Saving PILOTS: The Armor doesn’t go where the bullet holes are.

During World War II, Abraham Wald was part of The Statistical Research Group (SRG), a program that utilized American statisticians for the war effort. He was tasked with solving a significant problem - saving pilots’ lives while maximizing efficiency.? To protect planes from enemy gunfire, you armor the planes. Because armor makes the aircraft heavier, less maneuverable, and less fuel efficient, you want to find a balance between armoring the aircraft too much (cripples functionality) and armoring the planes too little (compromises safety).

When American planes returned from battles over Europe, they were covered in bullet holes. The damage, however, wasn’t distributed equally across the airplane. There were more bullet holes around the fuselage and none around the engines. The military saw an opportunity for efficiency: applying conventional wisdom, they placed the armor on the places with the bullet holes—where the planes were hit the most.

Abraham Wald said they were wrong.

The armor, he said, doesn’t go where the bullet holes are. It goes around the engines where the bullet holes aren’t - Protect the areas where the planes were not getting shot.

Abraham Wald was right.

Why? Because the planes with the bullet holes by the engines never returned.

Those planes were shot down and never made it back.

?

The Obvious Answer may be the Wrong Answer.

Let us pivot to a different PILOT.

When asking for tax abatements for a Development Project, it is too easy to give apparent answers to perceived obstacles.

When questioned about the length of property tax abatements, we ask for fewer years to lessen the perceived burden on school districts.

When asked about the abatement amount, we ask for a smaller delta to be fair.

When challenged about the annual multiplier, we agree to a larger increase to “bring the taxes back to normal” as quickly as possible.

Those answers are admittedly easy and accepted

They are not, however, solutions.

They do not result in developments that will work.

These reduced pilots do not bring the planes home.

Solve for the Question that Wasn’t Asked

When a stakeholder questions the scope and breadth of tax abatement, that person is responding to time-tested objections based on giving away the store, negatively impacting governmental services, and short-changing the taxpayer.

Most assuredly,? the inquiring governmental official is not focusing on the increased revenue the Development will yield over its current use, the actual number of school children generated by a residential rental development, or the mathematical impossibility of building without tax abatements.

The reduced tax abatements are inefficient because they will only allow for smaller developments with fewer amenities that do not attract tenants, fail to fill needed jobs and do nothing to address housing shortages.

The aspirational moment of the ribbon cutting is short and fleeting.

The negative impact of a non-performing vacant building is far-reaching.

Focus on Tomorrow. Not on Today.

Rather than a knee-jerk accession to compromised incentives, focus on what the tax abatement will bring.

A successful, performing residential development will attract workers to needed jobs, increase revenues to school and municipal budgets, and attract people who will shop locally, volunteer for their communities, and keep regions stable and productive.

A developer can easily demonstrate that improved property provides more revenue than vacant land or neglected worn-out buildings.

Subject to compliance with applicable law, teachers, volunteer firefighters and veterans can be identified as proposed residents.

Utilize the studies that prove that local shops and restaurants benefit from the spending by the residents of these new developments.

Follow Abraham Wald.

Bring the PILOTS home.

Place the armor where it is needed and Tomorrow, with the Development, will be much better than Today, without.

P.S. Yes, I know it's a photo from WW I.