Archive for October, 2008

“Gaming the Tax Code” Hearing Yields No Winners

October 28, 2008

It didn’t break through the coverage of the presidential election or the meltdown of our financial system, but corporate welfare was center stage at the Capitol last Friday.

In his fourth Congressional hearing into the economic benefits – or lack thereof – of taxpayer-subsidized stadiums, Rep. Dennis Kucinich (D-Ohio) summoned to Washington the masterminds of America’s most expensive stadium: the Yankees’ new palace going up in the South Bronx. There was Randy Levine, President of the Yankees; Seth Pinksy, President of the New York City Economic Development Corporation; Martha Stark, Commissioner of the New York City Department of Finance defending the project. Also testifying was Assembly Member Richard Brodsky who as Chairman of the state’s Assembly Committee on Corporations, Commissions and Authorities is conducting an investigation into the use of public financing for the project.

If attendees (yours truly sat in)  and web watchers (see www.fieldofschemes.com and www.atlanticyardsreport for the play by play) expected the hearing to clarify how the Yankees project  - considered by many the murkiest deal in recent New York history – got a bundle of bond financing, they came away disappointed. (more…)

Can Slowdown in the Chicago Suburbs Lead to Smarter Growth?

October 23, 2008

Chicago-area advocates of more sensible growth and land-use policies got a boost this week when Chicago Tribune columnist John McCarron urged the region’s public officials to see one upside of the painful economic crisis: a chance to put the region’s “suburban sprawl machine” into reverse.

McCarron, an expert on urban affairs and state and local fiscal policy, cited problems in previously booming Chicago exurbs, where higher gas prices have made long commutes painfully expensive, and where affordable housing and public transit are limited or non-existent. He called on the region’s public officials to rethink the “anything goes” development and land use policies that have led to massive traffic congestion, high commuting costs, “monster” mortgage payments, and the loss of agricultural land.

The editorial described the redevelopment of an old naval air station in suburban Glenview as an example of more rational, energy-efficient and compact suburban development based on accessible public transit. A recent report by Chicago Metropolis 2020, a business-oriented civic policy group, predicts that seniors and low-income immigrants (two groups leading the region’s population growth) will demand more such compact and transit-rich communities, as well as more affordable housing.

Even if the recession limits some smart growth investments, McCarron believes local governments can still require private developers to take common sense steps to increase energy efficiency, transit access, and the number of pedestrian walkways.

Besides McCarron’s suggestions, other smart growth measures, affordable even in a recession, include promoting the state’s little used “business location efficiency” incentive, which provides a moderately larger corporate income tax credit to companies locating near affordable housing and public transit. McCarron is certainly right to urge Illinois officials to respond to a bad economy with policies that both promote more sustainable development and save taxpayer dollars.

Making Development Work for Local Residents

October 21, 2008

Community benefits agreements are changing the power dynamics of local economic development in many parts of the country. Among the most important of the benefits that these agreements can bring about are high-quality jobs for low-income workers. The Partnership for Working Families (PWF), which is spearheading the CBA movement, recently published a report, Making Development Work for Local Residents, that describes the gains that have been made with local hiring programs.

Written by Kathleen Mulligan-Hansel, the study finds that “the best local hire programs create first source referral systems to coordinate worker recruitment and screening, liaise with developers and employers, refer workers and support them as they navigate the hiring process, and link workers with support services that can help them stay on the job.” The report emphasizes the need to recognize the significant differences between the hiring process for temporary construction jobs and for permanent positions at the development site.

The findings in the report are based on nine case studies, mostly in California. One of the most successful was the Hollywood and Highland Center project, which included construction of the Kodak Theatre, now home to the Academy Awards. In the project, completed in 2001, 19 percent of the construction hours were worked by local residents, and 36 percent of the permanent jobs went to locals.

PWF is using the release of the report to kick off a broader effort to use local hiring programs to transform regional economies. That effort includes the launch, in cooperation with Cornell University’s School of Industrial and Labor Relations, of the Construction Career Opportunities Project. Its goal is “to identify, study, support and promote promising approaches to elevating union density in the construction industry and increasing access to building trades careers for low-income urban residents.” That’s real development.

Will Chicago’s Budget Crisis Finally Curb TIF?

October 21, 2008

Chicago city government faces a two-year deficit of at least $469 million, with additional massive shortfalls looming through 2012. Mayor Richard Daley has proposed some draconian steps: laying off over 900 city workers, eliminating over 1,300 unfilled positions, raising city amusement and parking taxes, and imposing six days of unpaid leave on “non-essential” city employees.

Daley blames the unexpectedly large deficit on the economy, but others are citing causes the mayor is not eager to discuss, such as the city’s overuse of tax increment finance districts (TIFs). Chicago had 37 TIF districts in 1997; it now has 155; they can last 23 years and even be extended 12 years beyond that.

The original purpose of TIF in Illinois was to help genuinely “blighted” neighborhoods. However, under Daley, Chicago has been a leader in making TIF an all-purpose development and attraction tool even in already thriving or growing parts of Chicago, including the commercial/financial powerhouse called the Central Loop.

In their analyses of the city’s budget crisis, both dailies, (the Tribune and the Sun-Times), and an alternative weekly (the Reader) have all cited TIF’s massive diversion of property tax revenue –now $500 million annually –from city services, schools, parks and other local services.

The revived debate over TIF’s harm to public services is a tribute to the now-defunct Neighborhood Capital Budget Group. As their ground-breaking 2001 study Who Pays for the Only Game in Town? revealed, many Chicago TIFs are in areas that were the opposite of blighted. Now the high price of diverting revenue from areas that were already rising in value without the TIF boost is coming home to roost.

Despite these pressures, Mayor Daley stands by his TIFs, telling Tribune editors: “If we didn’t have that [TIF], we’d be in deep (bleep).” But some change is evident. The city recently dropped efforts (described in the earlier blog The TIF That Won’t Die?) to extend by 12 years the massive Central Loop TIF district when Gov. Blagojevich reportedly demanded more disclosure on its “winners and losers.”

CBA Moves Forward in Pittsburgh

October 1, 2008

Pittsburgh has joined the list of cities with community benefits agreements. The plan is moving forward after the Pittsburgh City Council gave its blessing to the agreement, which was signed by several public entities as well as community groups and a private company. The One Hill CBA Coalition negotiated the deal with the owners of Pittsburgh Penguins hockey team, as well as the City of Pittsburgh, AlleghenyCounty and the county Sports and Exhibition Authority. The $750 million project includes a new arena for the Penguins and redevelopment of the arena where the team currently plays.

The One Hill CBA Coalition was formed in April 2007 when city and county officially agreed to subsidize a new arena for the team in the city’s Hill District. The Coalition consists of 97 community groups, church groups, small businesses and historic preservation groups. Carl Redwood, Jr., Chairman of the Coalition, told me he wanted to make sure the development was beneficial to Hill residents: “We needed to determine our community’s future and development projects that fit into our plan.”

Pittsburgh UNITED, a chapter of the Partnership for Working Families, played a crucial role in the coalition’s success by mobilizing allies from around the city. For instance, the group organized a bus tour for progressive allies and for members of the media to show them areas of the Hill that would benefit from a CBA. Ultimately, the media started talking about the importance of family-sustaining jobs, community involvement and giving workers freedom to organize.

Local elected officials and the owners of the Penguins were originally resistant to the idea of a signed CBA. After months of public actions and press coverage, the Penguins and the elected officials had no choice but to bargain with One Hill. Subsequently, the final negotiations involved community leaders, County Executive Dan Oronato, Mayor Luke Ravenstahl and Penguins President David Morehouse.

The CBA will involve the people who live in the Hill District in numerous ways and help to rebuild their infrastructure and economy. First, the Penguins and the city’s Urban Redevelopment Authority will each provide $1 million for a locally-owned full-service grocery store in the district. Additionally, residents will have access to a local employment center that gives district residents access to jobs created at the new arena and the redevelopment project that will pay $12 to $30 an hour. The CBA also calls for the creation of the master planning committee which sets forth development guidelines. Along with the construction of a community center for youth, families and seniors, the Hill District will also see the creation of a Neighborhood Partnership Program centered on social services for the neighborhood.

While the CBA is seen as a victory, Redwood admits that there are some people in the community who feel the agreement did not go far enough given the $290 million subsidy. Redwood emphasized the need to continue community involvement: “To have a victory like this is important but we need to build upon it.”


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