Sam Bell: Just say no to subsidizing luxury housing

Special tax deals for politically connected developers are a big part of Providence’s fiscal problems. The $18 million TSA for the Edge College Hill 2.0 luxury housing development that the Council is considering tonight is just another example of how these deals keep getting crazier and crazier. When we have such a crisis of affordable housing, why do we need to subsidize high-end housing in an already wealthy, overwhelmingly white, neighborhood?

Also, and I think this does matter, the design is really awful.

Shlock development does undermine our city. Because of the pedestrian-focused elements, I don’t think this design is quite bad enough that the project should be opposed on principle, but it is a valid concern.

I understand why many reform advocates like DARE push for compromise concessions, but I personally feel like we need to go further and just say no.

Even with a few affordable units, this project would still not deserve this insane level of public subsidies. Subsidies should go directly towards building affordable housing. We can achieve inclusionary zoning by direct ordinance, not as a compromise attached to public subsidy. This is not a radical position. Quite conservative towns in our state (like, say, Lincoln) have inclusionary zoning ordinances on the books.

TSAs for luxury housing are just not a good idea. I don’t even think they’re a good idea for affordable housing–TIFs are just a much more efficient way to do the subsidies, and using the TSA model wastes public money.

The key of a TIF is that the upfront investment allows a focus on public infrastructure, placemaking, historical preservation, and environmental cleanup. These kind of expenditures are upfront and require some sort of TIF model. Even when the cash is given in direct subsidies (which is only a good idea when there’s something we should be subsidizing, like affordable housing or renewable energy), the upfront cash is more useful. When it’s allowed, developers often sell TSA-style credits at far less than face value on the markets.

This is why I will be introducing legislation to ban all TSAs from our state. Time for us to build a culture of real economic development at the municipal level, built around the TIF model that has worked so much better in other states.


See: 20-year, $18 million tax break for luxury downtown apartments under fire ahead of Providence City Council vote


 

About Sam Bell 1 Article
Sam Bell was recently elected to represent District Five in the State Senate. Running on a message of returning to the Democratic Party's traditional progressive values, he unseated a long-time conservative incumbent in the Democratic primary. He is uncontested in the general. District Five contains the Providence neighborhoods of Mount Pleasant, Federal Hill, West End, and Olneyville.

4 Comments

  1. I was thinking like, wow, you are finally resonating with my thinking but then I came to paragraph #6 – TIFs.

    Rachel Weber has been particularly critical of TIFs. From her paper:

    Selling City Futures:The Financialization of Urban Redevelopment Policy

    https://www.scribd.com/document/276740542/Rachel-Weber-Selling-City-Futures-The-Financialization-of-Urban-Redevelopment-Policy-Economic-Geography-2010

    But to add further clarity I think the following quote from the abstract of another paper of hers, The Historical Roots of Tax Increment Financing, or How Real Estate Consultants Kept Urban Renewal Alive, should be first considered:

    “our genealogy of TIF in the state of Illinois reveals that critical actors—private real estate consultants—actively promoted the adoption and subsequent promotion of TIF as an economic development tool. Through interviews and a review of primary documents, we uncover a network of private consultants who had prior experience shepherding federal urban renewal dollars to cities and who later mobilized concerns around the 1970s deindustrialization crisis to steer the use of property tax incentives from job creation/retention to real estate development.”

    from Weber’s Selling City Futures:The Financialization of Urban Redevelopment Policy:

    “This article examines the specific mechanisms thathave allowed global financial markets to penetratedeeply into the activities of U.S. cities. A flood of yield-seeking capital poured into municipal debt instruments in the late 1990s, but not all cities or instruments were equally successful in attracting it.Capital gravitated toward those local government sthat could readily convert the income streams of public assets into new financial instruments and that could minimize the risk of nonpayment due to the actions of nonfinancial claimants.This article followst he case of Chicago from 1996 through 2007 as thecity government subsidized development projects with borrowed money using a once-obscure instru-ment called Tax Increment Financing (TIF).”

    “Although the City insisted that the rate hike and subsequent personnel and service cuts were unrelated to TIF, popular opinion was that public funds had been overcommitted to paying off TIF expenses (Joravsky 2007). Outrage about the mechanism and the City’s strategy of keeping the public out ofTIF decision making began to surface.As the case of TIF in Chicago reveals, managing a process of capital accumulation that is sizeable, deal-driven, and secretive—even in an autocratically run large city where the mayor’s power is often described as “hegemonic”—may call the legitimacy of the local state into question (O’Connor 1973).”

    “Another critical component of the local state’s ability to make markets and financializeits property tax base has been in place for more than a century: the municipal practice of establishing close ties with an inner circle of developers and financial intermediaries(Miller 1996).The City of Chicago worked only with those developers that it could trust to build quickly and to its specifications, claiming that the need to complete projects and generate increments within TIF districts as soon as possible placed pressure on them to do so. On the developer’s side as well, uncertainty about the amount of their individual TIF allocation, combined with an involved and politicized application process, discouraged all but the most connected from participating in TIF deals.”

    “Some of these costs were ultimately passed on to taxpayers and residents. Between1997 and 2005, property tax rates declined at a slower rate than that at which theunderlying property values grew (Thompson, Liechty, and Quigley 2007), and in 2007,the City suddenly instituted a property tax rate hike to try to close a $217-million budgetdeficit.Although the City insisted that the rate hike and subsequent personnel and servicecutswereunrelatedtoTIF,popularopinionwasthatpublicfundshadbeenovercommitted to paying off TIF expenses (Joravsky 2007). Outrage about the mechanism and the City’sstrategy of keeping the public out ofTIF decision making began to surface.”

    “. . . but I am suggesting that there is a correlation between centralized political authority and the financialization of local policy, particularly when the political administration is unabashedly entrepreneurial . . . ”

    “but I am suggesting that there is a correlation between centralized political authority and the financialization of local policy, particularly when the political administration is unabashedly entrepreneurial studies of the place-based articulations of global finance.”

    • I am sorry about the way some of the text runs together. I guess I don’t know how to copy and paste from a pdf to a WordPress format. I’m also sorry I double posted the final quote. I think the fist one I posted was the one I intended. The second one contains, ” studies of the place-based articulations of global finance.”, which is incoherent as it is written. I don’t know why I attached it to what preceded it. “Place-based articulations of global finance”, is, however what things like TIF programs are all about; that is, find new markets and revenues for Big Finance. Beyond the people who come up with such schemes I wonder how much clear comprehension there is concerning them.

      Rachel Weber, who by the way is a Brown grad, writes prolifically on the subject. What I get out of what she writes is that one cannot say “caveat emptor” loudly enough when discussing them. Rachel Weber has an expression which I don’t know if I remember word for word. It has to do with the fact that through internet technology and financial deregulation real estate investment has been “separated from place”. I believe there are huge implications involved. The problems are structural. The developers, from what I’ve been able to observe are masters of co-optation.

  2. Perhaps you became an elected official before being put through your paces as an organizer, but it takes more than a patronizing essay (a short one at that) to change the neoliberal development policies in this city that better people than you have been fighting for decades. Next time you think it wise to write a trite response to something that 30 year old membership-based organizations, local unions, sitting and newly elected councilors (who have an actual base in our neighborhoods) have created, try putting in the work to help us build our movement first. And a heads up – your “legislation to ban all TSAs in our state” will not pass the Senate and the House on your superior sense of what’s right for others. Try doing a little organizing in our context before you come at us sideways like this.

1 Trackback / Pingback

  1. Hummel Roundup

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.