Ballot Box Zoning Should voters decide land use

Ballot Box Zoning • Should voters decide land use? • What consequences of public votes on what gets built where? • If put to a vote, what incentives for voters to say yes or no?

Exclusionary Zoning • • • Ballot Box Zoning Power of local vote varies by state What is subject to direct democracy? • • • Set density? define allowed land use? adopt / reject entire general plan? grant / block rezone? grant / block variances to plan? Decide on individual properties?

Exclusionary Zoning • Ballot Box Zoning • Utah • • rezone not subject to referendum; what else? Oregon • Fassano case; map amendments, ‘general ordinances’ subject to referendum, not actions on specific property

Exclusionary Zoning • Ballot Box Zoning • Washington • Leonard v. City of Bothell (1975); rezone land to retail; opposed by citizens • General plan had land as agricultural • WA Court: referendums and initiatives can be held on “legislative matters”, NOT “administrative matters” • “amendments to zoning and rezone decisions require an intelligent choice by individuals who posses the expertise to consider total economic, social and physical character of community” • Not voters

Exclusionary Zoning • Ballot Box Zoning • • California Arnel Co. v. Costa Mesa (1980) • • Citizens can use initiative and referendum to fight anything; a re-zone for a single property legitimate use of direct democracy, since it sees the rezone not as an administrative procedure, but a change affecting lifestyle of city residents. • So, developers in CA must make voters happy

Private Communities Since 1980 s: Increase in % of (wealthy) Americans living in private communities 16% in places ran by private associations (2004) 10% in private ‘gated’ communities, as of 2012 Walled, gated, exclude based on age Private security forces Private roads Why pay city taxes?

Metropolitan Fragmentation (again) n Population growth has occurred in highly fragmented metropolitan areas n Areas are fragmented into cities, counties, towns, school districts, and special districts n Places have local land use powers n can & do use powers to exclude

Summary n Federal and local PUBLIC policies have shaped development of metro areas n What equity issues?

Local Economic Development Competition n Cities as competing places n n Land use one set of policies n n for firms, jobs, certain residents, certain nonresidential properties Zoning, eminent domain Economic Development Policies n another way they compete

Local Economic Development n Logic: Supply side economics n n n Govts. can’t affect demand side Lower firm’s location costs Goal: Attract firms that are net fiscal gain n job gain

Local Economic Development n Examples of what local governments try to recruit/subsidize: n Intel Plant (Dupont WA); Saturn Plant; BMW Plant; Boeing; n n Call centers, distribution centers, shopping malls, small employers. . . Sports franchises; multi-use arenas; convention centers; hotels; Glass museum,

Local Economic Development n Tools / Policies n n n n n tax abatements / rebates utility discounts public land acquisition / land consolidation regulatory relief issue debt for firm site improvements worker training grants TIF

Local Economic Development n Major costs to state & local governments n $20 -$30 billion per year in spending & tax breaks n PLUS $6 b per year from fed.

Local Economic Development n n Which Places Use ED Policies? Everyone (almost) n n Cities, counties, port districts, etc. Which ‘suburbs’? : n n n where less controversy over growth less affluent places older places larger places have dedicated ED office more homeowners (vs. renters)

How Do Firms Respond? n What factors determine a firm’s Location Decision? n n n 1)? 2)? 3)?

How Do Firms Respond? n Factors behind Location Decision n production costs / resources labor market conditions access to markets / demand for product transport costs lifestyle for managers n taxes, location costs lower down list n n

How do Firms Respond n For many firms: n n n major location factors ‘region-specific’ Silicon Valley, US South, Greater Seattle. . . Policy incentive may affect intra-regional decision n Beggar-thy-neighbor fights within region

Does this Competition ‘Work? ’ Policy Logic: Policy -> increase -> more tax -> lower tax private revenue; rate investment & jobs Plus: a multiplier effect (or loop) Stadium, manufacturing plant, convention center, call center, industrial park, etc.

Does this Competition ‘Work? ’ n Supply side assumption shaky n if public investment = tax breaks, and firm coming anyway, policy reduces net yield Richer cities can do most, need least n Poor cities do much, but have least to give n

Does this Competition Work? n Beggar-thy-Neighbor? n n n Assume a firm will locate in region City A offers 20% tax break City B offers 50% tax break n n n Firm goes to City B If cooperation, could both cities gain? Where do workers come from? Where do their kids go to school? Where do they pay taxes?

Does this Competition Work? n Beggar-thy-Neighbor? n There are COSTS associated with gain for City B: n n Where do (low-wage) workers live? Where do their kids go to school? Where do they drive (traffic)? Where do they pay taxes?

Does this Competition Work? Evidence (macro): n Studies of policy use across many places n n Cities using more policies have greater growth of firm location Cities using more policies DO NOT have greater growth of local employment Revenue. . . ?

Does this Competition Work? n Evidence (project specific) n Public investment in large facilities (sports, convention centers) rarely repay construction cost n n but how evaluate as ‘benefit? ’ Benefits supposed to be ‘multiplier’

Is this worth public investment?

Does this Competition Work? n n n Oklahoma ‘Sonics’ LA Lakers Utah Jazz Memphis Grizzlies Oak/LA/Oak Raiders St. Louis Rams

Does this Competition Work? n Sports Stadiums; Matheson and Baade n Economic impact of an MLB team n For city, net = $16 m For region, net = $123 m n MLB says $300 m n

Does this Competition Work? n Sports Stadiums n Brookings Study: n n economic impact of minor league baseball = to “a large pet shop” 3 decade study (Rosentraub & Swindell) n direct and indirect economic impact of major sports teams and facilities quite small

Does this Competition Work? n Convention Centers n More payoff than sports facilities n attracts people from outside region, outside the state § Sports competes for local entertainment $$ n very little / no payoff for smaller markets

Does this Competition Work? • Why Should Public Pay? • n If profitable, would private sector provide? Intangibles: n n Sports teams as a public good? Civic venues a public good? n meeting places, other uses

Intangibles

Do public economic development policies work? n How mobile are businesses? n Can places attract, facilitate, small business?

Evidence n Evidence from “Empowerment Zones” n n n 1994 -2001 Demand side ? ? Improved labor markets n n tax credits no capital gains taxes incentives to hire people in zone wage subsidies

Metropolitan Fragmentation (again) Local hierarchy of places in region n Winners and losers affected by: n n n Federal programs (1950 s/60 s vs. today) Local zoning policies Economic development policies HUGE disparities w / in a region re: assessed value of property per-capita, sales tax rev.

A Level Playing Field? n Mitigate beggar-thy-neighbor dynamic n Metro Governments n n regional structures; city/county consolidation; share tax powers Tax-Base Sharing n each place dedicates a % of its tax base to a regional pool; revenues divided among all in pool (proportionate to population) § MN, Rochester NY; Hackensack NJ. Montgomery, OH

A Level Playing Field? n Regional Tax Base Sharing n n reduce competition among places for adding properties to tax base create fair distribution of benefits and costs reduce tax base disparities w/in region help regional land use planning

Tax Increment Financing n n TIF / RDA A “downtown” tool. . . n n n n city acquire land; “clear” land provide land to developer get (Fed. ) grants to write down land cost Build mega facility establish RDA and RDA boundary marginal tax increase in RDA stays in area re-invest that w/ in RDA for how long? ? ?

Tax Increment Financing in WA n Not as widely available in WA n n n Ltd to use with state property tax LIFT, HBZ Constitutional amendments rejected 3 X by voters

Local example Railroad & Holly n Market was not generating development n n n Condemnation Flame Tavern Threat of eminent domain at opposite corner Public $ to make Starbucks site buildable Tax exemption zone for new residential dev.

Pit to Starbucks

Drug property to burgers

Abandoned building to apartments