Efforts to exempt owner occupied houses from taxes in Florida and California

This house cost $50 million.  If it is the primary residence of the owner, it could be exempt from property taxes.

Cities rely on property taxes for the bulk of their revenue.  

Anti-tax fever in Florida, which already doesn't have an income tax, calls for eliminating property taxes on "homestead properties," that is owner-occupied housing ("Looming tax reform has Fort Lauderdale thinking about worst-case scenarios," South Florida Sun-Sentinel).

Fort Lauderdale officials say they are well aware of the fiscal fallout that might be coming and are already making plans for what could be a worst-case scenario: A staggering $72.8 million shaved from the city’s day-to-day budget.

DeSantis has called for the elimination of property taxes, referring to them as a burden that forces homeowners to pay perpetual “rent” to the government. Property tax reform would require a constitutional amendment passed by 60% of the voters.

If voters approve tax reform in November, cities across the state would likely have no choice but to slash budgets, with one caveat. They’d be prohibited from cutting spending on fire-rescue and police departments below current levels.

The anti-tax fever led primarily by Republicans increasingly leaves governments strapped for cash.  In Florida, this measure would take away billions of dollars in local revenue, with no replacement.  While school taxes would still have to be paid, according to the Pensacola News-Journal ("Florida House passes property tax proposal. Here's what it does"):

House staff have estimated that beginning in fiscal year 2027, the amendment will have a negative cash impact of $14.7 billion on local non-school property tax revenues. ...

What services would be at risk? Florida property taxes go toward critical infrastructure and services that are used by or impact taxpayers on a daily basis. These include things like: 

• Law enforcement
• Social services
• Parks
• Environmental programs
• Fire districts 
• Emergency medical services 
• Schools 
• Roads

The bill calls for a referendum, but I'm sure people who don't want to pay taxes will outnumber those who care about good government when it comes to a vote.

It reminds me of the disaster in Kansas, when then Governor Sam Brownback enacted supply side tax policies which posit that when you lower taxes, people and businesses are motivated to work, spend, and invest more. 

So far, Kansas did not achieve that outcome ("‘The Kansas experiment’ should be a warning to Republicans touting Trump’s big, beautiful bill," Boston Globe, "The Tax Experiment that Failed, Independent Lens/PBS, "Kansas abandons massive tax cuts that provided model for Trump's plan," Guardian).  

It definitely didn't in Kansas, where public reaction led to voting in a Democratic governor, and electing enough Democrats to the State Legislature so that the Republicans no longer had a super majority.

Besides raising sales taxes and fees, the primary course of action would be to cut back on government significantly, comparable to how UK local governments, with up to 3/4 of their revenues slashed by the national government, take austerity planning and governance to new levels, levels which significantly impact quality of life in negative ways.

California has a similar proposal moving to referendum, eliminating property taxes on homes lived in for 5-10 years ("California ballot proposal would exempt seniors from paying property taxes," ABC10).  Local governments already have austerity from Proposition 13 (Common Claims About Proposition 13, California State Legislature, "The Taxpayers Revolt! How Prop 13 Transformed California," KQED/PBS, "Prop 13: Winners and Losers From America’s Legendary Taxpayer Revolt," Trulia, "How California voters can update, improve Prop. 13," San Jose Mercury-News).  This would make it worse.

From the last article (the revision didn't pass):

California voters have an opportunity this November to correct decades-old legislation that has resulted in deteriorated public institutions and services throughout our state. It’s time to challenge the divisive and widespread anti-tax sentiment promulgated by powerful interest groups bankrolled by wealthy donors.

The California Schools and Local Communities Funding Act is a proposed constitutional amendment that would update and improve Proposition 13, the 1978 tax law that fundamentally crippled local governments.

A contributing factor to Prop. 13’s passage was the sentiment that older Californians should not be priced out of their homes through high property taxes. However, the proposition’s underreported giveaways to big business and corporations have exacerbated inequity and inefficiency in the state’s tax structure.

The new law would keep tax rates the same for individual homeowners, but would close the business loophole. It will periodically reassess commercial and industrial properties to full market value, while safeguarding homeowners, renters and agricultural land.

Proposed ballot measure in San Diego would tax second "empty" homes

 "Proposed ballot measure that would heavily tax thousands of second homes in San Diego clears critical hurdle," San Diego Union Tribune.

A proposed ballot measure that would impose a hefty tax of as much as $15,000 a year on thousands of empty second homes in San Diego cleared a major hurdle Wednesday when elected leaders agreed to advance it to the full City Council next week.

The proposal, which initially calls for an annual $8,000 tax on more than 5,000 largely unoccupied homes — plus a $4,000 surcharge for corporate-owned dwellings — is being pushed by Councilmember Sean Elo-Rivera, who just a month ago failed to win support from his colleagues for a far broader measure that would have also taxed whole-home short-term rentals.

An empty second home is defined as one that is left unoccupied for more than 182 days out of the year and is not an owner’s primary residence. Elo-Rivera argues that by keeping such homes off the rental or for-sale market, owners are depriving San Diegans of much needed housing.

A lengthy analysis prepared by the Office of the Independent Budget Analysis offered a more conservative estimate of anywhere from 1,790 to 2,812 empty homes that would be affected by the proposal. However, that estimate takes into consideration properties that would fall under a number of exemptions proposed by Elo-Rivera, as well as those instances where owners opt to sell their properties or convert them to short- and long-term rentals.

The Independent Budget Analyst’s office also concluded that the measure, if passed by voters, could generate from $12.1 million to $23.8 million in new revenue to the city during the first year of implementation. That could increase to $15.3 million to $30 million in the second year, which is still considerably less than the $51 million calculated by Elo-Rivera’s office.

Ideally, laws like this are less about revenue generation, and more about pushing properties back into the home ownership market.

Downtowns versus neighborhoods as a revitalization conundrum | Detroit

Hudson’s Detroit, the Motor City’s first new skyscraper in nearly half a century, is a symbol of Detroit’s transformation from bankruptcy to boomtown.  Photo: Steven King/Icon Sportswire.

I wrote about Detroit a few weeks ago ("Dan Gilbert and the state of Detroit revitalization | phases") and CNN has s similar story, "Detroit is back from the dead. But not everyone is feeling it."

CNN references a report (Allowing the Detroit DDA’s Captured Tax Revenues to Again Fund Government Services, Citizens Research Council of Michigan) on the city's economic development and tax policies from the bankruptcy in 2013 to today, and generally finds

• that while there has been plenty of economic development, the costs still have been greater than the benefits
• that the creation of downtown development authorities in Michigan was a good thing because it provided for a dedicated stream of local revenue to support economic development without impinging on other revenue streams
• but it does come at the cost of lost tax revenues for other government authorities like school systems and counties
• that in Detroit, the primary focus on downtown revitalization as being justified to bring revenues to neighborhood improvements hasn't been realized.

View of Downtown's Renaissance Center office complex from the window of a vacant industrial building.  Photo: Jeff Kowalsky, Bloomberg/Getty Images.

I think this is true sure, but like I write about economic impact studies of transit needing a thirty year or longer time frame to truly be able to measure results, the same goes for revitalization of a cities like Detroit, Pontiac, St. Louis, Oakland, etc.

In the words of the Doors song, "Been Down So Long":

… Well, I've been down so Goddamn long

That it looks like up to me 

Well, I've been down so very damn long

That it looks like up to me 

Yeah, why don't one you people 

C'mon and set me free

The current time frame of 12 years for generating conclusions and making recommendations shouldn't be seen as an endpoint but a midpoint.

From the report:

Wellbeing of the City

The idea of “two Detroits” is rooted in part in the perception that the CBD (and midtown) has prospered by channeling property tax revenue back into economic development activities while the balance of the city, including the neighborhoods, have suffered from the lack of investment and economic struggles.

This narrative existed before bankruptcy but has become more acute since.

It is clear that downtown and midtown have fared better than many of the neighborhoods. While abandoned houses have been demolished throughout the city, new buildings have been constructed downtown. Downtown has had a level of vibrancy that is not present in many other parts of the city.

Likewise, it is clear that investments in the downtown have not lifted the city to share in any levels of prosperity. Hopes that investments in downtown would lead to housing nearby and throughout the city have not been experienced except for anecdotal recent developments. 

It is not the DDA’s duty to save the whole city and many factors contributed to the exodus of people, including crime, auto insurance rates, the struggling school system, and the high cost of construction throughout the city.

Rebalancing a Downtown focus vis a vis neighborhood improvements.  In some respects the text reminded me of the point that Rolf Goetze makes in Building Neighborhood Confidence, that the point of focused public investments in neighborhoods (or Downtowns) is to reorient the neighborhood trajectory so that residents once again are confident to make investments on their own.  

Detroit.  Rock City.

In Detroit, while there is tremendous investment as mentioned in my blog entry, as massive as it is, it hasn't been enough to hit critical mass so that the private sector is the predominate investment actor.  In Detroit, the DDA, the State of Michigan, and private foundations remain heavily involved.

I think that even though Downtown improvement requires still more resources, a reset is required to simultaneously pursue more focused neighborhood efforts, even though there is already so much going on at that level already, with improvements in the functioning of the County Land Bank and neighborhood revitalization programs--to me, it's an astounding amount of action and involvement.

Vacant houses are shown in Detroit, Thursday, Jan. 6, 2011. Wrecking crews in the Detroit are well on their way to knocking down 3,000 vacant and abandoned homes promised by Mayor Dave Bing. (AP Photo/Paul Sancya)

One of the problems is that there is only so much population in-migration going on.  Sure the city has added 7,000 residents the first gain in a long time.  But that's equal to about 1% of the city's population.  

It's not nearly enough to power residential development in Downtown or in key neighborhoods.

Another problem is just how much vacant and abandoned land there is, many dozens of square miles, an area larger than the City of San Francisco.

Still, residents need more skin in the game to feel like they are part of the process, that their long term sacrifice has meaning, that their communities are receiving visible benefits, that all the benefits aren't going to just the Greater Downtown.

While that might slow Downtown momentum some, at the same time the whole could be greater than the current sum of the parts.  I've drawn an outline of such a program for St. Louis, which is worth considering.

-- "St. Louis: what would I recommend for a comprehensive revitalization program? | Part 1: Overview and Theoretical Foundations"
-- "St. Louis: what would I recommend for a comprehensive revitalization program? | Part 2: Implementation Approach and Levers"

Another concept is leveraging the development of the Purple Line light rail program in Montgomery and Prince George's Counties in Maryland, both wrt transit and revitalization improvements.

-- "Codifying the complementary transit network improvements and planning initiatives recommended in the Purple Line writings," (2022)

-- Setting the stage for the Purple Line light rail line to be an overwhelming success: Part 1 | simultaneously introduce improvements to other elements of the transit network (2017)
-- Part 2 |   the program (macro changes) (2017)
-- Part 3 |   influences (2017)
-- Part 4 |   Making over New Carrollton as a transit-centric urban center and Prince George's County's "New Downtown" (2017, originally 2014)
--PL #5: Creating a Silver Spring "Sustainable Mobility District"
- Part 1: Setting the stage
- Part 2: Program items 1- 9
- Part 3: Program items 10-18
- Part 4: Conclusion
- Map for the Silver Spring Sustainable Mobility District
- (Big Hairy) Projects Action Plan(s) as an element of Comprehensive/Master Plans
- Creating the Silver Spring/Montgomery County Arena and Recreation Center
 -- Part 6 |  Creating a transportation development authority in Montgomery and Prince George's County to effectuate placemaking, retail development, and housing programs in association with the Purple Line (2017)
-- Part 7 | Using the Purple Line to rebrand Montgomery and Prince George's Counties as Design Forward (2017)
-- Revisiting the Purple Line article series after one year: Part 1 | a couple of baby steps (2018)
-- Revisiting the Purple Line (series) and a more complete program of complementary improvements to the transit network (2019)

Basically it's what I call Transformational Projects Action Planning, at the neighborhood scale ("S").

There are a few other best practice programs in action models to draw from.

Hennepin County Community Works 20 Years of Transforming Places for People

Hennepin Community Works.  When I was reading about how and why Downtown Development Authorities were created in Michigan, as a strategy to stoke city renewal, I couldn't help but think of Hennepin County, Minnesota's creation of a revitalization program in recognition that continued population leakage in Minneapolis was a serious threat to the county tax base.

Hennepin did an analysis of Minneapolis, and identified the factors that separated the stable neighborhoods from those that were declining.  They created a revitalization program focused on Minneapolis, to turn declining neighborhoods into successful and stable ones.  This journal article, 

"A COUNTY AND ITS CITIES: THE IMPACT OF HENNEPIN COMMUNITY WORKS," Journal of Urban Affairs (2006), describes the program.  What they found is that housing in areas by parks, rivers, and lakes retained the most value.

Faced in the nineties with a growing imbalance between the declining prosperity of its core city (Minneapolis) and suburban municipalities, Hennepin County, Minnesota, pioneered a different path. In 1994, Hennepin County launched an urban redevelopment program, “Hennepin Community Works” (hereafter HCW) that clearly supplemented the more common models of county activity. HCW devised an entirely new redevelopment role for the county, and has consequently had a major impact on Minneapolis and its suburbs. 

Since its inception, Hennepin County commissioners have committed close to $200 million of infrastructure spending into a targeted redevelopment program with five goals: (1) to enhance the tax base; (2) to reshape troubled neighborhoods; (3) to improve transportation within the county; (4) to protect and develop green space; and (5) to create new jobs. While much of the U.S. urban past since the eighties has featured decreasing levels of public sector funding and involvement with urban affairs, Hennepin County voluntarily took on substantial additional financial and political commitments with this program

... HCW began here in 1994 as a public works program initially intended to address declining property values. Since then, HCW has significantly transformed portions of the county through major housing, transportation, parks, and environmental restoration investments. Through 2008, HCW launched nineteen projects, totaling $197.5 million in investments.

Minneapolis Neighborhood Revitalization Program.  Separately, the City of Minneapolis developed the Neighborhood Revitalization Program, which sold TIF bonds on Downtown revitalization to raise $20 million per year for 20 years directed to neighborhood improvements (case study, "The Minneapolis Neighborhood Revitalization Program: An Experiment in Empowered Participatory Governance," International Journal of Urban and Regional Research, "Citizen-driven program led to more housing, stronger commercial corridors and better public infrastructure in Minneapolis," MinnPost).  

Neighborhood associations were tasked with working with city agencies like the School System and Parks Board to make improvements.  Early into the program, they realized that most neighborhood associations lacked the technical capacity to lead the effort, so they developed a strong technical assistance program so residents could develop the expertise to successfully create and implement projects.  From the MinnPost:

The NRP drastically altered the landscape of neighborhood associations in Minneapolis. What were once underfunded, small groups that relied primarily on volunteer labor transformed almost overnight into organizations that had the financial resources to enact dramatic change in their neighborhoods. Overall, neighborhoods used just under half of their allocated NRP dollars to construct housing projects — in many cases affordable housing projects.

The third largest allocation of funds went towards economic development and efforts that aimed to revitalize commercial corridors and help support local businesses. The results show that neighborhoods channeled funding in a way that mirrored neighborhood needs, meaning investment was sensitive to the local context. The bottom-up design of the NRP led to increases in housing stock, revitalization of many key commercial corridors, improvement of public infrastructure such as parks and schools, and increases in the institutional capacity of many neighborhood associations.

This book discusses the MAP program in depth.

Oklahoma City Metropolitan Area Projects.  This is a little different.  OKC is more than 3x larger than Detroit.  So while it is funding "metropolitan" projects, they are limited to the boundaries of the city.  MAP is an impressive system that's been through a few rounds.  

Each round puts investments into major community improvements from the riverfront, recruiting an NBA basketball team by building an arena, to school physical sites, the beginnings of a streetcar network, etc. ("Change isn't usually that simple: The repatterning of Oklahoma City's Downtown Streetscape," "Civic culture and organization as an element of community economic resilience").

Detroit's MAP so to speak is what it is doing downtown.  By contrast, it would be interesting to create a MAP 4 Neighborhoods just like the second phase MAP in OKC was MAPs 4 Kids on improving schools.

Other transformational project models include

• Bilbao ("Why can't the "Bilbao Effect" be reproduced? | Bilbao as an example of Transformational Projects Action Planning")
• Liverpool ("Liverpool regeneration as a process for regaining relevance at the regional, national, and global scales")
• Downtown Edmonton's focus on cultural asset development ("Downtown Edmonton cultural facilities development as an example of "Transformational Projects Action Planning"")
• Germany's International Building Exhibition and International Garden Festival revitalization programs ("Hamburg, urban design, and placemaking: big vision, big projects")
• Helsinki's Arabianranta district ("Developing Creative Quarters in Cities: Policy lessons from “Art and Design City Arabianranta, Helsinki," Urban Research and Practice) 
• Portland's developments in transportation and urban design ("Talk by Congressman Earl Blumenaur on "The Portland, Oregion urban revitalization story"")

• Kansas City's streetcar development ("Kansas City Streetcar’s extension is open! Now you can ride from River Market to UMKC for free," KCUR/NPR, "'I was so wrong': Main Street shop says KC Streetcar brought more business than expected," KHSB-TV, "Years before KC streetcar expansion on Main St., development begins to boom in Midtown," Kansas City Star, "UMKC Proposing Student Housing, Retail by Planned Streetcar Terminus," Flatland).  They use a special tax district on properties within 1/3 of a mile of the line to pay for operations.
• etc.  

Luis Hernesto Holguin, left, and his sister Resfa Holguin use outdoor escalators, newly installed at Comuna 13 shantytown as part of an urbanization plan to improve living conditions of residents, in Medellín. (AP Photo/Luis Benav)

Social urbanism as another approach to neighborhood revitalization: Medellín.  Social urbanism is an initiative launched by Medellín, Colombia, to improve neighborhoods and public safety by investing in civic assets like parks and libraries, urban design, new schools, and better transportation connectivity such as public escalators and gondolas in extremely hilly areas, to bike share to finish or begin a transit trip.  

Improvements include a reduction in murders by about 90%--likely, even in the face of the pandemic, crime and murders would have dropped, neighborhoods and life circumstances and achievements would have improved.  

Top-notch amenities like parks and libraries have been placed in some of the city’s poorest neighborhoods. Photo credit: Jorge Gobbi via Flickr

Social urbanism isn't suggested here to deal with public safety so much as to focus neighborhood investments.

-- "Experiments in Social Urbanism"
-- "'Social urbanism' experiment breathes new life into Colombia's Medellin Toronto Globe & Mail
-- "Medellín's 'social urbanism' a model for city transformation," Mail & Guardian
-- "Medellín slum gets giant outdoor escalator," Telegraph
-- "Medellín, Colombia offers an unlikely model for urban renaissance," Toronto Star-- 
-- "Latin America’s New Superstar," NextCity

Cook County property taxes

Counties across the US are mostly funded by property taxes.  If communities within the county decline, and/or costs continue to go up, a county's revenue base is threatened.  Cook County, Illinois, which encapsulates Chicago, has had property tax issues for some time.

High property taxes, higher taxes proportionately on properties owned by lower income households, graft in property tax appeals ("Powerful Chicago official charged with corruption," "County property tax official running for sixth term rakes in cash from appeals industry," Chicago Tribune), and increased number of vacant properties not paying taxes are just some of the issues.

Crain's Chicago Business has an article, Cook County's property tax system is complex and burdensome. Here’s how it can be fixed," listing 7 policy options.

1. Create circuit breakers 
2. Get vacant properties back on the tax roll
3. Increase assessment frequency
4. Reduce government spending
5. Raise other taxes
6. Implement a 'millionaire tax'
7. Address appeals 

I didn't think the solutions were particularly amazing.  Circuit breakers are homestead tax credits.  The article focused on amounts that were pretty minimal.  Some areas of the county have as low as 50% collection rates, because of the high number of vacant properties.  

The County has a lot of different agencies funded in large part by property taxes, and the article suggests perhaps some could be consolidated.

The County has also initiated a reinvestment plan in some of the communities with lagging collection rates, but it's had minimal impact--one property! (Transforming Places).

Once again, this reminded me of the pathbreaking program in Hennepin County, Minnesota, where declines in property tax assessments in Minneapolis, then a declining city, were increasingly worrisome, with potential significant worse outcomes in the future.

Hennepin did an analysis of Minneapolis, and identified the factors that separated the stable neighborhoods from those that were declining.  They created a revitalization program focused on Minneapolis, to turn declining neighborhoods into successful and stable ones.  This journal article, 

"A COUNTY AND ITS CITIES: THE IMPACT OF HENNEPIN COMMUNITY WORKS," Journal of Urban Affairs (2006), describes the program.  What they found is that housing in areas by parks, rivers, and lakes retained the most value.

Faced in the nineties with a growing imbalance between the declining prosperity of its core city (Minneapolis) and suburban municipalities, Hennepin County, Minnesota, pioneered a different path. In 1994, Hennepin County launched an urban redevelopment program, “Hennepin Community Works” (hereafter HCW) that clearly supplemented the more common models of county activity. HCW devised an entirely new redevelopment role for the county, and has consequently had a major impact on Minneapolis and its suburbs. 

Since its inception, Hennepin County commissioners have committed close to $200 million of infrastructure spending into a targeted redevelopment program with five goals: (1) to enhance the tax base; (2) to reshape troubled neighborhoods; (3) to improve transportation within the county; (4) to protect and develop green space; and (5) to create new jobs. While much of the U.S. urban past since the eighties has featured decreasing levels of public sector funding and involvement with urban affairs, Hennepin County voluntarily took on substantial additional financial and political commitments with this program

... HCW began here in 1994 as a public works program initially intended to address declining property values. Since then, HCW has significantly transformed portions of the county through major housing, transportation, parks, and environmental restoration investments. Through 2008, HCW launched nineteen projects, totaling $197.5 million in investments.

Later it was matched by a couple of complementary reinvestment initiatives by Minneapolis, which furthered the impact of HCW and now Minneapolis is thriving.

I have a set of entries on suggesting revitalization programs for East County Montgomery County, Maryland, Pontiac Michigan, and St. Louis.

As I stated in the article about Pontiac, I am embarrassed that as a former resident of Oakland County, it never occurred to me that one of the wealthiest counties in the US should have created a specific revitalization program for Pontiac.  Although the county was one of the first in the US, to create a Main Street commercial district revitalization program to support the various smaller towns across the country.

-- St. Louis: what would I recommend for a comprehensive revitalization program? | Part 1: Overview and Theoretical Foundations," 2021
-- "St. Louis: what would I recommend for a comprehensive revitalization program? | Part 2: Implementation Approach and Levers," 2021
-- "Revisiting St. Louis revitalization planning in the face of population shrinkage," 2023

-- "Pontiac Michigan: a lagging African American city in one of the nation's wealthiest counties," 2022

-- "Social urbanism and equity planning as a way to address crime, violence, and persistent poverty: (not in) DC," 2021 

-- "East County, Montgomery County, Maryland: Council redistricting spurs ideas for revitalization | Part 1 -- Overview," 2021

Cook County needs a similar program.  The current program, which has led to the rehabilitation of one property, is obviously a failure.  But a quick Google search shows a number of revitalization programs.  Obviously, they need to focus, while also address the property tax conundrum.

=====

In DC, my experience was that additions to transit infrastructure done right had the most and fastest impact on neighborhood revitalization.  Chicago and Cook County, though served by heavy rail and bus transit, as well as commuter rail service, like most everywhere, still has opportunities for transit improvement, and that should be leveraged as part of a "Cook County Works" program.

Good quote on arenas and stadiums as "performing arts centers" attractions for cities

 Right now there's a lot going on in stadium and arena deals:

• Chicago: the White Sox MLB and Bears NFL teams want new stadiums
• Boston: the Revolution soccer team aims for a stadium in Everett, just outside Boston
• Dallas: the Mavericks NBA team along with the Stars hockey team wants a new arena, preferably with a casino, which isn't yet legal in Texas
• Kansas City: the Chiefs football team and the Royals baseball team just lost a sales tax extension which many attributed to a poorly defined program for use of the money
• Las Vegas/Oakland: the Athletics MLB team is moving to Las Vegas with an interim stop in Sacramento 

The Las Vegas Athletics aren't interested in a throwback stadium design

("The Baseball Stadium That “Forever Changed” Professional Sports," The Ringer, and 

"Larry Lucchino, baseball executive who helped end Red Sox ‘curse,’ dies at 78," Washington Post).

• Nashville/Portland: want a baseball team and have been working for one for a lot longer than Salt Lake.  Interesting take on the Nashville effort, which has lots of diversity and equity elements ("In seeking the Oakland Athletics, Sacramento must be careful," Sacramento Bee) which likely mean zero to the other MLB owners
• Oklahoma City: a few months ago extended a sales tax to pay for renovations to the arena for the Thunders NBA team
• Philadelphia: the 76ers basketball team proposes a new arena they'd fully control on Market Street ("This Philadelphia Inquirer article on the issues around Market Street East is a tour de force"), in response Comcast, where they play now has suggested new facilities as well ("Comcast Spectacor envisions a $2.5 billion transformation of the South Philly sports complex" and "Comcast Spectacor one-ups the Sixers with a smart, urban plan for the sports complex," Philadelphia Inquirer)
• Salt Lake: the state wants baseball and hockey teams and just agreed to $1 billion to support baseball ("Legislature approves funding plan for MLB stadium in Salt Lake City," Utah News Dispatch) and another billion for a new arena for the Utah Jazz with the expectation that it comes with a new hockey team ("Utah rolls out NHL arena project bill one day after revealing MLB ballpark plan," Salt Lake Tribune)
• San Antonio: the Spurs NBA team is planning a new arena
• Washington, DC: the Capitals NHL team and the Wizards NBA attempted to decamp to Northern Virginia but ended up getting a deal to stay in DC.  Plus the NFL team wants a new stadium and Mayor Bowser of DC would like to waste money attracting them back to DC ("House passes bipartisan bill to let D.C. redevelop RFK Stadium site," Washington Post).

There's an article in the Fort Worth Star-Telegram, "America's future sports stadiums finally at a cross roads," suggesting that the KC vote indicates voters are tired of paying subsidies to billionaires for sports teams.  

Any proposal for a new home of the Stars and Mavericks should serve as a litmus test where America sits with its tolerance to subsidize venues for teams that take a disproportionate share of the revenue. As the valuation of sports franchises continues to shatter logic, perhaps citizens will have a hard time justifying giving them more money.  

I'm not sure I agree.  I think the KC vote was more about not getting enough information to make a good decision, with a foundation of a bit of lack of trust ("Why Royals and Chiefs need to say we heard you, not act out ," Kansas City Star).  

And as I blogged, the Virginia Governor sprung the arena proposal on the public and the Legislature, giving them only 14 weeks to decide ("Wizards and Capitals teams staying in DC after all and the failure of the mansion tax referendum in Chicago have one thing in common: failure to take the time to build consensus").

In Oakland, the city was willing to provide a fair amount of money, but the MLB team owner wanted even more.

The S-T article quotes Ron Kirk, mayor of Dallas when the American Airlines Center was built, opening in 2001, and he has some interesting points.

1.  30 year maximum life for the facility

Ron Kirk knew going in what the lifespan would be for a replacement for Reunion Arena. “Thirty years,” he said. 

Kirk was the foremost political figure to lead the American Airlines Center project from its conception to construction. The AAC cost $420 million to build, and it opened in October of 2001. 

No one in any rational state who builds a house, or even an office space, thinks before they sign the necessary 43 million documents required for construction, says, 

Area around the Dallas arena, 2001.

“Thirty years and she’s done.” “That’s the reality of modern sports,” said Kirk, the former Dallas mayor, in a recent interview. “You build a building and when it’s life span is over, you build a new one. That’s what these owners want.”

2.  Sports stadiums and arenas as performing arts/cultural facilities

You either play, and operate, the glorified museum-stadium, which is a tourist attraction, or you “need” the new one complete with an assortment of new-age amenities. “The argument is always you never need to build it; we battled that when we did it here,” Kirk said. 

“We put in $125 million, and there’s been over $3 billion in private investments around (the AAC). It worked spectacularly.” 

Before the construction of the AAC, the area was an industrial hazard site. Literally. Since the building went up, it’s morphed into a mixed-use site for offices, residential space in the form of condos, and retail space with bars and restaurants. 

Area around the Dallas arena today 

“What drove a lot of energy then, in the ‘90s and not just in Dallas, all o.f the urban areas had been hallowed out by families fleeing and businesses going to the suburbs,” Kirk said. 

“The one thing that brought people back into the urban areas were arts, culture, sports, museums, and concerts. “It’s a performing arts building; that’s what you need to think of it as.”

Response.  

1. How did Dallas get so much spillover development around the arena?  Those before and after photos are startling.  Did they have a plan, an implementation organization or did it just happen?  Few arenas or stadiums generate this level of change.  It could be location (I've never been to Dallas) because a lot of arena and stadium placements have flawed locations.
2. Chicago.  The baseball team owner chose a bad location for the current stadium, and had no interest in embedding it in a neighborhood commercial district, despite the example of Wrigley Field a few miles a way.  While the new "stadium city" initiatives like Ballpark Village in St. Louis, District Detroit, or the area around the Braves stadium aren't city embedded per se, creating a mini city of development around them is what they do.
3. Chicago.  The Bears are vacillating between a suburban location and the Chicago waterfront.  They propose a domed stadium, and placing such facilities in parks is very controversial in Chicago.  The Chicago Tribune editorialized, "The Bears have yet to say why they need the lakefront. Why even think of saying yes without that?," stating the Bears haven't provided a good rationale for a waterfront location, that a dome would hide the water, and that it would change the park with a museum and cultural center (there are 10 such facilities) to a sports and entertainment district. (Similar to the issue in KC about lack of definition.)
4. Dallas.  The interesting thing is that Mark Cuban's sale of a majority of the basketball team to Las Vegas Sands with the aim of a casino means that sports betting/casino ("Mark Cuban has Vegas-like vision for Dallas, new Mavs arena if Texas OKs casino gambling," "Mark Cuban: ‘I’d like to see resort casino gambling,’ plans for making Texas a destination," and "Mark Cuban, the Mavericks and the great plan to bring a casino to Dallas," Dallas Morning News) or "ballpark village" (ULI case study, "Stadium anchored mixed-use development," Realogic, "It takes a ballpark village: stadiums, coalitions, and growth in two cities," MIT thesis) are the two future paradigms for boosting revenues.    
   
   
   
5. Kansas City.  Probably better to have the baseball team downtown, but it's not a city with well developed transit.  For example, the 76ers argue by changing locations, instead of the 30% getting to the arena by transit now, it will be 60% on Market Street.  That won't happen in KC.  Plus you still need to do tons of marketing etc. to make the stadium work for other actors.  If games are scheduled early, people won't eat off site.  And increasingly, baseball patrons aren't interested in anything but eat and drink, so they won't help adjacent retail.
6. Nashville.  Business doesn't care much about non business metrics.  Some of the residents are skeptical that the "wealth creation for the black community" objectives are reachable ("Some North Nashville Residents Wary of MLB Pitch," Nashville Scene).
7. Philadelphia.  Probably Market Street is a better location and needs the jump in interest.  Plus more people will take transit to get to the games, comparable to the numbers for Madison Square Garden and Barclays Center in Brooklyn, which are the highest for transit using nationally.  The trick is to integrate the arena better and improve the street, while arenas tend to have deadening effects.
8. Salt Lake.  Many years ago there was a study by American Business Journals about the capacity of metropolitan areas to add professional teams ("American City Business Journals calculates the capacity of North American metropolitan areas to support new/additional professional sports teams" 2015, archive.ph original article), also taking into account college sports (college football especially is big in Salt Lake).  Salt Lake didn't have a lot of financial capacity to add beyond NBA, soccer and Utes football.  It's smaller in population than most of the smallest teams in the professional sports landscape. But billionaires are billionaires and they don't think economics applies to them.

Wizards and Capitals teams staying in DC after all and the failure of the mansion tax referendum in Chicago have one thing in common: failure to take the time to build consensus

 Change is hard.  My experience in the civic arena is that it takes "a couple rounds" of putting the idea out there before there is consensus to go forward.

I wrote a bunch about failures of transit referenda in Tampa Bay and the State of Georgia in the 2010s.  Georgia introduced a new way to create transportation districts, then expected people to vote up or down in less than a year ("Failure of the transit-roads sales tax measure in Metro Atlanta," 2012).  

In Tampa, the two counties can't figure out how to work together on transit, nor can they build support within their counties (Voters reject Greenlight Pinellas," Tampa Bay Times, "My Ride/My Road: Polk County Voters Reject 1-Cent Sales Tax Increase," Lakeland Ledger, 2014).

There are plenty of other examples.

My point was that to do breakthrough initiatives, you have to build the support for it, people are conservative, and that takes time.  The other way I put it is that the more time you spend on the front end, with civic engagement and a slew of meetings and other activities, the faster it goes on the back end.  Finally, I hate losing. So I'd rather set myself up for success by taking the necessary time to build support.

1.  Sports Arena in Alexandria.  Virginia has a Republican Governor and a Democratic State Legislature.  Announced in December ("Lawmakers vote in favor of plan to bring Capitals, Wizards to Virginia," Washington Post), he wanted to move the Capitals hockey team and Wizards basketball team to an arena in Alexandria, claiming billions of dollars of benefits and many thousands of jobs("$730 rooms, $75 parking: Youngkin’s own report calls arena forecasts rosy").

Note while Downtown DC benefits from CapitolOne Arena, it's not like it drives the economy.

To stoke development in that area, a process that has been going on for about 20 years--giving the rights to develop to the team owner, which is the trend in stadium and arena development.  Team owners say they need the extra money to spend on the team, especially with the decline in broadcast revenues and minimal revenues from streaming.

-- "Suburban stadium/arena interest a function of new, younger generations of ownership or a better real estate play?," 2023

-- "Capital One Arena, Wizards and Capitals may move to Alexandria | Why not the RFK campus?," 2024
-- "Framework of characteristics that support successful community development in association with the development of professional sports facilities," 2021

The deal called for at least $1.35 billion in tax incentives ("Caps, Wizards complex in Virginia could get largest arena subsidy ever").  

It was a shocking move.  And not all the state, especially State Senator Caroline Lucas, was on board ("Leonsis finally met arena nemesis Lucas, but maybe too late to save it").

Other issues also brought more opposition ("Plan to move Capitals, Wizards to Virginia draws transportation worries," "Plan for new Caps, Wizards arena in Va. stirs up its would-be neighbors") including a casino proposal ("JBG Smith blames Tysons casino conspiracy for derailing Potomac Yard deal," Alexandria Now).

Governor Youngkin just sprung this on everybody.  And "everybody" needed more than 3 1/2 months to get on board.  Let alone vote on it.

An article about the aftermath in the Post , "Va. Gov. Youngkin arrived like a GOP star, but arena failure clouds legacy," made the point about Youngkin, on most new initiatives he proposes, doesn't attempt to build support for them in advance, therefore fails.  (Also see "After Va. arena plan collapses, politicians and dealmakers trade blame" and " Proclamation: Governor Glenn Youngkin Statement On Monumental Sports & Entertainment Project.")

But Holsworth, the political analyst, said he saw a significant difference in the way Youngkin approaches big initiatives compared with previous governors. When Republican George Allen wanted to impose new education standards in the 1990s and had a Democratic legislature, he said, the governor appointed prominent Virginia educators to key administration roles and mounted a campaign around the state to build support from lawmakers and local officials — all before any votes were taken. 

Similarly, in the 2000s, Democrat Mark R. Warner logged miles around the state and made endless PowerPoint presentations to persuade business groups and a GOP legislature that Virginia had to raise taxes to preserve its high bond rating. 

Youngkin made no such broad effort to pave the way for the arena ... “It’s just not a very keen understanding of the political dynamics of Virginia,” Holsworth said.

So it failed and the teams are staying in DC ("Caps, Wizards will stay in D.C. under deal announced by Bowser, Leonsis," Washington Post) getting $500+ million from the city to do so, and getting the rights to redevelop the adjacent Gallery Place development to add some revenue streams ("MRP Realty to buy Gallery Place, make room for Monumental Sports & Entertainment," Washington Business Journal).

Under the terms of the deal signed Wednesday, pending expected D.C. Council approval next week, the District will send $515 million over three years to finance Capital One Arena’s modernization. In addition, the agreement provides for 200,000 square feet “of newly programmed space throughout Capital One Arena and in the Gallery Place building next door.” The terms also call for a new downtown practice facility for the Wizards, with “options including top floors of Gallery Place,” per Monumental’s release.

Campaign flyers for the Bring Chicago Home referendum at a march to the polls event March 9, 2024, in Chicago. (Vincent Alban/Chicago Tribune)

2.  Real estate transfer tax in Chicago.  In Chicago, new mayor Brandon Johnson proposed a higher transfer tax rate on properties selling for more than $1 million, to pay for affordable housing.  

Called "Bring Chicago Home," he proposed it in September ("Chicago mayor introduces real estate transfer tax plan to combat homelessness," Axios) for a vote this March.   That's 6 months!

It was estimated the tax could raise $100 million per year.

Naturally, the business community especially the real estate development community was against and could spend a lot of money fighting it.  Plus a lot of citizens were indifferent.

A number of cities, including DC, have such a tax, so it's not novel (Local Mansion Taxes: Building Stronger Communities with Progressive Taxes on High-Value Real Estate, report, Institute for Taxes and Economic Policy), the issue is getting it passed.

• As of early 2024, 17 cities and counties have progressive taxes on high-price real estate sales, also known as “mansion taxes.” Several others are currently considering adopting these policies.
• Together these taxes raise nearly $3 billion in annual revenue, equipping communities with resources to make progress on critical priorities of local and national concern including housing, education, and infrastructure. 
• Local mansion taxes have been around since 1982, but the momentum for them has built in recent years. 
• Nearly all of today’s mansion taxes were enacted or expanded between 2018 and 2023. 
• Local mansion taxes play an important role in rebalancing upside-down tax codes, advancing racial and economic equity, and raising new revenue to build more resilient and inclusive communities. 
• Mansion taxes have proven popular with voters: When put on the ballot, measures to enact or expand mansion taxes have succeeded 86 percent of the time.

Which they didn't.  It was also challenged in court by real estate interests, who didn't even want the votes to be counted ("Real estate group appeals Bring Chicago Home to state Supreme Court," Chicago Tribune).  The court said no, count the votes.  

But it didn't pass anyway, losing roughly 54% to 46%, a 21,000 vote difference in a low turnout election ("Chicago Voters Reject Mansion Tax in Blow to Mayor Johnson," Bloomberg).

Some electeds are chastened ("City Council’s Progressive Caucus responds to ‘Bring Chicago Home’ defeat with ‘we heard you’ humility," Chicago Sun Times). Not the mayor ("Johnson, defiant after 'Bring Chicago Home' loss, vows agenda push will 'get stronger'," Crain's Chicago Business).

But they shouldn't be so chastened, just recognize that they mishandled the initiative, by trying too soon for a vote without building the consensus for the need.  From the Axios article, "Why the Bring Chicago Home ballot measure failed"

1. People not affected by homelessness don't understand it
2. Voters fear rising residential taxes if the measure further hurts commercial real estate
3. People worry that the tax could stifle future development
4. Citizens have little faith in city leaders
5. Voters were confused by the measure's changing legal status and swayed by opponents' commercials
6. The measure lacked spending specifics

Conclusion.  My point is pretty clear.  Losing sucks.  So take the time necessary to build the consensus and coalition so you can win.  I don't understand why elected officials can't figure this out.

Especially in Chicago when you know from the outset that monied interests, in this case the commercial real estate industry, will fight you hard.  Or in Virginia, where the governor was asking to subsidize a billionaire with $1.35 billion, based on dubious claims about the economic value of doing so.

When I used to work in restaurants, there was a woman who was really fast but made mistakes and I would say "speed kills."

In this case, "Speed kills good ideas."

Municipal finances face a shaky future

The entry, "The real lesson from Flint Michigan is about municipal finance" (2016) makes the point that in the US, financing systems for local government were created when the nation experienced rapid growth, and for the most part they've never been addressed in a substantive way since many cities have moved to a position of either equilibrium or shrinkage.

The problem with equilibrium or shrinkage is that personnel is the biggest cost for cities, and wages go up not down, not to mention the issue with retirees and pensions--typically local governments may stint on wages but in return offer great pensions often with health care, but these are underfunded creating significant financial overhang.

Center cities rely in large part on commercial property taxes, and the ancillary revenues that come in association with officer workers.

But the work from home phenomenon that has been driven by the pandemic is going to crash the value of commercial property, both in terms of office space and retail--which is worth a lot less when there are fewer customers ("Hold on tight: How NYC and state must prepare for the possible implosion of commercial real-estate values," New York Daily News).

The Philadelphia Inquirer has an article about this, "City finances, including Philadelphia’s, could go bad fast in this economy, bond expert says."  From the article:

Here are Kozlik’s observations on threats to city finance, many of which fell on his audience like a door slamming shut:

Scared borrowers. As recently as last spring, Kozlik and other analysts were predicting municipalities would borrow a record $500 billion this year by selling bonds to pension funds and other investors. But as interest rates have spiked, cities have been delaying commitments to long-term funding, and bond sales are unlikely to reach $400 billion, this year, or next, either. That translates into fewer jobs and business contracts, and a slower economy.

Rising interest rates. Pension funding, which has cost Philadelphia more than law enforcement in recent years, is no longer Wall Street’s main worry about local governments. Even though public pensions have been drained by the financial markets’ fall and many are badly underfunded, a recent survey shows analysts are even more concerned about rising interest rates and prices, the shrinking U.S. labor force, and divisive politics that prevents decisive policy, as causes for concern that cities will go broke.

Empty offices. Workers aren’t returning to office centers, including Philadelphia’s Center City. Nationally, restaurants, air travel, and apartment rentals have recovered, post-pandemic, but only half of workers have returned to office locations; in Philadelphia and San Francisco, it’s more like 40%.

Lower revenue. With offices shutting, property valuations and taxes are heading down, too.

Crime. Polls show Americans are more worried about crime, and less confident police will protect them.

Construction challenges. Labor and material shortages and cost increases have crimped construction to the point where, even if the federal government resumes billions in funding to cities, city managers have told Kozlik they would have a hard time spending it on projects in the near future.

Politics. Politicization of public policy, which has stalled Congress on immigration and other key issues since the 1980s, has been spreading among state and local governments. States like Texas are banning East Coast investment banks that have adopted anti-oil and anti-gun policies; in California, activists are pressing to punish banks that finance fossil fuels and weapons makers. What that means, in practical terms, is fewer banks available to sell public debt in those restrictive states, and, therefore, higher borrowing costs for taxpayers.

“The speed and magnitude of change, and the number of variables that are evolving is not being recognized by most people,” Kozlik said later in summary. “Most people across various industries are reacting to one or two changes in the landscape. Very few recognize the major transformation going on across the board with labor, technology, education, demographics, and politics.”

Communities growing have less at risk.  But rising prices and interest rates will press budgets, especially for capital planning.  

Constant pressure to reduce taxes is another risk.  But the other risk not mentioned is the constant pressure to reduce taxes.  For example, in Utah, the State Legislature does this every year "to share the benefits of growth."  But when you're growing you need to spend more money, not less, on infrastructure and other programs.  

Cities and counties face real pressure to provide the kinds of programs and facilities people want, as costs and demands rise.  

As conditions become more turbulent, cutting taxes increases risk.

The New York Daily News editorial suggests the following actions, to be proactive, in the face of declines in commercial property tax revenue:

• rethinking zoning. There’s no good reason that in a modern city, buildings are so rigidly categorized into classes, with minimal flexibility between light industrial, commercial, residential, medical and other. A nimbler New York would end unnecessary distinctions to let people find the best uses for space with minimal regulatory hurdles.
• budgeting smartly. Profligate spending that piles ever more recurring spending into the city’s $101 billion-and-growing fiscal plan risks throwing New York off a cliff if and when property receipts revenue plunges (personal income and related tax revenue is already expected to fall sharply this year). 
• Building up reserves and responsibly dialing back bureaucracy are the wisest insurance policies against sudden downward shifts — especially if those coincide with a recession.
• rethinking property tax collections, which have become unfair and incomprehensible over generations. Not only must New York rationalize levies on rentals, condos, coops and single-family homes; it must accept that golden-goose employers whose taxes have defrayed those from residences might not lay eggs forever.
• more sensitively implementing statutes that inflict huge costs on commercial real estate, like the law that will soon start punishing noncompliant buildings with big fines. That’s likely to accelerate a commercial exodus.
  

Project Rehab, University City District, Philadelphia: Best Practice Neighborhood Stabilization Program

In 2020/2021, I wrote a five part series on creating a model framework for systematic neighborhood stabilization, suggesting the creation of a national program comparable to the Main Street commercial district revitalization program, but for neighborhoods/residential property, modeled after a program created in Pennsylvania, called Elm Street.

-- "The need for a "national" neighborhood stabilization program comparable to the Main Street program for commercial districts: Part I (Overall)"
-- "To be successful, local neighborhood stabilization programs need a packaged set of robust remedies: Part 2"
-- "Creating 'community safety partnership neighborhood management programs as a management and mitigation strategy for public nuisance programs: Part 3 (like homeless shelters)"
-- "A case in Gloucester, Massachusetts as an illustration of the need for systematic neighborhood monitoring and stabilization initiatives: Part 4 (the Curcuru Family)"
-- "Local neighborhood stabilization programs: Part 5 | Adding energy conservation programs, with the PUSH Buffalo Green Development Zone as a model," 2021 

The major point is the framework and ability to implement, but that programs need complementary remedies to be able to act, and organized initiative so that they are able to implement and effect change.

Photo from the first Project Rehab project, in 2012.

The Philadelphia Inquirer has an article, "A ‘Mr. Fixit’ helps West Philly residents and businesses cut through red tape," about the Project Rehab initiative of the University City District business improvement district.  It focuses on addressing problem properties--distressed, vacant, etc.--as a way to "cure nuisances" by assisting the property owner, rather than seizing or demolishing buildings.

It's not a huge program, they've addressed about 5 properties per year since the program's creation in 2011.  That demonstrates not failure, but how time consuming the process can be.

From the website:

While Project Rehab responds to the unique needs of each property owner, the core steps of every project are the same. 

 1. Property Monitoring and Identification UCD uses a variety of methods to monitor problem properties in the district. Staff conduct physical surveys to identify distressed real estate, and seek input from community and civic associations as well as concerned community members. Staff also work closely with the City, making use of information and investigations gathered by the Department of Licenses and Inspections. 

2. Owner Identification Project Rehab then uses a variety of resources to clarify property ownership, which can be challenging to unravel. Staff conducts online research and interviews community organizations, neighbors, and owners’ family members. Project Rehab also partners with government offices such as the Philadelphia Revenue Department, the Records and Deeds Office, the Register of Wills, and Licenses and Inspections to obtain information on owners and their properties. 

3. Defining the Course of Action Once we establish contact with an owner, Project Rehab and the owner develop a course of action for the property, which often entails renovation for eventual personal use, sale, or rental/leasing. Whatever the desired outcome, UCD provides a range of free supports and services to help the owner achieve their goals: 

Financing: Working in partnership with local banking institutions, UCD drafts and develops financing packages for owners who want to finance the rehabilitation of the property. 

Rehabilitation: UCD has developed a list of licensed contractors who are experienced with the rehabilitation of distressed properties. Staff provide support and knowledge to owners throughout the process, helping to obtain all required permits, licenses and inspections. '

Sale: UCD has built a network of realtors who support those owners who decide to sell their property. Zoning: UCD connects owners with local attorneys and community organizations to work through the zoning process. 

Conservatorship: Project Rehab works with 501-4C not-for-profits to utilize Pennsylvania legislation known as the Act 135 Conservatorship Act to redevelop distressed properties with no known owners. 

Along the way, the Project Rehab team is able to deploy outside the box strategies to help each owner achieve their rehabilitation goals, regardless of the issue surrounding the real estate. From helping a family open an estate to untangling title issues to ensuring that owners are well represented while seeking equity development partners, Project Rehab is a guide and support for property owners.

======

The UCD is an association so to speak, not a typical business improvement district where property owners in the district are taxed a small amount on the assessed value of the property. Instead property owners in the district pay voluntary amounts.

-- "In University City, a model for a [neighborhood improvement district]," Philadelphia Daily News, 2012

It was pointed out to me that this wasn't altruistic, but a strategy by the nonprofit property owners--University of Philadelphia, Drexel University, Amtrak, etc.--to ward off the idea of taxing nonprofit property owners as a way to generate tax revenues for cities.  Some institutions pay what are called PILOTs, or payments in lieu of taxes.  

--"Proposal to eliminate nonprofit property tax exclusion in Maine," 2015

But some cities, which have significant swathes of property off the tax rolls because of the concentration of nonprofit institutions within their borders, look to tax nonprofits too.  (Note that Ontario doesn't have the kind of tax exemption system we do in the US.  Even the provincial government and nonprofits pay property taxes.)

Separately, Pittsburgh is looking for PILOTs as a way to fund infrastructure improvements ("Pittsburgh City Council proposal would turn to nonprofits for infrastructure funding," Pittsburgh Tribune-Review).  

PILOTs are an alternative to an earlier proposal to impose a 1% tax on tuition and medical bills--the city has two major hospital systems and at least two large universities, Carnegie-Mellon and the University of Pittsburgh ("Pittsburgh Councilman Ricky Burgess proposes 1% tax on higher-ed students, medical patients," PTR).

That built on similar proposals, at least for a capitation tax on students, in Providence, Rhode Island.  Providence College was disfavorable ("Student Fee Would Break Bond of Trust").

Community improvement strategies for keeping the property tax base up: Something school systems should think about? | Nesquehoning Pennsylvania

Hennepin Community Works.  I mention quite frequently that Hennepin County, Minnesota created a community improvement program for Minneapolis starting in the late 1980s, because they noticed that with population leakage due to suburban population outmigration, the city's housing stock was depreciating in value, affecting property tax valuations, and therefore property tax revenue.  

They realized that if this continued, it would pose severe economic problems for the county.

They also noticed that the housing that kept its value the best was proximate to high quality amenities such as parks, greenways, and lakes.  This lead them to focus on place-based investments.

Later, Minneapolis developed a couple of complementary programs, and later, the County added light rail transit to the program also.

-- "A County and Its Cities: the Impact of Hennepin Community Works"," Journal of Urban Affairs (2008)

Nesquehoning, Pennsylvania/Panther Valley School District.  The Washington Post has an article, "A closing factory, a booming economy and a town’s search for identity," on the closure of a firefighting truck plant in Nesquehoning, Pennsylvania.  

The company was founded in the late 1940s and was family owned, until the death of its founder.  A couple years ago, the company was sold to a private equity firm owning other firefighting equipment manufacturers, and the decision was made to consolidate KME's operations with other facilities, meaning that the plant in Nesquehoning will close in 2022.

The article says the labor market is decent in the area, so it won't matter so much.  But it doesn't discuss the wage rates at the KME plant, or at other employment alternatives in the region.

It mentions that the founder and the company had a strong philanthropic focus on the community, and the importance of the company to the city tax base.

But it also mentions even with the plant, that the community was experiencing disinvestment.  From the article:

The school district also depended on KME for its tax base. The impact of the factory’s closing was still being worked out. 

But the Panther Valley School District was already in trouble. Its six-year college graduation rate was under 12 percent. The district was severely underfunded, despite having the state’s 10th-highest property tax rate, officials said. Now, it was one of several districts suing the state over education funding. 

Even as Panther Valley saw property assessments increase in 2020, Walck said, the amount of property tax revenue going to the schools declined because so many other properties fell into blight. “It’s not a good situation,” Walck said.

This reminds me of the Hennepin County realization.  

Even in communities with relative success--for example, Nesquehoning is a lot better off than Flint ("The real lesson from Flint Michigan is about municipal finance," ) or Pontiac ("Pontiac Michigan: a lagging African American city in one of the nation's wealthiest counties," 2022), cities in Michigan that were once very successful as home to major automobile manufacturing factories, but as those plants shut down, the local economies were devastated--shouldn't they look at property tax assessments and revenues as indicators of community success, and develop programs similar to Hennepin County Works, as a way to ward off economic decline?

Typically, when people look at the property tax-school funding issue, it's more about how communities with lower tax bases underfund their schools by comparison to high tax base communities (The Property TaxSchool Funding Dilemma, Lincoln Land Institute).

But this element is subtly different.  

Oakland County, Michigan: city/township school districts versus county-wide school districts.  Interestingly, when I went to K-12 schools in Michigan, Oakland County then was (and still is) quite wealthy.  School districts are organized mostly by city or township, not the county as is typical in Virginia and Maryland, although some districts might span multiple communities.  

Many were quite wealthy, with many fully enrolled schools.  Although even then, the next door school district was starting to close schools on the edge of its boundaries (one of the schools happened to be close by, even though it wasn't our school district).  

Now, many of the cities that had multiple high schools with burgeoning enrollments have only one school, and many schools at all levels have closed and consolidated.

I wonder though how the tax base has been?  It's probably been reasonably stable, not hurting school district revenues, especially as they've responded to falling enrollments by closing schools.

One advantage of county-scale school districts is the ability to share revenue across a county.  

OTOH, standard models for what schools should look like ("Missing the most important point about closing Clifton School in Fairfax County,"2011; "The bilingual Key Elementary School in Arlington County as another example of the "upsidedownness" of community planning," 2019) means that they might not be making better decisions either.

Conclusion.  School boards in smaller communities these days seem to be more concerned about whether or not to wear masks ("The Topic Of Masks In Schools Is Polarizing Some Parents To The Point Of Violence," NPR), parent involvement ("As School Board Meetings Get Hostile, Some Members Are Calling It Quits," NPR), book banning ("Books are being banned from school libraries. Here's what that does to students," USA Today), and politicization more generally ("How One Governor’s Race Has Channeled National and Local Anger Over Schools," Education Week).

I wonder if they are capable of thinking more broadly about funding and how to invest in schools and communities in order to maintain and improve the property tax base, to protect funding streams?