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Ballot Box Zoning

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?

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Ballot Box Zoning

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  1. 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?

  2. 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?

  3. 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

  4. 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

  5. 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

  6. Private Communities Since 1980s: 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?

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

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

  9. Local Economic Development Competition • Cities as competing places • for firms, jobs, certain residents, certain non-residential properties • Land use one set of policies • Zoning, eminent domain • Economic Development Policies • another way they compete

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

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

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

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

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

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

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

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

  18. 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.

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

  20. Does this Competition Work? • Beggar-thy-Neighbor? • Assume a firm will locate in region • City A offers 20% tax break • City B offers 50% tax break • 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?

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

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

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

  24. Is this worth public investment?

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

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

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

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

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

  30. Intangibles

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

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

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

  34. A Level Playing Field? • Mitigate beggar-thy-neighbor dynamic • Metro Governments • regional structures; city/county consolidation; share tax powers • Tax-Base Sharing • 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

  35. A Level Playing Field? • Regional Tax Base Sharing • 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

  36. Tax Increment Financing • TIF / RDA • A “downtown” tool... • 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???

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

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

  39. Pit to Starbucks

  40. Drug property to burgers

  41. Abandoned building to apartments

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