In response to your question, Bruce, I am very interested in the study
you suggest ... and Kris Wernstedt, with Lauren Heberle, has already
looked at a related issue -- the divergence between perceptions of
developers and those officials who might be te ones offering
subsidies... I leave it to him to raise that issue more thoroughly for
the group, but the general finding I derive from their work is that the
officials misread the concerns and risk perceptions of developers, and
thus do not provide subsidies in anything remotely approximating an
economic or socially efficient manner.
Bill Cocose's point about assessed values is exceptionally well taken
-- but incomplete. There are, indeed, states in which it is very
difficult to discharge old tax debts in the case of redevelopment of
abandoned, and thus tax delinquent, sites. In such cases, the burden
accumulated from those tax obligations can, as he points out, add to
the financial burdens carried by a brownfield site.
However, there is another side to the issue. In other instances,
especially with warehoused small sites, some of which are held on spec
against expected property value increases, the carrying cost for
holding a site off the market would be depressed by reassessments to
close to zero for un- or under-utilized sites. In Kentucky, for
example, some cities were pressing for the right to assess a higher tax
rate burden on vacant unused brownfield sites as a means of getting
access and forcing sites onto the market.
The problem really is that there are few, if any formulaic solutions or
responses that make sense. The real need is for tailored responses -
and for subsidies where needed, but not as automatic grants. The
problem, then, is that such responses require data, and we have not
been willing to demand information from business applicants requesting
public support, while we have always required it from individuals and
families. "Need-based assistance" is acceptable as a basis for
providing welfare or supplemental security income to the elderly -- why
isn't it equally appropriate for developers?
There is also no reason not to require some sort of assurance of
public benefit as a condition of that assistance. To continue the
welfare analogy, we evolved "workfare," in which people had to show
that they were making an effort to get themselves beyond dependency. We
could, logically, require a similar demonstration of environmental or
other socially beneficial outcoems from brownfield developers, and we
might even penalize them after the fact for nonperformance.
We do not need to look to welfare for an analogous program, but to the
economic developemnt experience with "clawbacks." These are conditions
imposed on various forms of state support for economic development
projects, in which the developers or new firms promise some number or
jobs or total payroll in return for some subsidies. States, dating back
to the 1970s, monitored development project performances and
implemented clawbacks of different sorts, and this did not seem to
acutely discourage investment. (A typical clawback might be a higher
interest rate on a low interest loan proviced in response to a
commitment to generate a specific number of jobs, if the target jobs
were not created.)
In the brownfield case, the performance measure could be the site
remedial response, and the pollution abatement condition attained. This
is an outcome that is more under a developer's control than the number
of jobs generated by a company, and one that can be attained regardless
of the unknowns of economic condition or real estate market changes.
Such a clawback provision need thus need not add to the uncertainty
prospective developers would face, and could actually save investors
time and money by providing community representatives, who might
otherwise be a real thorn in brownfield redevelopers' sides, with some
assurance about the environmental performance the project will deliver.
Reduced community resistance can speed project approvals and safe money.
-- All in call, this is an excellent and important debate to have, and
I am very pleased to see that CPEO has hosted the discussion thus far.
Peter
- - - - - - - -
Peter B. Meyer
Professor Emeritus of Urban Policy and Economics
Director, Center for Environmental Policy and Management
School of Urban and Public Affairs
University of Louisville
- - - - - - - -
Director of Applied Research
Institute of Public leadership and Public Affairs
Northern Kentucky University
- - - - - - - -
Senior Advison, E2 Inc.
- - - - - - - -
President, The E.P. Systems Group, Inc.
- - - - - - - -
Managing Member, Ecofun, LLC
- - - - - - - -
cell 502-435-3240
phone 859-491-9298
fax 859-491-9252
skype pbmeye02 or 859-648-0373
- - - - - - - -
3205 Huntersridge Lane
Taylor Mill, KY 41015
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