The Congress for the New Urbanism is holding its annual convention, which means it is time once again for the New York Times to get suckered into publishing a story about how rail transit spurs development. The Antiplanner calls bullshit on that.
The article opens with a heartwarming tale of how light rail turned a dusty cow town in Texas into a thriving, New Urban community. Naturally, the writer never mentions the tax-increment financing that supported this redevelopment.
In 2008, the Carrollton city council decided to spend 65 percent of the increased taxes — more than $13 million — from new development around the light-rail station on assistance to that $38 million development. That would be enough to spur any kind of development. I am sure homebuilders would love to be able to dedicate 65 percent of the future property taxes collected on their homes on the homes and infrastructure. (In Texas, developers normally pay for all the infrastructure themselves.)
Of course, Carrollton planners give the usual jive about how tax-increment financing is “free money,” but it isn’t. Within a region, development is largely a zero-sum game, so if you spend tax revenues to attract it to one place you are effectively stealing those revenues from schools, fire, police, and other public services that depend on property taxes.
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The Times even claims that Denver’s FasTracks rail program will cost $4.7 billion, when the latest numbers are $7.0 billion. Of course, that means the Times never mentions that a lot of the FasTracks program may never get built because revenues have fallen far short of projected expenses.
“Urban-style development may be the brightest spot in a generally gloomy market,” claims the Times. Tell that to all the condo developers who have recently shut down their projects. Of course, if you get a big enough subsidy, it doesn’t matter how gloomy the general climate.
For example, Columbus, Ohio (according to page 2 of the article) effectively spend $800 million to attract $1.5 billion in new development. Not sure what that has to do with rail transit, but it confirms what I always say: subsidies, not rail transit, is what spurs New Urban development. The question is, if yuppies are so rich and downtown living is so “efficient,” why does everyone else have to subsidize their housing?
There is hardly an accurate sentence in the whole article, which is basically just a love-fest between the Times and the New Urbanists/rail nuts. It must be nice for urban planners when the nation’s “newspaper of record” is willing to look the other way after decades of planning lies.
“You may fool all the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all the time.†-Abraham Lincoln
“You can fool too many of the people too much of the time.” -James Thurber
There are competing trends in US citizens’ economic skills.
Positive trends: There are many small business owners and managers who learn by doing. There are quite a few business schools in universities. There have been major advances in operations research and computers and software to make business analysis more effective and efficient.
Negative trends: Economic education in public elementary through high schools seems to be poor to non-existent. Economists don’t agree on what is the best course much of the time. Most politicians don’t seem to understand economics any better than the general population; they don’t know the difference between an investment and an expense. Much of the economic education the public receives comes from advertising and it is misinformation designed to sell things people don’t need and make people borrow money instead of saving money. Advertising tries to make customers think in terms of monthly payments instead of life cycle costs and return on investment.
Another negative trend – Financial derivatives which are so abstract and complicated hardly anyone can analyze their risks. Just as no one understands the entire US tax code, no one understands all the financial derivatives.
Antiplanner: The question is, if yuppies are so rich and downtown living is so “efficient,†why does everyone else have to subsidize their housing?
That is a very good question.
TIFs are usually counter-productive & pro-inflation (re: property, thus other).
They reduce normal tax revenue to regular city services [partially by redistribution]. If an area is “blighted”, the lower land cost will entice builders to buy & build.
The normal outlays, going to regular public expenditure (schools, police, libraries, fire, etc.), will increase, w/less gov income overall & less than the proportional composition from the property.
Let the market decide. In other words, if there is a demand for housing & businesses, those will be built [paying for related infrastructure], if policies don’t create too much burden.
Why should existing property pay for the taxes (ie via discounts) for future development?
If we are truly to “let the market decide”, then:
1. The Antiplanner should be calling for the removal of all use-based codes, which restrict the market and the developers to building single-use projects and make it unbelievably hard to do anything mixed-use or New Urban. Right now, the additional costs (and lost time!) to fight this zoning if you want to do a NU project is a severe hindrance. Without them, we could see whether the subsidies are really necessary and whether there is a demand for NU.
2. I guess the AP should write an article shunning tax abatements and other such programs for new strip malls. This happens frequently on Long Island – a developer is enticed to build his new strip mall by a 10-year tax abatement, effectively reducing the benefit of increased property taxes that the development would have had for the town’s tax base.
In Texas, school districts are separately-governed jurisdictions and TIF do not steal from their allotted proportion of property tax revenues. Also, if TIFs inflate property values and the new regulations dependent on the TIF as an incentive are higher-quality and higher-priced development, then theoretically the increase in property valuation and the increase in tax revenue from the new development could off-set and/or surpass the revenue that would be redirected to an area targeted for development. Of course, there’s a possibility it won’t. It’s a gamble. In Carrollton’s case, it worked out very well in their favor, as the redevelopment more than paid for the realloted tax revenue.
hkelly1: (Repeal of use codes); (no tax abatements for strip malls)
Mike: Your suggestions are consistent with what the AP typically advocates, and “anti-planners” like me agree with them more explicitly. Taxation should only pay for services that protect individual rights (military; police; courts; etc) and never expropriate dollars to convey to another party.
Public safety may require that sufficient use codes exist to prevent, say, a slaughterhouse from abutting a restaurant, or a railway yard from abutting a public park. Beyond that sort of thing, a use code is an artificial impediment to efficient development, and if someone can build a NU community and make it work in the absence of impediment laws AND without requiring subsidies, then that’s what they should be free to do.
The strip mall example is a little more obvious. It’s pretty clear that there is no shortage of strip malls in this country, and the protection of individual rights does not require the government to spur further strip mall construction. As such, any subsidy for strip malls is pure expropriation and a violation of the rights of the taxpayers.
ROT:“The question is, if yuppies are so rich and downtown living is so “efficient,†why does everyone else have to subsidize their housing?”
ws:Dunno, but why does Wal-Mart, a leading corporation of the world, need billions in tax payer dollars either? Plenty other big box stores get similar incentives.
http://money.cnn.com/2004/05/24/news/fortune500/walmart_subsidies/
“if yuppies are so rich and downtown living is so “efficient,†why does everyone else have to subsidize their housing?”
That isn’t necessarily true. As an affluent (although not “rich”) no-longer-young urban professional living (highly) efficiently “downtown,” no one is subsidizing my housing. Quite the opposite. In fact, I generously, and more-or-less willingly, subsidize farmers and rural folk.
Gruss from Zurich
hkelly1:“I guess the AP should write an article shunning tax abatements and other such programs for new strip malls. This happens frequently on Long Island – a developer is enticed to build his new strip mall by a 10-year tax abatement, effectively reducing the benefit of increased property taxes that the development would have had for the town’s tax base.”
ws:In the Portland metro area, the “Silicon Forest” mainly comprised of Intel is just one huge Enterprise Zone with very enticing tax abatements.
gecko55:“That isn’t necessarily true. As an affluent (although not “richâ€Â) no-longer-young urban professional living (highly) efficiently “downtown,†no one is subsidizing my housing. Quite the opposite. In fact, I generously, and more-or-less willingly, subsidize farmers and rural folk.
Gruss from Zurich”
ws: We all know it’s not true, as in the US those hippy, liberal, queer-loving blue states with large downtown cities subsidize many fiscally responsible red states (notice the states that are above the 1.00 mark):
http://www.taxfoundation.org/UserFiles/Image/Blog/ftsbs-large.jpg
Randall O’Toole, the free market impostor is at it again! A NU gets a tax incentive that should be repaid from an increased tax base, but completely avoids the massive subsidization of other areas of the economy.
IIRC several months ago I linked to and quoted from a study that found empirically that around here rail spurs development.
IIARC there was very little comment.
Jus’ sayin’.
DS
Most people probably agree that no development, person, business, etc. should get tax discount favoritism. However, tax reductions happen all of the time, particularly w/the income tax (ie dependent children). In fact, income tax revenue might be 50% [or more] greater without these deductions, which are “built-in” on purpose. That’s not to question the efficacy or righteousness of them, but to just mention their prevalence.
Some development might not occur without these tax deductions.
That brings up the issue of municipalities competing against each other to attract development, which naturally leads to the existing developments being screwed, in that they pay the current taxes. Or does it? It can be boiled down to: Does the new development [w/discounts] receive more gov services than the taxes paid?
There are many unknown, unexplored & sometimes unmeasurable answers.
Those adamantly opposed to tax discounts are usually hypocritical.
The discounts are just for themselves, but not for others.
Particularly, the pro-transit crowd has that attitude.
If the same standard measure, for non-user gov support (ie general taxes), is used for transit & highways, then either: highways will be funded by an extra ~$100 billion/year or transit expenditure will be cut by ~30 billion/year.
Or, to be user-supported (ie specific taxes), transit ticket prices will need to increase 2-3 times & gas tax will need to increase by about $0.40/gallon; maybe prop tax should slightly increase too (for CA, get rid of prop 13).
If TODs are wanted, then the market (ie builders) will provide.
Don’t forget that multi-level parking can cost $20-50,000 per spot, depending on land prices, Davis-Bacon wages & such.
BTW, the rental price for units in a TOD usually exclude a large % of lower incomes–those who truly need transit.
Why do you pro-transit continue to ignore the fact that people have freely chosen away from transit, towards cars, for a century?
The recent slight reduction in VMT & the ~1% increase is transit use is insignificant.
And, its ignored that there needs to be a high density over a large area to have transit fairly widespread.
Shorter AP amen choir:
We don’t want people to have transportation choices, except the choice between car and car. And we don’t want folks to be healthier either.
So sayeth Message Force Multipliers for the Car and Obesity Industries (say “muffem coy”).
DS
The choice for public transit is there, but very limited.
Do you suggest that transit coverage be expanded wisely?
Suppose that 20% of the population live fairly close to a transit route now.
How would coverage be increased?
Double expenses to reach 30% of the people?
That might result in a 1/3 ridership increase, at most.
Then the riders per bus or rail-car have fallen drastically, & the energy use & emissions per passenger-mile have increased greatly to much worse than per car.
When you take your whining of not locating near transit routes & try to force much greater expense for transit to reach people in medium dense areas, and try a solution, then you have many negative outcomes ($ & larger energy consumption).
& try to force much greater expense
So sayeth the Message Force Multipliers. All hail long commute times and increased pulmonary and other impairments, yay-uh!
Suckered again, indeed.
DS
Dan have again succeeded in typing without any substance.
Those taking transit & living in higher densities have longer commute times.
Why do want that?
You have again failed to answer the questions posed to you.
Perhaps because the ramifications cannot be avoided:
The more money devoted to public transit, the more expensive the cost per passenger-mile (much higher than highways), and the greater energy & emissions per passenger-mile.
What is “Message Force Multipliers”?
This health issue is ridiculous. Walking is very low-impact exercise.
Cardio & lifting is much better & has nothing to do with how a person transports.
If you want the gov to force healthy habits, how about mandatory health club membership?
Or a person must have a BMI below a certain amount to get a driver’s license.
Those are certainly freedom restrictions, but if you want results thru coercion, try more effective strategies. Consider Occam’s Razor, meaning, find a simple solution.
Changing development patterns & infrastructure for ~10% obesity is rather complicated, and very costly for little benefit, with many negatives.
I live next to 2 bus routes and light rail.
I might ride it once every few years or so.
Why you may ask, don’t I use it more?
Simple answer.
Portland’s transit systeem,
does not go to where I need to be,
when I need to be there.
Carrying the things I need when I get there.
I like listening to my radio when I’m driving and I prefer the comfort of a my padded seats over the hard ones on the trains and buses. I prefer not to wait at at transit stops with people I don’t know.
I can be to where I need to be long before a bus or train can get me half way there, even during rush hour.
I’d rather have the use of personal transportation, than to be a slave, to transit routes and schedules.