Saturday, April 12, 2014

Rethinking city lots and the deeper cause of our decay

        The critical piece missing in places like Salem is recognition that we get the development we reward, primarily through taxation.  We have a tax system that punishes development in the most logical places (urban parking lots) by keeping taxes low if the owner keeps the low value use in place, but then raising taxes if a new building is built on the lot.

          We try to address it with a bunch of complicated workarounds that make the Cover Oregon website seem like a model of efficiency -- urban renewal areas, etc.  Each such workaround creates a constituency for tax favoritism and the rewarding of well-connected friends, and incentives for real estate and building interests to dominate planning commissions to steer the outcomes in their preferred direction.  Instead of a uniform tax system, we have a property tax system for the downtowns-- what should be our most tax productive land-- where the exceptions and favors have swallowed the system.

        We don't even bother measuring results -- we just move from one "urban renewal" scheme to the next, never asking why all this "renewal" isn't producing vitality.  And we ignore what this financing-by-favors-to-friends does to the basic core functions of public governance (public safety, education, environmental protection).  We divert money away from core services to reward speculators and developers, who get the reward up front (the tax favors) before we have any chance to know whether their scheme was valuable or a dud.  And then, like the patient in colonial America being bled by the physician, we prescribe another round of urban renewal because the patient still appears sickly!

        Our property tax system is a relic from a vastly different era, and it's serving us about as well as a medical procedures manual from the 1700s would serve a physician.  Until we address this root cause of urban property development distortion, we are going to continue to have downtowns like Salem's -- littered with vacant lots serving only for the care, feeding, and storage of autos, next to far too many vacant storefronts, in a city with overwhelmed human services and declining public services, lots of homeless folks, and sprawl development at the periphery suctioning resources away from the core so that real estate interests can keep pouring new pavement for profit, while sticking the rest of us with the tab.


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