by removing the obstacles of impact fees will create jobs. The money generated from those new jobs (either in construction or through the purchase of locally available material) will pass back and forth multiple times, eventually allowing workers to purchase homes that are already on the market — or something.

According to Mark Weiler, the Velocity of Money would generate dollars of a factor of—“Five to ten times.”

When I asked council how this was supposed to work, Weiler shot back, “Do you understand the Internal Velocity of Money?,” making a circular motion of his hands that, frankly, resembled a washer’s spin-cycle (I’m sure he was not consciously implying a’“Vortex of Money”). When I responded that, No, I wasn’t comfortable with the algebra of it, I said, and he then referred me to Bart Mitchell from the AEDA, the presumed expert on internal money velocity.

I talked to Mitchell the next morning and he conceded that Weiler was perhaps being a bit hyperbolic.’“Maybe three to five times,” he said.

I understand how, in the best-case scenario, $100 becomes $500 as it passes back and forth between multiple transactions (at maximum velocity). What I still fail to understand is how new development will mitigate the problem of a six-year inventory of unsold homes that currently gluts the area. In fact, I’m having a hard time understanding how adding to that inventory won’t further lead to a decline in values for that inventory’— not a good situation for property owners attempting to sell their homes.

I told Mitchell that I found the EDP’s emphasis on boosting one sector of the economy’akin to the auto industry saying, “Look, we need to make money and the lots of our dealers are overflowing with an inventory of unsold cars. So, what we need to do is build more cars. If we do that, we’ll put people to work selling those cars and they’ll pump that money back into the economy so other people will have money to buy up our inventory of unsold cars!”

Mitchell conceded that I had a point, “But we have to do something and this is just one thing, a first step,” he said.

If there really is an Internal Velocity of Money, there has to be more than just one thing and many more steps. The last thing this area needs is a vortex.