John Oliver Attacks the Wrong Target

As a policy analyst, the Antiplanner has a lot of appreciation for John Oliver‘s Last Week Tonight, which often includes in-depth analyses of important but sometimes forgotten issues such as stadiums, Guantanamo, bail, mandatory minimum sentencing, and municipal violations. I don’t always agree with his conclusions, but he and his writers usually ask the right questions and put a lot of thought into most of his shows.

However, he missed the mark in last Sunday’s show about special districts. “Special districts are small units of government with the power to take tax dollars to do one special thing,” he notes, adding that there are about 40,000 such districts in the country. Instead of weighing whether such districts were better or worse than other forms of government, such as cities and counties, he then proceeds to attack the idea of such districts using often specious reasoning.

For example, he spent nearly 10 percent of his 15-minute segment making fun of a New Hampshire mosquito control district because it meticulously followed the rules of public meetings and public involvement. The real scandal is how many city and county governments don’t follow public meetings laws. He also suggested there was something suspicious when the mayor of a small city in Illinois caught West Nile Virus even though that city was “protected” by four mosquito control districts. I’m sorry, John, but having a mosquito control district doesn’t mean no one will be bit by mosquitos any more than having a police department means no one will ever be robbed by burglars and muggers.

Two kinds of districts that are prone to waste: port districts and economic development districts. Unlike sewer, water, and fire districts in which all of the people who pay taxes to the district are direct users of that district’s services, port and economic development districts effectively tax large numbers of people who never directly use their services. If Oliver had concentrated on these districts, he could have found many scandals and much waste. Instead, he never mentioned them.

Instead, he criticized municipal utility districts in Texas, which happens to be one of the Antiplanner’s favorite forms of government. Created to allow developers to sell bonds to develop vacant land, such districts have to follow Texas law requiring that residents of that land vote on whether to sell those bonds. But if the land is truly vacant, there is no one to vote. So developers typically put someone in a mobile home on the land for a few months, hold an election, and have them approve the bonds. This is so common that a company called Stingray Services provides “rent-a-voters” to developers.

Oliver was outraged that hundreds of millions of dollars worth of bonds could be approved by what amounts to phony residents. What he didn’t mention is that the only ones on the hook to repay those bonds are the landowners. No one who doesn’t own land in the district will ever have to pay a cent on the bonds (unless they default, in which case the bond buyers lose, not taxpayers). Of course, developers expect to sell lots to hundreds or thousands of homeowners who will repay those bonds over 30 years, but none of those homebuyers are forced to buy into a district that has wasted too much money on infrastructure.

Long-time Antiplanner readers may know that I think municipal utility districts are a key tool for keeping housing affordable in the face of rapid population growth, but Oliver ignored this benefit. Instead of considering this a scandal, the Texas legislature should revise the law to allow the formation of municipal utility districts with a vote of the landowners, rather than the residents, of vacant land.

Oliver further betrayed ignorance of the relationship between special districts and housing with a video made with young children as an entry into a California contest asking, “What’s so special about special districts?” One of the lines in the video is, “Special districts can be very easy to create.”

That may be true in Texas, but it’s not true in California. Someone who wants to create a special district in a California county to cover infrastructure costs of new development must obtain permission from a majority of the cities in the county, and those cities rarely grant such permission because they figure that any new development in that district would take away from development in their cities. Even if the cities were likely to approve such a district, district proponents would also have to write an environmental impact report costing tens of millions of dollars without any guarantee that, having written the report, approval will be granted. That’s a major reason why housing in California is so much more expensive than in Texas.

Oliver did find one or two genuine special district scandals, such as a fire district that spent tax dollars on “flat-screen televisions, chewing tobacco, and fireworks” or another fire district whose chief was videoed drinking alcohol and apparently smoking marijuana while on the job. As scandals go, these seem pretty trivial, and considering that there are 40,000 districts to choose from, the fact that they couldn’t find any worse scandals actually makes special districts look good. You can find more and more serious scandals in any two or three city or county governments in your state just in the last year.

What is most attractive about special districts is what makes them special: they have only one job and one mission. That tends to make them more efficient and much less likely to use taxes from one group to cross-subsidize another group, while cities and counties do this all the time. For example, Portland uses water revenues as a slush fund for special interest groups, while Portland’s Metro regional planning agency uses garbage fees to subsidize its planning program.

Oliver did make a good point that the legislation creating such districts sometimes fails to include any way to dissolve the districts when they are no longer needed. But that isn’t necessarily a criticism of districts that are active and performing valuable services today. Nobody can be right 100 percent of the time, and Oliver is clearly wrong with his attack on special districts.

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