Subsidies for Low-Income Communities Are Funding Luxury Developments
Date Posted: April 26, 2019
Posted In: Discussion, Ideas,
From Pacific Standard: In New York City last week, anger mounted against the developers and city officials behind the Hudson Yards mega-development who financed the project through an act of what CityLab reporter Kriston Capps described as “creative financial gerrymandering.” The state created a map linking low-income public-housing projects to the wealthy West Side neighborhood where Hudson Yards is located, in order to offer foreign investors a discounted visa option designated for those who invest in projects in distressed urban areas.
At the same time, a similar problem came to a head halfway across the country, when two community groups in Chicago filed a lawsuit against the city—the first of its kind in Illinois—for misusing tax incentives to facilitate the massive Lincoln Yards redevelopment project in the city’s north side. The groups claim that the city council violated the state’s civil rights act when it approved the creation of a subsidized development district in a predominately white area of the city—allegedly the latest instance of Chicago’s persistent habit of administering incentives in a “racially and ethnically discriminatory manner.”
The incentive in question, Tax Increment Financing, has become a mainstay in the toolbox of developers across the country, and especially in midwestern cities like Chicago and St. Louis, Missouri. Through TIF programs, municipalities can divert future property-tax revenue increases from a designated district toward economic development in that same area. The program is intended to spur growth in underserved communities that developers wouldn’t be inclined to build in otherwise—areas designated by the city as “blighted.” Developers, essentially, can recapture some of their own tax dollars if they partake in “community development” projects.