Additional Thoughts on Olympia’s Community Renewal Projects

On April 19, 2012, the Land Use Committee of the Olympia City Council will consider whether to take the next step on the Community Renewal Area. This decision is not without theoretic and actual controversy. In fact, there is a marvelous piece on California’s experience with them in a publication called Forefront (apparently the first of what I hope will be many issues) published weekly by the Next American City, a 501(c)3 organization.  (I am particularly pleased with the terrific analysis of undesirable consequences of regulation and results of concentrating capital even with the greatest of good intentions.)

Let me jump to the central criticisms:

Throughout 2011, redevelopment agencies did something that they had never had to do in the previous 57 years since the formal establishment of redevelopment: They tried to explain to the public what they did and why they deserved to exist. It didn’t work.

Numerous surveys taken during this time indicate that redevelopment agencies’ lack of transparency, reported cozy relationships with developers and occasional but highly controversial use of eminent domain struck skepticism in the hearts of voters. And for every triumphant project that agencies trumpeted, residents suspected that there were untold thousands that conferred little, or no, benefit on their cities — or even worse, had an adverse effect.

But while public perceptions tended towards the cynical, some cities did manage to leverage TIF money in ways that helped their residents.

Before it became the home of the Internet and social networking billionaires, the Bay Area had been the industrial heart of the West Coast, with shipyards and steel mills ringing the bay. When those industries faded, they left places like Emeryville: Flat, toxic landfills with million-dollar views. Redevelopment money paid for environmental remediation, and from the 1980s onward the city implemented an aggressive plan to build apartment towers, retail, hotels and office towers, which have all sprouted proudly. It seems like half the Bay Area’s bachelor pads are furnished by its Ikea store.

“Emeryville was a post-industrial wasteland and we put in major infrastructure,” said Cappio, redevelopment director for the city from 1995 to 2000. She credits the city’s redevelopment agency, with its power of TIF, for making the transformation happen.

But successes like Cappio’s in Emeryville are, unfortunately, the exception. And the majority of project areas remain in various states of disrepair — as if after decades, the work of transforming communities may never be finished.

The white paper on Community Renewal that the Land Use Committee packet contained is sparse on the topic of financing. In Washington these tools described above are known by different names and are not exactly the same thing as what the article above describes. The most prominent and general tools are Community Revitalization Financing RCW 39.88 and Community Revitalization Financing RCW 39.89. However, the basic idea  is the same: An area is designated as a renewal area because it falls within the definition of blighted. (The article details the development agencies’ depressing abuse of that definition).

In California, as in the 48 other states that use versions of it, local entities harvest the so-called “tax increment” that arises in areas designated for redevelopment. As property values rise, a certain portion of the property tax increases get reinvested into further redevelopment in the designated area, rather than going to the general use fund that typically captures property tax dollars. The whole arrangement is known as tax increment financing, or TIF. Redevelopment agencies do not directly develop property, but they do nearly everything else: They create redevelopment plans, fund local infrastructure improvements, assemble parcels, assist developers, broker deals and sell bonds to pay for all of the above.

The white paper details the city’s ability to designate a commission that operates independently of the City Council and isn’t necessarily subject to the same citizen oversight that a government would be. I don’t know exactly what the LUC has in mind, but I’m not sure they do either. As I mentioned earlier, they are deciding on April 19, 2012 whether to hire a consultant who I presume would then come up with a proposal that the City Council would adopt.

Until I have a much clearer idea of what the Council has in mind, I’m against them moving forward with a CRA. I have great concerns about externalizing governmental functions; I am sure to disagree with their use of the word blight, and I think thus far the city staff and Council have a poor conception of the reasons downtown (where I presume redevelopment auger is pointed) is underdeveloped. I’ve said elsewhere that downtown hasn’t developed because people in Olympia don’t want to live downtown. I’m extremely interested in the soon to be online apartments in the Cunningham Building, but I have a hard time thinking the Condo market here will ever heat up because the prices of condominium and houses are too close to make the latter a financially attractive development project. I hate the idea of another unaccountable entity making decisions about the downtown that I personally frequent, and I am opposed to the use of any city funds toward more subjective, pie in the sky fantasies (“a family friendly and welcoming downtown”—ugh this isn’t Celebration, FL). This is simply more of the same public subsidies for private benefit and it’s doubly depressing to see it happening locally.

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