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Got Sprawl? Get Smart. PDF Print E-mail
News/Features - Local News
Wednesday, 25 October 2000 18:00
Over the past five years, Tax Increment Financing (TIF) has come to a proverbial head in Iowa, especially Davenport. Davenport’s controversial track record in applying TIF within its economic development policies has brought the debate to the City’s public arena, where TIF is now, and has been, greatly challenged by various citizens groups, including Citizens United for Responsible Vision (CURV), QC Interfaith (QCI), and 1,000 Friends of Iowa (TFOI).

TIF’s original intent was to create economic incentive for the private sector to invest in projects/properties within declining areas of a community where blight and deterioration have occurred. The incentives come in the form of either tax abatement or cash allocation to be paid back through the incremental property taxes that are realized because of the property improvement. These incentives can amount to huge dollars in benefits for those who participate. TIF was designed as a win-win-win program that, when used properly, benefits the public and privates sectors. The public sector benefits because the tax base is increased due to the project or property improvement, bringing more dollars into the municipality’s general fund, as well as those of school districts, counties, and states. Taxpayers benefit from the removal or improvement of blight in their communities and the economic impact that is derived from a revitalized neighborhood. The property owner or developer is rewarded through tax savings, no-to-low interest loans, or cash advances that are paid back through property taxes.

Utilizing TIF to encourage development where it would occur regardless of whether or not incentives were available is generally considered a poor use of TIF and a violation of the spirit of the law. Although Iowa law recently included a provision to allow for the use of TIF where new jobs are being created by a project, it is vague and open for potential abuse—a conclusion made more obvious by Davenport’s failed 53rd and Eastern Mixed-Use Development project and the more recent Sentry Insurance TIF.

Across the nation, states and municipalities have recognized the misuse of TIF relative to development and urban sprawl and have begun initiatives to address the rampant, uncontrolled growth of communities that destroy valuable resources (such as agricultural land, riverfront property, etc.), lack cohesive planning, and benefit developers at the expense of not only communities’ tax bases, but the quality of life and future development potential.

Anytime that TIF is utilized, the increased property taxes do not flow back to the general fund, but instead go to pay down the debt that was incurred by taxpayers to help pay for the development. In the case of new development such as that occurring throughout the 53rd Street corridor where TIF is applied, property taxes are being reverted away from the general fund for a period of at least 10 years. The community forgoes those property tax dollars. The result is that the most valuable commercial property in the State is not benefiting the community through property taxes, but instead going to pay the cost of developing the land to the distinct benefit of the land owner, contractor and the company inhabiting the space.

Meanwhile, urban sprawl has reached critical mass in America, especially in the Heartland where vital farmland is lost forever under pavment. Citizens are organizing to stop the practices and policies that contribute to the generic, homogenized development that characterizes much of the Midwest. As a recent visitor to the Quad Cities (as a guest performer) said as he toured northeast Davenport, “I’ve been here before, in nearly every city in the Midwest. You all look the same. You have no individual identity here.”

The Iowa legislature has recognized the crisis relative to urban sprawl, along with the abuse of TIF, and is working to address these land use issues. Fortunately, Iowa does not have to reinvent the wheel because cities nationwide have pioneered innovative and effective methods. Whatever the approach, the public sector should require that cities and counties work together on land use planning. This would not dictate any pecking order or additional authority, just a place at the table for all cities within a county.

American Cities Implement Smart Growth Using Sustained Development Principles Some of the initiatives that are proving highly effective include efforts by cities on either coast, as well as the less populated states of Oregon and Washington. Maryland uses policies to limit urban development within targeted “smart growth” areas. State money allocated for new infrastructure improvements is used only where such growth makes sense—in cities, around cities, and away from agricultural land and important natural resources.

Pennsylvania has implemented a change in land value taxation, shifting property taxes from buildings to land. This way, owners who improve older properties aren’t penalized by higher taxes, and slumlords aren’t rewarded with lower ones.

Cities are beginning to experience the epiphany that sprawl is a waste of tax dollars. They are questioning why, while they may be experiencing physical growth, they are not experiencing a corresponding growth in city revenues. By developing more density inside the city, they maximize their existing investment in streets, sewers, water lines and schools. The Iowa Legislature is considering a state tax credit program for such in-fill and preservation. Also under consideration is a state Brownfield program that would help to clean up urban land that has been contaminated for future redevelopment.

Urban Growth Boundaries have been implemented in Oregon with much success. Portland alones enjoys 75 new residents each day. Every city or region must set actual boundaries that include enough land to accommodate growth for twenty years.

Zoning ordinances that limit chain businesses are a means to stop large, publicly subsidized chains from competing with local business, who are at a competitive disadvantage because they receive few, if any, such subsidies. The tradition in Davenport has been for policy makers to support tax incentives that promote these commercial developments in undeveloped areas that require massive expenditures for new infrastructure and provision of city services. Some of the development, such as the proposed Wal-Mart is not new, but relocation from one part of the city to another (this is also the case with Sentry Insurance). Meanwhile, no new businesses are filling the void left behind. And most of the chains have their corporate headquarters out of state, put up new construction on precious farmland, then leave if their return on investment isn’t adequate, while offering 35 hour work weeks that do not pay a living wage, nor provide insurance or benefits.

Requirements that new residential developments include a percentage of affordable housing tend to help eliminate social stratification in communities. A requirement of TIF has always been to provide low-to-middle income housing as a development component to its use. However, that is proving to be the least utilized TIF of all.

Most of the development that is occurring, both residential and commercial, is formulaic, whether “big box” or cluster housing that repeats itself for blocks. There is no sense of neighborhood or place. There are no natural barriers between separate developments, or between commercial and residential types of projects. Comprehensive land use plans and zoning ordinances are not keeping pace with such economic expansion, to the detriment of the country’s communities.

Change does not come easily. Public and private agendas are at odds with one another. City leaders want to see development, regardless of its cost because they believe it will generate more jobs, more economic growth through consumption of goods and services, and an increased tax base to contribute to the improvement of municipal services. That thinking only holds true if there is also new population growth. Otherwise it is robbing Peter to pay Paul. New housing in northeast Davenport will have to find its buyers within the existing housing inventory throughout the Quad Cities because population growth has actually declined since 1975, which means displacing existing neighborhoods that already contribute to the tax base. That displacement reduces the property values of those neighborhoods where such exodus occurs. More often than not, the decrease in existing property taxes is not equitably offset by new property tax dollars, creating a shortfall for municipalities. In fact, relative to large spurts of growth in residential development, there are numerous studies that prove the fact that a city spends more tax dollars to support new residential development than it collects in tax revenues from the residential property. ut nowhere are these costs being weighed against the potential gain of projects that utilize the numerous public incentives, solely subsidized by taxpayers that epitomize corporate welfare. The small economic impact of jobs created in the construction industry is not compensatory, especially when the contractors are from outside the State.

Finally, require that all new development utilize “sustainable development” principles in the designs and functionality. For example, designs that respect these principles tend to create residential neighborhoods with some commercial components within the development (such as smaller groceries, drugstores, and cleaners), along with so much required green space that connects the residents, such as footpaths, bike trails, etc. Parks are also included as part of the development creating a sense of place.

In an executive summary supporting sustainable growth, written by Michelle Magyar, spokesperson for CURV and member of the current 53rd Street Ad Hoc Committee (formed to make recommendations to the city council for possible land uses for city-owned property at the corner of 53rd and Eastern), and submitted to the same, she stated, “Sustainable growth recognizes the connection between development and quality of life. ‘Smart growth’ describes the application of the sustainable development concept to land use issues. Smart growth means smart management of resources both in growing and declining communities. Smart growth, like sustainable development, is fiscally prudent and environmentally, economically, and socially sound, while enhancing the choices people have for housing, jobs, recreation and transportation.”

Research into other Midwest cities shows dynamic, progressive sustainable growth principles being aggressively applied. The implementation of such principles involves zoning ordinances that create planned, cohesive districts that complement one another and protect natural and agricultural resources. They include growth management, such as growth cluster ordinances that direct growth to contiguous existing urban areas; agriculture and forest protection districts limit certain activities in these natural areas to protect and preserve them; and conservation subdivision districts that allow for development of residential clusters on smaller lots while protecting the remaining open spaces.

Minnesota has set subdivision standards and requires a “Community Impact Assessment Worksheet” that quantitatively analyzes impacts such as fiscal tax shortfall for adding infrastructure cost; congestion (a new household adds 10 car trips to the area each day); water depletion in gallons (each house uses 300 gallons per day); school crowding (each household adds 1.8 children to the school system); waste increase (each household contributes 10.5 pounds of solid waste per day to the landfill); and noise pollution in decibels, to name only a few of the impacts considered.

Other ordinances include natural environmental district overlay areas that identify the natural resources specific to an area; water supply planning; neighborhood design; adequate public facilities ordinances (APFO) that provide for infrastructure and city services to be in place before the development occurs. APFOs link the city’s capital improvement budget to the comprehensive land use plan (CLUP) and to zoning ordinances. If the proposed development does not fit the CLUP or any of these plans, then it is outside the trajectory of development priorities and should be dealt with as such. Finally, ordinances are in place that deal with transportation, such as the “travel demand management performance standard,” sewage treatment systems, stormwater management, etc. All these contribute to an enhanced quality of life for residents, through long-term planning that considers the whole picture, not isolated pockets that are primarily influenced by individual developers.

The global population is growing at a rate of 80 million a year. The population is currently at 6 billion, and is projected at 10 billion by 2050. Between 1950 and 1990, rice, wheat and corn yields increased 2.1% annually. According to the USDA, the increase was only 1% between 1990 and 1995. With this in mind, the preservation of Iowa’s spectacular farmland should be our highest priority. Continuing to lose our farmland to sprawl, coupled with the increase in population and decline in commodities’ yields, our children and grandchildren face shortages and a potential deterioration in quality of life that we have an opportunity to prevent.

In Davenport, citizens can take an active role in establishing the new Comprehensive Land Use Plan for the entire city. You are encouraged to get involved on the committees currently being formed by calling City Hall and letting Clayton Lloyd, director of economic development, know that you are interested in participating. This is an unprecedented time in history because the American public is realizing its responsibility to the next generations in wisely debating and directing land use, both now and for the future sustainable growth of our individual communities.

During the Davenport City Council meetings scheduled for Monday, October 30 and Wednesday, November 1, presentations from the 53rd Street Ad Hoc Committee will also be heard regarding land use for that area and the public is encouraged to attend or watch it on Channel 13 (9am, 3pm, 7pm and 11pm). To learn more about “sustainable development” and “smart growth,” browse the Internet for examples of such policies and practices and share them with us. Ms. Magyar also authored a “Pledge to Support Sustainable Development in Davenport’s 53rd & Eastern Area: A Framework For Developing Davenport’s Future,” which can be read in its entirety at the Reader website (www.rcreader.com), and will also be presented to the council during the above scheduled meetings.

On the Cover: Site preparation for the new Sentry Insurance building at 53rd Street & Utica Ridge Road in Davenport.
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