Archive for July, 2008

Sometimes suggesting new ideas is unpopular. I’m sure this will be one of those times.

Things change. Ben Franklin’s Free Library looked nothing like the ancient Greek library. Nor should today’s version look anything like the Carnegie funded book temples of the last century.

Libraries have a noble tradition dating to a time when books held a much more sacred place in society than they do today. During the golden age of libraries, in the 1700s, books were relatively expensive. Today, most people can afford to buy as many books as they want and do. Also, the Internet has replaced much of a library’s utility as a research institution. Read the rest of this entry »

ReinventTrenton.com and the Trenton Downtowner are sponsoring a quick poll to gauge public opinion on eminent domain. This is the first chance Trentonians have had to make their voice heard on this subject.

You can vote at: trentonspace.com

I’ve said many times that the use of eminent domain is a matter of principle. While I consider forcing a property owner to sell a producing property to be unprincipled, I may very well be in the minority.

The Supreme Court has found state law governing eminent domain to be constitutional but in no way does that make it right. For instance, abortion is constitutional, but many people think it’s wrong. Drilling for offshore oil could become legal but plenty of people take a principled view that its wrong as well. On both the left and right we can have principled opinions that differ with the law. This is why we vote and enact laws, otherwise the judiciary makes rules for us.

Citizens need to vote on eminent domain either directly or through their representatives. Some towns may chose to allow their government to force sales of property to developers while others may decide to more tightly restrict government power. Trenton’s citizens must make a conscious decision on the relationship between property rights and government power.

Our city council could enact an ordinance banning or limiting the practice. Or they could choose not to. Either way the people should be heard and council should actively reflect the opinion of Trentonians, not the Supreme Court or developers.

Propose your own strategic 2012 Trenton Budget

Ask any businessman and they will tell you that budgeting is one of the hardest parts of running a company. Budgets force the organization to choose between activities that increase revenue, make customers happy and reduce costs. Spend too much money reducing costs and your revenue could dry up. Spend too much chasing new revenue and existing customers get fed up and leave.

There’s no reason to think cities should work much differently. The biggest difference is the customers (citizens) are a good bit more vested because their largest investment is their home.

The budget is the city’s main policy document

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There are plenty of influences on our country’s economic development including geography, natural resources and luck. However, government policy plays a powerful but sometimes unseen role.

Over the years government policies have contributed mightily to the American landscape

• The FHA loan program funded the suburban dream
• School desegregation gave rise to white flight
• Interstates made commuting possible
• Rural Electrification made far flung settlements possible
• Federal Housing projects enforced government ghettos

However one of the most powerful but least understood policies affecting cities and suburbs is the property tax structure.

A couple of illustrative examples make the point.

• In Barbados, if you don’t paint your house it’s considered under construction and is taxed at a lower value. Therefore there were plenty of unpainted houses in the country.
• In Philadelphia, houses were taxed by their width; therefore you see a lot of old narrow houses in Philly.

Today, most property taxes are based on the assessed value of a building. This is a progressive tax meant to more heavily tax the wealthy. However, by tying taxes to property value there is a built-in incentive to avoid property improvements. Therefore neighborhoods don’t improve like they might otherwise.

This is bad for both the payer and the collector. It’s expensive to continuously re-assess property values. In fact, it’s so painful, that Trenton rarely does it, making our revenue problem even worse.

Trenton’s property tax rate really hurts

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If you’re paying attention to this blog, you’ll know that yesterday wrote an article about the best way to spend government revitalization dollars. Many projects are pitched as revitalization but if they don’t have even the punch of my little hypothetical test project then they shouldn’t be called revitalization.

To be honest, I hurried up to get this test written in advance of a review of of Capital Park Master Plan.

Happily the Capital Park plan does not claim to be revitalization but instead is just a very nice state park.

Having not yet read the Master Plan, I expected to read all sorts of claims about how the park was key to Trenton’s economic development. As it turns out, the opposite is true.

There are next to no claims about revitalization.

Read the rest of this entry »

Over the last several years I’ve compared large urban revitalization project to a hypothetical program I call the down-payment grant.

Government folks hate comparing their revitalization projects to my hypothetical suggestion. They like to point out that the funds they propose to spend are restricted in nature and aren’t available for my crazy scheme. OK, I never said they were, but they shouldn’t argue that those funds are for the purpose of revitalization unless they can be shown to at least approach the simple benefit of the down-payment grant.

Let’s remind ourselves what revitalization means

Revitalization is somewhat in the eye of the beholder. In fact, that’s one of the problems. Our government officials shy away from specifying what they mean by the term.

I propose increased per capita income as a single clear and measurable standard for revitalization.

Economists and sociologist consistently link improved per capita income to better housing and education and to lower crime. Furthermore, it’s a statistic that the Census Bureau measures for us. A city with a high per capita income is better able to afford schools, the arts, charity for the poor and lower tax rates. It will also spend proportionately less on police and fire protection.

The down-payment grant is a good hypothetical way to spend $100M

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All Trentonians know that our high crime rate isn’t good for the economy. However, not many of us know just how bad it is. It turns out that economists have studied the subject and have asked themselves that very question.

In “CRIME, URBAN FLIGHT, AND THE CONSEQUENCES FOR CITIES”, economists Julie Berry Cullen and Steven D. Levitt worked through quite a bit of crime, census and other data in addition to third party research to build up an econometric model of the effects of crime. It’s worth noting that Steven Levitt later went on to write Freakonomics which is referenced in my earlier article on the economics of crime.

I’ve provided a link to the article but I’ve summarize it fairly simply below. I’ll warn readers of the report in advance that this is an academic paper and some of the conclusions it draws are a bit disturbing to the politically correct mind. Read the rest of this entry »