Ten Common Growth Subsidies and Corresponding Growth-neutral Policies

The following was excerpted from Better Not Bigger by Eben Fodor. Shown here with permission from the author. For more information see Fodor and Associates and New Society Publishers.

Typical Growth Subsidies/Incentives are listed below with their corresponding growth-neutral policies.

Infrastructure

Free or subsidized public infrastructure to serve new development, such as new or expanded roads, sewer systems, water systems, schools, fire stations, libraries, etc.

Growth-neutral Policy: Use development impact fees to recover the full costs for all types of public intrastructure required to serve new development.

Economic Development Programs

Most traditional economic development programs are designed to promote growth. They include a wide variety of tax subsidies and grants to new and expanding businesses, free employee training, free city consulting services, and many more programs used to stimulate business grtowth.

Growth-neutral Policy: Terminate costly economic development programs that cannot clearly demonstrate a net public benefit.

Developer Incentives

Examples include selling city-owned land to developers below full market value and public-private development partnerships where the public ends up with the short end of the stick.

Growth-neutral Policy: Require:

• greater public accountability.
• property value appraisals before sale.
• competitive bids.
• public cost-benefit analysis for joint partnerships.

Development Services

Not charging the full cost of processing building permits, reviewing plans and performing inspections.

Growth-neutral Policy: Charge full cost for all city development services.

Land Use Planning

Much of local government staff work on urban land use and transportation planning are part of the process of planning for and accommodating growth.

Growth-neutral Policy: Let new development pay for growth-related planning activities.

Regulations

Waiving environmental and land use regulations, or failing to enforce them, helps attract new industry at the public's expense.

Growth-neutral Policy: Apply local regulations evenly.

Land Use Changes

Rezoning land to allow developers to make more money off their projects ("windfall" profits)

Growth-neutral Policy: Local governments can recapture developer windfalls created by the public sector through negociated concessions.

Affordable Housing Programs

Poorly designed affordable housing programs can end up being big public growth subsidies that are a boon for residential developers.

Growth-neutral Policy: Avoid directly subsidizing home construction. Use regulatory approaches like inclusionary zoning and others described in Chapter 4. Try direct rent or mortgage payment assistance to low income families. Use existing housing stock rather than building new homes. Avoid programs where the city becomes a developer.

Federally-subsidized Road Building

Many of the big road and bridge projects that encourage growth and sprawl are funded primarily by Federal taxpayers.

Growth-neutral Policy: Learn to say "no" to Federal money.

Tax Increment Financing Districts

TIF districts were created in the late 1960s and 1970s to channel local tax dollars to blighted downtowns. They exert a preemptive priority on the use of public funds for business and infrastructure expansion.

Growth-neutral Policy: Phase out these districts. Stop making new TIF investments and pay off existing bonded debt.