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Urban Planning Mon Sep 19 2011

TIFs and the Race to the Bottom

Phil Rosenthal had a great piece in the Trib about the core policy questions that arise in the debate about TIF: Who needs subsidies? Working families? Or big companies?

On the one hand, you have unceasing waves of foreclosures hitting Chicago neighborhoods, contributing to blight, affecting property values, and, most importantly, putting families out of their homes. Without question, these harm a local economy.

On the other, communities need jobs. The flight of manufacturing from Chicago degraded the city's middle class significantly, and only an infusion of professionals to gentrifying neighborhoods has kept the median income steady. If employers are only willing to relocate with lavish subsidy, whatever our ideological or moral objections, it may be necessary.

Add to this a third layer: to what degree are we actually solving a problem, and to what degree are we shuffling deck chairs? From Rosenthal's piece:

"It depends on how you view the geography of our economy," said Rachel Weber, an associate professor in urban planning and policy at UIC. "If you think of the upper Midwest as one interlinked economy that competes with Europe and China, then moving these pieces around is not necessarily a benefit. If you look at it from the perspective of the city of Chicago, this is a winner. It depends on the scale of the economy you think matters most."

Beyond the process concerns, one of the challenges that TIF-style economic development presents is stability. TIFs are a weapon in the battle between communities and states to lure business away from one another, which changes the net but does nothing to the gross: the pie doesn't grow, in other words, between regions and states. How many subsidies are enough? What's to keep a company willing and able to chase the best benefits from staying put long enough to truly plan around?

Mayor Emanuel, like his predecessor (whose name is not "Mayor My Predecessor" as Emanuel would have you believe), has an intense policy focus on keeping Chicago a "global city." As the global economy has become more and more integrated and capital freed from parochial bonds since the 1970s, the "global city" idea has majorly informed of metropolitan areas has formed the basis of urban planning.

In her influential book Cities in a World Economy, Sasskia Sassen teased out what this often amorphous concept of a "global city" means:

[T]he forty or so cities that currently qualify as 'global cities' fulfil three major functions. They are command and control centres for the organisation of the world economy, key locations and marketplaces for finance and specialised services, and also major sites of production, including the production of innovation. [Sassen] stresses that global cities cannot be treated as single entities and that their social and cultural determinants must be taken into account to understand their economic trajectories.

The intense specialization and capital requirements of these functions requires significant infrastructure and social capital investment. Like the human brain, they consume a lot of resources. The professionals and the social networks in which they move require certain modes of urban living, access to major research institutions, access to power, and generally little interference from the state. Requirements like these often come to the detriment of the type of "neighborhoods first" governance that was the center piece of Harold Washington's reforms in the 1980s. Thus the constant friction between funding for "downtown" and Millennium Park versus investment into "the neighborhoods" and relief for cash-strapped families.

Competition for international capital and the industries, social networks, and professionals that accompany it is only sharpening. What's more, the policies needed to compete can seem to the public to be a series of desperation measures to stay relevant, with investment in working class communities forever put off into some future where there is some stability. And if the fictional wealth bonanza of the 1990s taught us anything, even seemingly dynamic changes to the fundamentals of the economy can be illusory. The example in Chicago is stark: the collapse of the housing market led directly to the tanking of Chicago's revenue base which was kept afloat by huge surges in Real Estate Transfer taxes.

The race to the bottom indicates there is a bottom, but the analogy can't be stretched too far. In reality, what is considered an acceptable level of social spending is constantly revised downward, the public common is consistently narrowed, and neighborhood participation in planning low-rated into oblivion.

Still, the abuse of TIFs by Mayor My Predecessor has given them a bad name, but they are not by any means inherently bad. To the contrary; one can easily imagine how TIF districts could be used as a tool for community control over and input into local planning and development decisions. A first step to resolving the type of tension Rosenthal reported on is to work towards some kind of consensus on the question of what makes a city prosperous, and to what degree our "global city" position needs to be balanced with true local ownership over policy and planning.

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