Steven Malanga works for the fiscally conservative Manhattan Institute and is the author of Shakedown, a book about how bureaucrats and left-wing interest groups seek to make government bigger and bigger. So why does he support the shakedown of local taxpayers for redevelopment projects?
Malanga’s recent article in the Manhattan Institute’s City Journal describes how developers are turning old shopping malls into housing projects. He writes as though this were a brilliantly innovative solution to both the housing shortage and the decline of brick-and-mortar retailing.
It’s not. It’s central planning, pure and simple, and almost every case he cites required a shakedown of local taxpayers to subsidize the residential portions of the developments.
Malanga’s first example is Belmar, a shopping mall in Lakewood, Colorado that was redeveloped into a mixed-use area. As it happens, the Antiplanner was in Colorado working with the Independence Institute when Belmar was being redeveloped. At the time, developers told me that they would have been happy to rehabilitate the shopping center without any subsidies, but they didn’t think there was a market for mixed-use developments. So, as documented in an Independence Institute report, local planners gave developers $95.5 million in tax-increment financing (TIF) subsidies to persuade them to add the housing.
All of the other examples in Malanga’s article are also government-inspired.
- The Annapolis Town Center received millions of dollars in TIF subsidies.
- The redevelopment of a department store in Montclair, New Jersey was a part of a city redevelopment plan.
- Another department store in Newark, New Jersey, sat empty for years until the state provided more than $100 million in housing and economic development subsidies to persuade developers to turn it into a mixed-use project.
- Rochester, New York’s Midtown Mall was redeveloped only after the city took the land through eminent domain, cleared most of the worn-out buildings, and sold it to developers at a price that was no doubt well under the cost to the city.
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This is not the free market at work. Government planners have decided that Americans would be better off if more of them were stuffed into cramped apartments in mixed-use developments because maybe they will drive less. When the market doesn’t agree, cities offer subsidies and mandates to force the developers to build what the planners want, rather than what people want as expressed by the kind of housing they are willing to pay for.
Melanga alludes to but doesn’t comment on central planning regulations that have deliberately made low-density housing expensive in many regions in order to get more people to accept living in multifamily and mixed-use housing projects. But the regulations often aren’t enough; most people’s preferences for single-family housing are so great that developers won’t build multifamily without subsidies. It’s too bad that Melanga was jaded enough to accept the regulation without comment and careless enough to overlook the hundreds of millions of dollars in subsidies that went towards the developments he praises.
When a city is at the precipice of financial turmoil or fiscal oblivion, their first instinct for survival is scrape together cash; Cash they desperately need to satiate the populace that work in their candor (The Public workforce that contributed so much to their elected campaigns) and the people whose electoral loyalty is bought and paid for solely with entitlement spending “MAH OBAMA PHONE”
Anyway, when a city is orbiting the financial black hole they go thru several stages.
Stage 1: Accumulation: SO what you see is what I call the “Fee, Fine and Taxation Era” of urban evolution. Things you never saw before. Fines for mundane crimes shoot up 10-20 times their original cost (AND THAT ASSUMING they have interest in enforcing it or target specific people who’re harmless but pockets full to shake). Fee’s for things that were largely free crop up (Parking, etc). And taxes on new behaviors and consumer goods (Vaping, plastic bags, soda) begin to creep into legislation discussions. For example an illegal alien dumping hazardous waste in a creek, is a losing issue, gotta pay for translator, court, arrest, clean up. But a yuppie with a cell phone, while driving and didn’t signal his turn…….is a money making opportunity.
Stage 2: Desperation: They start the above mentioned scenarios with even greater gusto and bravado. They Often hire MORE public employees anyway. At this stage media gets wind and often discusses or blames higher up leaders (state, federal) for not helping?
Stage 3: Advertising: The city leaders will spend more public funds on attempts to attract odd, amusing or financially appealing events or attractions. These often again come at huge public expense. Sports, the Olympics bid, convention centers, etc.
Portland- Lightrail
Baltimore- Inner harbor refurbishing
Chicago- Millennium park
Almost every city tries it by trying to Attract a sports team and building a stadium. The media lapdogs also jump to the defense to attribute blame for the financial crisis; Often on their ideological opponents.
Stage 4: Cuts/Propaganda/Budget increase: Where possible if the financial receipts continue to decline, cuts to the budget are often made, albeit they are minute or non sequential. Usually they justify all the other expenditures they made before thru clever words. Then the budget increases anyway. And is often financed thru the most horrible method, Burrowing.
Stage 5: Sayonara/Flight: Finally sick of the deteriorating services, lapse policing or public outcry for……….some random event that’s blown out of proportion. In the end, depopulation from productive citizens is usually accompanied by massive protests or some sort of public scrutiny. At this stage the city planners often beg the state for money to pay the bills.
Stage 6: Meltdown