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Department of Irony

By | | City planning, News commentary
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Officials from Aurora, Colorado are in a tizzy because someone conducted some focus groups to see what taxpayers thought of a $300 million subsidy to a proposed hotel. Such focus groups “violate the ethics code for economic development organizations in the region,” said Tom Clark, the executive vice-president of Denver’s Economic Development Corporation (EDC).

Apparently, it is perfectly ethical to steal money that taxpayers had allocated to schools, fire, and police and give it to a private developer, but it is unethical to ask those taxpayers how they fell about such theft. Colorado’s “taxpayer bill of rights” prevents governments from raising taxes by more than a certain percentage each year–but tax-increment financing, the main source of subsidies for the proposed hotel, is exempt from this law.

“You can’t work against your neighbor, and you can’t run around them,” Clark said. “If you do, you’re subject to permanent expulsion from the Metro Denver EDC.” Of course, it is always possible that some people don’t want to be a part of Clark’s cozy little club of thieves.

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A Different Kind of TIF

By | | City planning
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The Antiplanner’s visit to Lafayette, Louisiana was highly educational. Among other sights, I saw River Ranch, a very successful New Urban development that (according to local tax activists) was built without any tax subsidies. Although I personally would not want to live there, the development commands high prices even in the recession.

River Ranch Rowhouses start at $375,000 for 2,000 square feet, but owners are asking nearly $600,000 for the 2,800-square-foot corner model shown here. Single-family detached homes for sale include a 2,500-square-foot house for $550,000 and a 4,300-square-foot house for $725,000. Most single-family homes appear to be on fairly small lots. Given Lafayette’s median family incomes of less than $50,000, these homes are hardly affordable, but the development proved to be very successful.

I also learned that Louisiana tax-increment financing (TIF) is quite different than in most other parts of the country. In 1988, the state authorized cities to use property taxes, sales taxes, or hotel occupancy taxes for TIF. But property tax TIFs are limited to that portion of property taxes that are not already obligated to some specific purpose–and most property taxes are so obligated, so most if not all Louisiana TIFs rely on sales and hotel taxes instead.

Also, most, though not all, sales-tax TIFs are in the form of an additional sales tax on top of the existing tax (which is 4 percent for the state and a variable amount, generally around 4 percent, for local governments). TIFs that are on top of, rather than out of, the existing tax do not take money from schools, fire, and other urban services, which eliminates many of the objections to TIFs. (At least some other states that use sales tax TIFs, such as Colorado, also add the tax on top of, rather than out of, the existing tax.)

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California Almost Eliminates TIF Agencies

By | | City planning, Follow up, News commentary
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As a part of the annual budget package, the California legislature approved a bill that would have required city and county redevelopment agencies to either shut down or start making large payments to local school districts. However, Governor Jerry Brown vetoed the budget package, saying it doesn’t go far enough in closing the state’s budget gap.

Brown called for completely eliminating redevelopment agencies as soon as he took office in January. The agencies are primarily funded by tax-increment financing (TIF), which uses property taxes on new development to subsidize that development. California redevelopment agencies currently collect $5.5 billion in property taxes a year. Because some of that money is dedicated to repaying bonds, eliminating the agencies would immediately save the state $2.5 billion, later increasing to $5.5 billion as the bonds are paid off.

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Teachers Union and Tea Party Agree

By | | Follow up, News commentary
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After the dispute in Wisconsin, it is hard to believe that school teachers and Tea Party members would ever agree on anything. But 150 teachers and other school advocates held a protest march in Chicago demanding an end to tax-increment financing (TIF)–something that most Tea Partiers would readily agree to.

The protesters noted that half of the $500 million going into Chicago TIF districts would otherwise go to schools, and they demanded that one TIF district business owner–a Cadillac dealer that received more than $8 million in TIF subsidies–write them a check for $4 million. The business owner asked police to arrest them instead.
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TIF advocates noted that TIF really didn’t cost the school districts anything. Under Illinois law, the schools prepare their budgets and tax rates are set sufficient to fund those budgets. The people TIF hurts are taxpayers who must pay higher rates to keep the schools running since some of the money that would have funded schools is going to subsidize developers instead. So maybe the teachers union and other groups that organized this protest should contact the Illinois Tea Party to gain their support.

Spend It While You’ve Got It

By | | City planning, Follow up
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Last week, California Governor Jerry Brown said that the state’s financial problems are so bad that it should end urban-renewal subsidies. So the state’s urban-renewal agencies have selflessly stepped up and turned over surplus funds to the state to help it solve its financial problems.

Just kidding. Instead, redevelopment agencies all over the state have decided to blow their budgets by committing as much of their funds as possible before the state can take control.
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This is no surprise and it shouldn’t dampen efforts to revoke urban-renewal powers. Because most of today’s urban-renewal tax revenues are dedicated to paying off urban-renewal bonds, the greatest benefit from ending urban renewal will be in stopping the sale of any further bonds.

Save the States by Eliminating Urban Renewal

By | | City planning, News commentary
27 Comments

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.

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Portland Urban Renewal Scam

By | | City planning, Urban areas
6 Comments

The Antiplanner’s former hometown of Portland, Oregon, is proposing to create a new urban renewal district that is so gerrymandered that blogger Jack Bogdanski suspects it must cover at least 50 scams.

Most of Portland’s previous urban renewal districts are pretty regular, following roughly rectangular boundaries. The proposed new district has fingers going in all directions, often connected to other parts of the district by an area no wider than a street. Some of the fingers overlap existing or lapsed districts.

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TIF & Crony Capitalism

By | | City planning
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Speaking of crony capitalism (as the Antiplanner was doing last week), one of the biggest sources of such urban corruption is tax-increment financing (TIF). TIF was invented in the 1950s to help cities revitalize neighborhoods that were supposedly so blighted that no one would gentrify them without government support. Today, such blight (which resulted when people left high-density inner cities for low-density suburbs) is mostly a thing of the past.

Urban planners use TIF to promote their social agendas, most recently favoring high-density, mixed-use developments (which is ironic since TIF was originally used to clear such developments that no one wanted). City managers see TIF as a way of boosting their budgets at the expense of schools and other entities that they see as competitors for the limited amount of tax dollars that property tax payers (and, in some states, sales tax payers) are willing to cough up. Mayors and city councilors see TIF as a way of rewarding developers who contributed to their political campaigns, which is where the crony capitalism comes in.

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Estes Park Repeals TIF District

By | | News commentary
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In what leaders hope to be the start of a movement, nearly 61 percent of voters in the city of Estes Park, Colorado decided to abolish the city’s urban-renewal district. The measure, which was put on the ballot through an initiative petition, also requires voter approval before the city creates another one.

Supporters of the urban-renewal district made the usual
claim that tax-increment financing doesn’t cost anything. In fact, it takes money that would otherwise go to schools and other urban services and puts it in a slush fund for city officials to use to benefit favored developers.

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