Crony Infrastructuralism

Last night, the Antiplanner dreamed that Apple, the company with the highest market capitalization in the world, was spending some of its $97 billion in cash on roads, bridges, and other local infrastructure. A crazy idea, I know, but then, in the dream, some politician says, “What a great idea! Let’s create some TIF and special assessment districts so other corporations can help our infrastructure too.”

Somewhere between dreamland and waking up, I tried to explain why this was a bad idea. Suppose a town has two business districts, I said, and one is doing poorly compared to the other, possibly because it is older. Shops, restaurants, and other tenants turn over frequently, vacancy rates are high, and the shops that do exist tend to be downscale, including thrift stores and antique malls. The other district, perhaps because it is newer, is doing much better.

Suppose the city creates a special-assessment district around the older area and uses the funds to update the infrastructure. Unfortunately, the assessments, i.e., taxes, paid by the property owners in the district force them to raise rents, which causes even more turnover. The other district will probably complain and demand its own infrastructure improvements, which the wealthier property owners will more easily afford and thus give that district an even greater advantage over its rival.

If the city uses TIF instead of SADs, property owners won’t need to raise rents. But people city wide are likely to experience either a reduction in urban services or an increase in taxes, either of which is going to hurt the city more than it will help.
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By now fully awake, I soon learn from Victoria Taft that Portland is using TIF and other subsidies to redevelop five neighborhood business districts. The boundaries of these districts are strangely gerrymandered, leading the Antiplanner to wonder what the local politics were of including one property in a district while excluding its neighbor.

In any case, each district will get about half a million dollars in grants over ten years to make locally determined improvements. In at least one case, the TIF money was awarded as a sort of consolation prize for not getting selected as a “Main Street,” one of nearly a dozen government programs the city has to boost local business districts.

It all comes down to jobs,” the city says. In fact, it all comes down to faith in government, a belief that government planners can pick winners and make sure they win. It won’t be long before everyone in Portland is subsidizing everyone else, and then the question become, where do the subsidies come from?

One obvious answer, of course, is the federal government. Coincidentally, last week President Obama created a “Strong Cities” program aimed at tilting federal programs in favor of cities, as opposed, apparently, to suburbs and exurbs. Obama thinks this is so important that he appointed his entire cabinet to the “White House Council on Strong Cities.” I’m sure they will give it their utmost attention.

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

6 Responses to Crony Infrastructuralism

  1. LazyReader says:

    Just make sure there not dreams within dreams.

    http://www.youtube.com/watch?v=NOVnNg0CmG8

  2. Dan says:

    a belief that government planners can pick winners and make sure they win.

    Of course, we all know and are willing to wager that exactly zero planners were involved here except after they were told to draw some lines according to a politician’s whim.

    But let’s not let that stop us from tarring with a broad brush, hasty generalizationing, conflating, and all the rest of the standard tactical approaches…

    DS

    • Sustainer says:

      Yes the generalizations and bias still hold this site back from being reputable. But I’ll admit this site and its community have come along way in terms of fairness, at least since I started visiting. I actually enjoy reading most of these responses and debates now. I just think people need to try not to visualize the other side as opposition, that’s not how professionals negotiate. We really are all on the same team here, just with different techniques. Thus, respect comes before proposals.

  3. Sandy Teal says:

    I am not trying to be political with this comment. I just wonder about the conflict in trying to improve areas of a city with large city subsidies or even rail transit stations, and how if it works then the complaint will be how the neighborhood is gentrified.

    If a TIFF investment draws YUPies and DINCs into a poor area of town, is it successful? If you want to improve the life of current residents, then a TIFF is probably not going to do that.

    • LazyReader says:

      Well the problem is a TIFF can help to gentrify a neighborhood. Unfortunately it does so at often at the expense of the historic residents. Old neighborhoods often have neglected historic buildings that new residents swoop in to refurbish; look no further than Hell’s Kitchen, Brooklyn, the Bronx, Harlem, Washington Heights or the Minneapolis “Warehouse district”. Often old industrial buildings are converted to residences and shops. In addition, new businesses, catering to a more affluent base of consumers, move in, further increasing the appeal to more affluent migrants and decreasing the accessibility to the poor.

      • Sandy Teal says:

        It seems like the whole purpose of a TIFF is to greatly increase the property taxes of a neighborhood, and thus do that by raising property values and rents. Isn’t that pretty much the definition of gentrification?

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