Save the States by Eliminating Urban Renewal

One of Jerry Brown’s first acts after taking office as California’s new/old governor was to propose to eliminate the state’s 425 urban redevelopment agencies. These agencies spend more than $5 billion a year on urban renewal subsidies that are largely unnecessary, and Brown hopes he can somehow tap into that money to help the state cover its financial deficit, currently estimated to be about $28 billion.

The redevelopment agencies are mostly funded out of tax-increment financing (TIF), which means the money they spend would otherwise go to schools and other services, many of which also receive state funding. Every dollar that schools get that would otherwise go to urban renewal is a dollar that the state doesn’t have to spend to fund the schools.

TIF was invented in California in 1952, and is big business today. Although 48 other states also allow cities and (in some states) counties to use TIF, California remains responsible for the lion’s share of the nation’s TIF. In the early 1990s, more than 80 percent of TIF bond sales were made by California cities; in the late 2000s, California’s share was down to 60 percent. This means other states could help close their deficits by repealing TIF laws: as the table below shows, 16 states in addition to California sold more than $100 million worth of TIF bonds in the last six years.

TIF Bond Sales in Millions of Dollars, 2005-2010

StateTIF Bonds
California12,702
Colorado846
Missouri722
Pennsylvania637
Minnesota558
Georgia554
Connecticut544
Texas477
Illinois467
Indiana430
Kansas325
Ohio323
Florida241
Iowa192
Nevada162
Michigan154
South Carolina105
This table only shows states whose cities/counties sold more than $100 million worth of TIF bonds in 2005-2010. States where TIF bond sales were between $1 million and $100 million in 2005-2010 include Utah, Mississippi, West Virginia, Montana, Tennessee, Alabama, Rhode Island, Oklahoma, Nebraska, Oregon, Arkansas, Idaho, Virginia, Wisconsin, South Dakota, Louisiana, North Dakota, and Kentucky.

Urban-renewal advocates claim that TIF is “free” money because the developments wouldn’t take place without it. In fact, studies have shown that TIF is, at best, a zero-sum game: without the TIF, the development would have happened somewhere in the same urban area, though perhaps not at precisely the same location. At least one study suggests that TIF is a negative-sum game: cities that don’t use TIF actually grow faster than ones that do, possibly because of the tax burden places on communities or possibly because developers decide they don’t want to compete with subsidized developments and so turn their attention elsewhere.

Unfortunately, eliminating TIF wouldn’t immediately save California $5 billion a year, as most agencies sold bonds backed by their TIF revenues and it will take years, and in some cases decades, to repay those bonds. The immediate result of eliminating the agencies would be to stop the problem from growing worse by preventing the redevelopment agencies from going further into debt and capturing even more tax dollars that should be going to schools and other programs.

As Portland residents are realizing, TIF is profoundly undemocratic. Both California and Oregon have laws requiring voter approval for any tax increases. But TIF is exempt from these laws, meaning voters could approve a tax increase for schools or fire districts, and the redevelopment agencies could swoop in and capture much of that money, leaving the schools or other districts as poor as they were before.

It might be surprising that Brown, who has a reputation as a fiscal liberal, would seek to end TIF, especially since a lot of TIF dollars are going to support the kind of smart-growth projects that Brown endorsed when he was mayor of Oakland. But California’s fiscal crisis is pretty serious. As the Vulcans say, “Only Nixon can go to China.”

The only disappointing thing about Brown’s proposal is that the Antiplanner is working on a report that recommends that states do exactly what Brown is proposing. It would have been nice if Brown had waited to make his proposal until after my report was published.

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27 thoughts on “Save the States by Eliminating Urban Renewal

  1. Borealis

    When cities lure factories and retail businesses to their city, do they use TIF or other tax benefits?

    Since the Antiplanner is writing a report on the subject, I hope he addresses that question in the report. He could also opine on whether the non-TIF lure to businesses is better or worse public policy.

  2. The Antiplanner Post author

    Francis King,

    A good response to the Guardian article can be found in my recent paper on transit. In a nutshell, the U.S. has spent half a trillion dollars subsidizing transit in the past 40 years only to see transit’s share of travel continue to decline. Increasing subsidies have been a windfall for transit unions and rail contractors but not transit riders. It doesn’t really matter how much you subsidize it; in a decentralized nation of decentralized cities, transit really doesn’t make much sense except to provide some mobility for people who don’t have access to cars.

  3. MJ

    As an aside, there is this article about US commuter rail in the Guardian newspaper in the UK.

    The article isn’t really about commuter rail, it’s about the DC Metro and its persistent maintenance problems. The author seems ill-informed, and does not draw a distinction between the heavy rail/metro system that is the focus of the article, and other types of urban and/or intercity rail systems. The author then blames these problems on Republican short-sightedness and an inability to see the value of maintaining such systems.

    I remain unconvinced. The DC Metro is in the process of building a $5 billion+ extension to its network, even as equipment at dozens of its stations are in dire need of repair. This is the direct result of the poor incentives its managers face and the complicity of the blank-check policy favored by the federal government in encouraging such neglect.

    The comment that alluded to the “pick” system for station maintenance may have a kernel of truth to it, but I think it is far from the primary cause for the poor outcomes we continue to witness.

  4. palvar

    Thank you Mr. O’Toole and Mr. Brown. TIF has been a horrendous scam for many years. Check out Mapping Decline for a great review of how urban renewal damaged St. Louis. TIF funded suburban malls are especially popular in Missouri.

    http://www.amazon.com/Mapping-Decline-American-Politics-Culture/dp/0812240707

    It’s especially frustrating here in Philadelphia, where TIF bonds are floated by unelected “authorities” or “commissions,” the proceeds of which are habitually funneled to election campaigns or, most recently, tens of thousands of dollars of designer luggage. TIF needs to GO.

  5. Dan

    TIF and other tax breaks are often among the array of carrots to dangle to attract wanted biness to make politicians look shiny. Nonetheless,

    the U.S. has spent half a trillion dollars subsidizing transit in the past 40 years

    Since 1947, the amount of money spent on highways, roads and streets has exceeded the amount raised through gasoline taxes and other so-called “user fees” by $600 billion (2005 dollars), representing a massive transfer of general government funds to highways.

    · Highways “pay for themselves” less today than ever. Currently, highway “user fees” pay only about half the cost of building and maintaining the nation’s network of highways, roads and streets.

    · These figures fail to include the many costs imposed by highway construction on non-users of the system, including damage to the environment and public health and encouragement of sprawling forms of development that impose major costs on the environment and government finances.

    DS

  6. C. P. Zilliacus

    Dan wrote (quoting a USPIRG report):

    These figures fail to include the many costs imposed by highway construction on non-users of the system, including damage to the environment and public health and encouragement of sprawling forms of development that impose major costs on the environment and government finances.

    The Transportationist (a/k/a Dr. David Levinson at the University of Minnesota) offered these comments about the USPIRG report, from which I quote (emphasis added):

    As with most advocacy work, most of the facts are correct, the issue is in the spin. It is well known that “roads” do not pay for themselves, most local streets and roads are paid for from general taxes (esp. property taxes) and most roads are local (and most travel is local). The question is really ‘do “highways” pay for themselves?’, which the answer is much more difficult. Unfortunately the authors loosely interchange the terms “highways” and “roads” to suit convenience. They are different, they serve different purposes, and they are funded differently.

    The authors have a heterodox history of the gas tax (but seem to emphasize the federal over the state, which is a common fallacy in all national transportation discussions, promoted by those based in Washington.

    Financing new roads and highways is a separate problem from maintaining the existing. They should not be conflated.

  7. Dan

    Thank you for highlighting, CPZ, the passage It is well known that “roads” do not pay for themselves, most local streets and roads are paid for from general taxes (esp. property taxes) , as I have asserted that for some time here.

    Nonetheless, thank you for that link – one of the commenters has a blog entry about PACE, something I’m working on now.

    I agree about the spin part, I was just pointing out the similar big number and the ‘not paying for itself’.

    DS

  8. metrosucks

    Mass, I mean, mass bs transit doesn’t pay for itself at all, yet the liberal commentators have no problem with it, though. Not trying to start anything, just pointing out the double standard, especially in light of the enormous benefit of roads, and the small benefit of transit.

  9. msetty

    If roads have such “enormous benefits” as claimed by road/highway system advocates, then they should have no problem covering the negative externalities of said usage, which are legion.

    I don’t know where The Troll gets the idea there’s a “double standard.” For Dan, myself and others, we’re the true libertarians here, as pointed out by Jarrod Walker in this post: http://www.humantransit.org/2011/01/new-years-resolution-no-more-coercion.html.

    The difference between the ideological libertarians here and our viewpoint is that we don’t deny the fact that there have been huge structural subsidies and massive social engineering in favor of the road/highway system by government for nearly a century now. Perhaps earlier many “wanted” it this way (no doubt about that!), but using this as a basis of argument by ideological libertarians is a rhetorical trap against their fundamental point of view, leading away from “the market” and “pricing.”

  10. metrosucks

    Pretty funny that msetty thinks himself and Dan are libertarians, lol!

    Fact is, in today’s decentralized world, the automobile is King and “mass” transit is a quaint, largely outdated concept, which is especially applicable to the rail fetish these losers have. As far as most of the US is concerned, buses are the only sort of transit that makes sense. This is true and will be true no matter how many subsidies get thrown at rail. Grow up and get used to reality.

  11. Scott

    It has been painful to read the comments, many in favor of coercive high density & other big-gov “solutions”. That rhetoric is lacking in logic, basic econ principles, human nature, reality & such. Plus, there are are many fallacies, distortions distractions, avoidance & such used. Many techniques from this guy: http://www.crossroad.to/Quotes/communism/alinsky.htm.

    Plus just basic ignorance (over used term)–not knowing the many ramifications & even basic data. Such as density does not lead to many advantages as claimed. About whatever you believe or read is skewed. And its not all fabricated by Maurice Strong, Club of Rome & the watermelons; there are many dupes.

    What is compact living (forced density) about?: http://www.freedomadvocates.org/articles/illegitimate_government

    /iclei_primer%3a_your_town_and_freedom_threatened_20090804364/

    It would be prudent for a person to know certain stuff, before making many judgments about, such as in econ. Recently, O’Toole reference Thomas Sowell & one of his books. It didn’t seem that any commenters had any idea of the point, as normal–our “rulers” making laws to their desire & to gain votes. Anybody disagreeable to freedom & private business have any idea what it is about, as well well as his other works?

    http://townhall.com/columnists/ThomasSowell?bio=t
    http://www.hoover.org/bios/sowell.html

    http://www.gmu.edu/departments/economics/wew/articles.html

    http://www.capmag.com/
    http://mises.org/
    http://fee.org/

    As I’ve typed before, discussing this stuff, with many of you [being unaware of many things, albeit even having advanced education] is analogous to the using of the princilpes of algebra, to a person whom just knows basic math. There is even more in that comparison, than readily apparent: many variable leading to result (ie side effects, unintended consequences). For example, the formula: C + I + G = GDP, and just private & public sectors, change in one comes from change in another.

  12. msetty

    Scott, why don’t you stop reading Birch Society-style/BOO! The UN is coming!/”Austrian economics” paranoid bullshit for a while and look at what a (relatively) intellectually honest libertarian has to say about urban issues, e.g., http://marketurbanism.com/.

    I don’t agree with everything discussed there, but that site has more insights in its little finger than all the intellectual junk websites you cite. The “bike paths are a conspiratorial path to Agenda 21″ fever argument in particular is a hoot.

    For the record, I encountered Sowell’s writings in college 35 years ago, and thought he was a buffoon then, as he is now.

    So don’t make accusations of ignorance when you’re ignorant of what those with my viewpoint and I’ve read…actually, I’ve read most of the standard libertarian screeds, and am quite familiar with the various claims that are made–and any claim that I “don’t understand” them is the same sort of goofy logic from Scientologist “true believers” I’ve encountered, who claim I “didn’t understand” their claims–but I did!

    The best writing on true believers like Scott and other posters here was The True Believer by Eric Hoffer (http://www.amazon.com/True-Believer-Thoughts-Nature-Movements/dp/0060916125. For the record, Eric Hoffer was LBJ’s favorite philosopher, e.g., that LBJ, that evil “Great Society” New Dealer “statist.”

    BTW, Scott, your math analogy is quite unclear.

  13. metrosucks

    I think msetty and his libtard buddies are the buffoons. Always insisting on their BS theories, even in the face of decades of proof they just don’t work. Throw in snarky comments directed at their opponents, and the average Libtard is sitting pretty, smug in his assurance of his intellectual superiority. Let’s not forget that Austrian economists were the only one who correctly called the recession. What, cat got your tongue, libtard?

  14. msetty

    Dan spake:
    Ignore the attention whore. It’ll scuttle away eventually.

    You’re right, of course. But this week, anyway, I need an outlet for my anger and disgust for what happened in Arizona, taking on the overheated right wing assholes with blood on their hands (I hope President Obama mentions all the OTHER people who where shot and died thanks to right wing loons acting out the rhetoric), AND morons on this board, which is sorta fun and cathartic, too. Amazing how people can ignore the obvious, e.g., that imagery and words can and do influence people–the fundamental principle behind advertising, for one thing, let alone political rhetoric.

    I’m not sure who you’re referring to by “attention whore.” At least Scott tries to put together an argument, even if they are usually lacking. Based on that fact alone, I hereby–officially–retire the moniker “The Troll” in favor of your much better alternative, “The Attention Whore.”

    Now I don’t know if The Attention Whore(tm) is actually human, or just an updated, Internet-age “Eliza” program. But I’m certain it will continue to spew off with the insults and name-calling and not rational discussion. It probably also won’t understand the biblical injunction, “you reap what you sow.”

  15. Scott

    This is a sidenote, response entry, to Dan, about the nut-murderer (redundant?).
    BTW, 6.5 years ago, I lived in the Congressional District that Gabrielle represents. No significance, just coincidental, as is the fact that I was was in AZ (Scottsdale) a few days before, visiting my parents, at their 7,000’sq. mountain-side house, on 5 acres. What a shame, huh? It was the first time in hearing her name, learning then that she was moderate (ie, like a JFK Dem, small portion of Party, now).

    You typed “right-wing”? Not this guy, Regardless, ideology does not make a person commit murder.
    Problem with association or happenstance?

    Regardless, any ideology that this guy has… It’s irrelevant.
    There is not a real call for violence, in the political debate. Except. Actually there is, by the left, especially, Van Jones (spoke at ASU–the commie Sustainability dept, 2 months prior)& unions & ACORN & Allinsky & CAP & _ & _ & _ & CNBC pundits & _ & _ . How ignorant are you of facts & media?

    Anyway, you & other readers don’t meant that.
    You just want to force behaviors.
    For actual battery & murder: Each person is responsible for actions.
    Right? Oh, ignore the individual & responsibility? Look at the collective?
    The left has much for call to rebel & symbolism & words to violent action, but not relevant.

    But–Come-on! This guy is way more Left! He showed support for Marx, Hitler, Pelosi.
    But so what!?
    However, the left advocates destruction.
    Using weapons metaphors does not push a person.
    This guyt is unlikely to have even heard/read the stuff in question,
    PLUS he was a stickler on grammar, so knew the various meaning of words.
    Reload–gather more info.
    Target–focus on these persons to vote out.

    Get real! How deficient on history are you?
    Still doesn’t matter for this guy, who should be executed in a month–evidence in.

    No need for him to murder. A murderer can have any, many, multiple ideals, belief systems. Ideas on “the way things should be” do not mean killing.

    There is no advocation, by rhetoric of the main right-left spectrum to kill those who he disagrees with! Although violence is still more pushed by the Marxists (ie Progressives, in class warfare & taking wealth), but hat’s not the issue in our urban discussions, albeit the huge reductions of property rights.

    Thank you for playing.
    Let’s discuss urban issues, with real stats & other reality.

    Separate from severe harm,
    Interest in learning?:

    http://sovereignty.net/p/sd/sdmenu.htm

    http://open.salon.com/blog/americanmuser/2009/12/16/are_enviros_like_watermelonsgreen_outside_red_inside

    http://morphcity.com/home

  16. Scott

    msetty,
    (Oh, the previous response to Dan, is to you to, since you clearly misrepresented some kid wacko’s motives & non-self-control on proper behavior)

    I haven’t read the JBS site for years, although the principles of Austrian School are very relevant & seen. Does JBS even mention urban issues?

    For econ basics & complexites, See major sites:
    http://www.capmag.com/
    http://fee.org/
    http://mises.org/

    Individuals:
    http://townhall.com/columnists/walterewilliams/archive.shtml
    http://www.tsowell.com/
    http://www.gmu.edu/departments/economics/wew/articles.html
    http://www.aynrand.org/site/News2?page=NewsArticle&id=5151
    http://www.liberal-international.org/editorial.asp?ia_id=1243
    http://www.fff.org/aboutUs/bios/sxr.asp

    Reich & Krugman are not that much reality-based, although the latter knows about S & D, regarding housing. They are semi-Marxists, looking at equity & the Gini Index.
    (I could give you 100+ links, relevant to the current economy & housing in general)

    I think that is above your level. Even though prof. Bossard has a BA in econ, he was deficient in some principles.
    You & similar-minded, have to admit, that you do little reading on real economists. And when do, miss the point. We realists, know its true–that leftists avoid much of reality. Just a small part of delusion–Where has the big push for density & transit worked? Don’t count what already existed. Singapore & HK, not worthy–no choice. Japan actually proves wrong, as well as the EU (“sprawl” & cars are desired).

    It comes down to a quote by Murray Rothbard,
    ~It’s not a crime to not know econ, but to offer much discourse,
    involving it’s principles, without the knowledge of, is.

    You think it’s common sense, but it’s not.
    Examples:
    Assuming that demand, controls price, while ignoring supply.
    . The many local restrictions & added costs are often not counted.
    . (ie zoning, UGBs, MPOs, etc.)
    Give strong medical advice, without having an MD?
    Pretending to know certain elements, molecules, compounds, & reactions, without having knowing chemistry?
    Law, without having a JD?

    You have made it known that you have been short on econ knowledge for your adult life (ignorance doesn’t much count as a kid), when you typed that you disagreed w/Sowell, decades ago. How so? Pick one of his many books & elaborate on what’s wrong. Or just explain how George Mason University has unqualified PhDs holders, teaching econ.

    Care to learn?:
    http://habitat.igc.org/agenda21/
    http://www.cornwallalliance.org/
    http://www.thefreemanonline.org/in-brief/renewable-energy-loses-clout/
    http://www.newswithviews.com/Shaw/michael13.htm

  17. Scott

    Oh, Even though I addressed 2 individuals, the last 2 columns are meant particularly for all statists, who think they have the knowledge for how others should behave & things should be.

    All those sources are not even needed to understand the issues.
    Reading most of Randall O’Toole’s books & reports (see links) provide the stats & reasoning. See Cox too. Also http://reason.org/areas/

    BTW, that market-urban kid is off on many things, going by a misnomer. For example, he thinks that highway land can better be used for other things. How would you get to those things?

  18. metrosucks

    Scott, I think you’ve gone so far over Dan’s head that he probably thinks you were speaking in a foreign language. Let’s wait for him to go to the Daily Kos and get some more talking points about “hand-waiving” and “harrumphing”

  19. Scott

    Hey, “metro_is _awesome” [for <4%],
    That's probably true, about Dan, or even Betty, trying to regroup, or just ignore, when proven wrong for the umpteenth time.

    Of course there's time to get to reading this again, could every be 36 hours or 3, 7 days, weeks, plus not knowing when there's a response (~expiration of comment period).

    That's a hint, Randal, for a message-blog system that has recent comments (see the IMBD) for any article/topic (much more than RSS), plus email notification. Want to encourage dialogue? That's over half the reason that I've been absent, plus the fact that the Lefties don't really discuss.

    Re: your content, yep, for these big-gov types, the econ principles & reality are ignored &/or unknown to them. Mumbai (as many other cities) must be awesome for the NUs (old).

    BTW, I recently talked to a friend & his father from Peoria. They despised LaHood & his non-freedom shit before even being Sec of DOT. BTW, Caterpillar only rocks because they didn't let the unions dominate. (My Dad made part of his money, for his business, in receiving sub-contract work from them, for a lower cost).

    Did I ramble enuff, again? Lefties got little concept. No debate. No rebuttal. No understanding. Not, no brains, but capacity lacking.

    Lefty learn? (Asking too much) Know this guy too?:
    http://www-rcf.usc.edu/~pgordon/blog/

    Oh, what's the OP?
    Hey, RDAs & TIFs are anti-freedom, crony-capitalism, counterproductive & displace much.

  20. Andrew

    metrosucks:

    “As far as most of the US is concerned, buses are the only sort of transit that makes sense. This is true and will be true no matter how many subsidies get thrown at rail.”

    So this would explain why bus routes perform the very worst financially for the largest and most heavily used transit agencies like NYCT, WMATA, CTA, MBTA, and SEPTA, while their rail routes usually cover their cost of operation and are actually able to provide a contribution towards the enormous fixed charges of the agencies overhead? Because losing gobs and gobs of money instead of merely losing money is what “makes sense” for transit in your view?

    Isn’t it odd – when the transit agencies were private companies that made money, they mostly used electric powered rail – even while being forced to also maintain the street surface over their tracks where they operated in mixed traffic. As they moved away from streetcars to diesel buses in the 1950-1965 era, they all started to lose enormous ammounts of money and ended up requiring a public takeover to continue in operation. How could that be in your view?

  21. Scott

    Andrew,
    Buses are better cost runners than LRT.
    Roughly guessing, overall, maybe 20% of bus routes could be cut, yet yield 35% savings. Rail routes purposely pick or make higher traffic, yet buses are much more widely used & need by the non-drivers.
    Stop the unions & excessive pay, too.

    Regional (commuter) rail is a fraction of transit users, but fairly efficient , but still requiring more tax money. The riders mostly still have cars & earn above avg income.

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