Tuesday, December 28, 2004

Bonds . . . or the Invisible Hand?

A couple of years ago, the Aycock neighborhood proposed to radically alter the intersection of Summit Avenue and Murrow Boulevard, and to open up the currently-underused acreage there for a mixed-use, new-urbanist development, provisionally dubbed "Aycock Square." The City Council approved of the idea -- in principle -- and adopted a long range plan for the neighborhood that includes provisions to study this proposal. The proposal is to turn this:

into this:

David Hoggard thinks that NC's newly-approved tax-increment financing, aka Amendment One, should be used to make this happen post-haste, and is nice enough to suggest that I might weigh in on the subject. So I'm weighing . . . .

The truth is, I don't know yet whether a bond is the way to go with this proposal. The other candidates for bonds that city staff mentioned in the N&R's article this morning are in pretty dire straits. And Aycock currently has two other irons in the city's fire: the Summit Avenue Corridor Study, and the renovation of War Memorial Stadium, both of which will require infusions of public cash.

But I'd like to float an idea that applies not only to this project, but to center-city infill and redevelopment in general. I'll call it the Targeted Tax Holiday (TTH).

Since there's plenty of underused land in Greensboro's urban center, and since everyone agrees that it is a good idea to develop this land, and since the city's Comprehensive Plan calls for such development, why not offer developers a little incentive to do so at no cost to taxpayers?

Here's how it would work. The city identifies underused/vacant areas that need redevelopment, and insures that they are zoned appropriately for that redevelopment. If the city wants a certain kind of development in the area, they might rezone it. For example, if the city determined that the blighted area at South Elm should be mixed-use like Southside, they could re-zone it with a pedestrian-scale overlay like Southside's.

Then, if a developer develops the area appropriately, the property is taxed only at its pre-development value for a period of, say, 10 years. The city loses only the tax revenue that it probably wouldn't have got anyway without the TTH, and it gains the kind of development it wants, plus increased tax revenue down the road.

I know, it's kind of like some of the incentives we offered to Dell. But the TTH is fairer because it is open to anyone who wants to buy and develop a TTH property -- not just one business. And it's friendly to entrepreneurs and small business people. And it taps into market forces rather than relying on government borrowing.

Of course it does that last thing by skewing the market a bit. But one could make the case that the market is already -- and always -- skewed, and that this is skewing it in a good direction: just giving Adam Smith's Invisible Hand a little nudge.

I wish in retrospect that the city had adopted a TTH for the downtown area rather than increasing taxes via the BID (Business Improvement District). But the city could still conceivably do both.

Anyhow, I think that the blank area on Summit Avenue between Murrow Boulevard and Church Street would be an excellent test area for a TTH. If it worked, the city would have a strong motivation to re-do the silly cloverleaf at Summit and Murrow, and open that area to further TTH incentives and development.


Billy Jones said...

Makes sense to me. I could see some uses for such a plan in my corner of NE Greensboro too. (a couple miles Northeast of you)

Anonymous said...

Good thinking, David. The BID extra tax on downtown folks is like a penalty for doing something good in Greensboro.
I always enjoy reading your comments.