Friday, June 26, 2009

June 2009 At Lincoln House e-newsletter:

A significant database



     For nearly half a century, the Advisory Commission on Intergovernmental Relations, which was established by Congress in 1959, provided information on relationships among local, state and national levels of government, including the flagship publication Significant Features of Fiscal Federalism. The commission fell victim to budget cuts in 1996, to the dismay of journalists, researchers, policymakers, and practitioners, all of whom made heavy use of the data. After a hiatus of more than a decade, the Lincoln Institute and the George Washington Institute of Public Policy have stepped in to provide information once again on public finance and local property taxation in all 50 states, with the online database, Significant Features of the Property Tax.

     "This small agency did more to shed light on...the unique features of fiscal federalism than any other group," said Robert Reischauer, president of the Urban Institute and former director of the Congressional Budget Office, at an event at George Washington University June 8 in Washington D.C. to announce the online database, in the Resources and Tools section of www.lincolninst.edu.

"It was a cross between a dictionary, bible, and encyclopedia. Since its demise we've been contacted by many who said we want to revive this, but none came to fruition. My hat's off to you folks."

     "We're testing the 'Field of Dreams' theorem—that if you build it, they will come," said Gregory K. Ingram, president of the Lincoln Institute, noting his commitment to make more data available for researchers and others on the Lincoln Institute Web site. Significant Features and a database subcenter on university real estate development will soon be joined by data on land and property values in the U.S.

     Significant Features of the Property Tax was the brainchild of Joan Youngman, senior fellow and chair of the Department of Valuation and Taxation at the Lincoln Institute, who designed the database to allow users to zero on individual states, but also compare across states. The team at George Washington Institute of Public Policy spent four years tracking down the data and creating tables that can be customized and downloaded as spreadsheets.

     "I get asked all the time—what do other states do, on tax relief or economic development incentives," said David Brunori, research professor at George Washington Institute of Public Policy and a contributing editor at State Tax Notes. "What this will allow people to do is find the answers, and look at best practices. It will be a roadmap that will be incredibly valuable. This will also bridge the gap between academics and policymakers."

     Nancy Augustine, former research associate at George Washington and now program manager at the Pew Center on the States, led a walk-through of the online database, and noted that the data, current to 2006, will be updated through 2009. The site is organized in these major categories: General Characteristics of Local Taxation of Property, covering real and personal properties that are taxed, basic and differential local property tax rates, local jurisdictions' use of transfer charges when properties change hands, and limits placed by states on local jurisdictions' authority to use the property tax; Property Tax Relief and Incentive Programs, a listing grouped according to objectives for providing relief to homeowners and encouraging economic development and preservation of farmland and open space; and Structural Arrangements of Property Assessment, a data set on land use types in use in each of the states to characterize the property tax base and the assessment standard used to value that property. The site also displays statistics from the U.S. Census Bureau's Census of Governments on the property tax in the context of state and local finances. Data for the years 2005, 2002, and 1992 are reported for state and local governments combined and separately. For each year and each set of governments, data are presented for each revenue source in nominal dollars, as a share of all revenues, per capita, and as a percent of personal income.

   The site is at https://www.lincolninst.edu/subcenters/significant-features-property-tax/

Of QZABs and dirt bonds



     As state and local governments grapple with extraordinary fiscal turmoil triggered by the economic downturn—California leading the way, but other states and cities facing staggering budget shortfalls—political leaders are turning to new sources of revenue and capital financing. Earlier this month, the Lincoln Institute hosted its fourth Land Policy Conference, "The Changing Landscape of Local Public Revenues," to review cutting-edge trends in public finance. The gathering of experts examined an alphabet soup of revenue instruments old and new, including:

-- Community Facility Districts or CFDs, issue debt (also known as "dirt bonds") for funding infrastructure for new development financed by a special tax on households and businesses in these districts.

-- Certificates of Participation or COPs, a type of a lease-back plan, where local governments enter into agreements with non-profit entities that issue tax-exempt bonds to finance facilities or projects that are sometimes leased back by the local government.

-- Tax Credit Bonds, where the federal government pays interest in the form of credits against income tax liabilities, used in the American Recovery and Reinvestment Act for school construction, clean energy projects, recovery zone economic development bonds, and Build America bonds; their origins are in the Qualified Zone Academy Bond or QZAB, dating back to the late 1990s.

-- Business improvement districts (BIDs), of which there are currently some 700 in 46 states, which can either complement or increase public expenditures.

-- Impact fees, although widely used to fund capital investments, have little evidence indicating they correspond to actual community expenditures; theory suggests they can lower property taxes, though empirical support for this is scarce.

-- Homeowner associations, estimated to provide services to some 50 million Americans for such services as road and sidewalk maintenance, street lighting, trash collection, and recreation facilities, encompass about half the residences constructed in the U.S. in the past two decades.

-- CEPACs, or certificates of additional building rights potential, an innovative instrument of value capture used since 2004 in Sao Paulo, Brazil. These are rights purchased from the city government by developers that allow construction of larger buildings.

-- Tax increment financing or TIF districts, now widely used—there are 789 such districts in Wisconsin alone—raising concern that they may increase the volatility of local property tax bases and revenues.

-- A VMT (vehicles miles traveled) tax, where a GPS device in cars allows the charge of 1.2 cents per mile, as the equivalent of a 24 cents per gallon gas tax.

-- Tolling strategies for highways, which have moved to a new phase after privatization and leasing deals in Chicago and Indiana; more sophisticated pricing structures can take into account time of day or allow solo drivers to use high-occupancy toll lanes (so-called "HOT" lanes).

     The experts at the conference were wary that many of these instruments do not require voter approval and are unknown to most residents. "Voters might not approve of these instruments if they knew about them," said Tracy Gordon, assistant professor at the University of Maryland's School of Public Policy. In addition, as cities in particular adopt various new revenue instruments—a meals tax, a lodging tax, sales taxes on new items, a local income tax, and additional user fees—researchers will have their hands full keeping up with the analysis of the fiscal impact.

The proceedings of "The Changing Landscape of Local Public Revenues" will appear in book form by May 2010, as the fourth volume in the ongoing series.

Live from Denver

     The Congress for the New Urbanism wrestled with issues including infrastructure, going green, and financing of projects in these dark economic times earlier this month in Denver. Some takeaways from the gathering of 1,000 architects, planners, and others from the design professions:

-- Showing results. The analysis contained in the Lincoln Institute report Smart Growth Policies provided some food for thought in the session "Selling the Green Advantage," as Carol Coletta from CEOs for Cities and Robin Rather from Collective Strengths addressed effective messaging techniques to draw support for post-carbon human settlement. The challenge for sustainability is to demonstrate the impact and benefits of New Urbanist-style development -- that compact, mixed-use neighborhoods really do reduce vehicle miles traveled (VMT) for example.

-- Riding the rails. New Urbanism's focus on transit-oriented development is paying off with renewed interest in transit infrastructure, and President Obama's high-speed rail initiative holds much promise with the group.

-- LEED-ND in the works. Standards for the green good-housekeeping seal of approval for entire neighborhoods and not just individual buildings are coming together, and several Denver-area projects, such as Stapleton and Bel-Mar, were put to the test. Interestingly, the Highlands Village neighborhood scored low on some measures because a street was deemed too wide and there was only one floor of street-fronting retail in one section.

-- Dark age ahead. Author James Howard Kunstler was in typical form with his analysis that the US financial system is broken "at every level," making it impossible to return to the oil-based arrangements to which we've grown accustomed. He argues that a much more locally based economy is on the horizon, with small cities depending on proximate farmland.

-- Duany says no mas. Reflecting on his experiences building the Katrina cottage on the Gulf Coast and modular housing, DPZ's Andres Duany made the surprising conclusion that architects had only one choice to create affordable, simple homes: designing a better mobile home. Trades contractors and government-imposed permitting and inspection requirements obliterate the savings achieved in low-cost housing construction, he said. 

Welcome Bruce Babbitt

     With his book Cities in the Wilderness: A New Vision of Land Use in America (Island Press), Bruce Babbitt, former governor of Arizona and interior secretary in the Clinton administration, was one of the most prominent environmentalists to recognize the importance of cities and the need for a national land use planning framework in the U.S. Admiration will no longer need to be from afar, as he has joined the board of the Lincoln Institute.

     "This is a convergence and a coming home," said Babbitt, who is stepping down in October as chairman of the World Wildlife Fund. "I have worked with the Lincoln Institute for many years as governor of Arizona and during my time as secretary of the interior. I have always believed the Institute is the recognized leader in land policy, and I am honored to become a member of the board."

     Kathryn J. Lincoln, the Phoenix-based chair of the board of the Lincoln Institute of Land Policy, said she was "thrilled that someone with such wisdom and experience will help us guide this great organization."

     With degrees in geology, geophysics and law, Babbitt was elected to statewide office as attorney general of Arizona on his first foray into elective politics at age 36. After fulfilling that role from 1975 to 1978, he then served as governor of Arizona from 1978 to 1987. As governor, Babbitt brought environmental and resource management to the forefront in Arizona, bringing about the Arizona Groundwater Management Act of 1980, which remains the most comprehensive water regulatory system in the nation. He was also responsible for the creation of the Arizona Department of Water Resources and the Arizona Department of Environmental Quality and a major expansion of the state park system.

     Appointed secretary of the interior by President Clinton in 1993, Babbitt served from 1993 to 2001, bringing about the forest plan in the Pacific Northwest, restoration of the Florida Everglades, passage of the California Desert Protection Act, and legislation for the National Wildlife Refuge system. As a certified fire fighter, Babbitt brought his front line experience to creating a new federal wild land fire policy that emphasizes the role of fire in maintenance and restoration of natural ecosystems. He pioneered the use of habitat conservation plans under the Endangered Species Act and worked with President Clinton to create twenty two new national monuments, including the Grand Staircase Escalante National Monument in Utah. He is perhaps best remembered by American school children as the secretary who brought the wolves back to Yellowstone.

The departing chairman of the World Wildlife Fund, Babbitt is a research fellow at the Blue Moon Fund, working on infrastructure in South America, and was the founder of the National Landscape Conservation System Foundation.

     Other members of the board of the Lincoln Institute include Thomas M. Becker, president of The Chautauqua Institution; Henry A. Coleman, professor at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University; Gary Cornia, dean of the Marriott School of Management at Brigham Young University; William A. Fischel, professor of economics at Dartmouth College; Alberto Harth, president of Civitas in San Salvador, El Salvador; Gregory K. Ingram, president, Lincoln Institute of Land Policy; Bruce Lincoln of Phoenix, Arizona; David C. Lincoln, president of VIKA Corp. and chairman of the Lincoln Laser Company; John G. Lincoln III, senior engineer at CH2M-Hill in Boise, Idaho; Kenneth T.W. Pang, adjunct professor at the Hong Kong Polytechnic University; Andrea Taylor, director of community affairs, North America, Microsoft Corporation; Douglas P. Wheeler, partner at Hogan & Hartson in Washington, D.C.; and Carol Whiteside, president emeritus of the Great Valley Center in Modesto, California.

Odds and ends



Visiting fellow Daphne Kenyon distributed copies of Property Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers at a gathering in Albany earlier this month, as New York State considers major revisions to its circuit-breakers program...Retrofitting the edgeless city—in this case Tyson's Corner—is addressed in Time magazine...The first version of the massive transportation spending bill, up for reauthorization, emerged on Capitol Hill this month...Land use and transportation planning can help reduce greenhouse gas emissions, according to a report, Cost-Effective GHG Reductions through Smart Growth & Improved Transportation Choices: An economic case for strategic investment of cap-and-trade revenues, released by the Center for Clean Air Policy...Vermont passed a "right to dry" law for those who favor the clothesline over a dryer, reports the Orton Family Foundation...Martim Smolka, director of the Program on Latin America and the Caribbean, traveled to fast-growing Panama to advise some 25 mayors on urban planning and development...In April, Xavier de Sousa Briggs, associate director of the Office of Management and Budget, told journalists gathered at the Lincoln Institute that better coordination among federal agencies was critical; this month, the Environmental Protection Agency announced a partnership with Housing and Urban Development and the Department of Transportation for common goals on climate, energy, and the environment...Evaluating Smart Growth, a Policy Focus Report version of the Lincoln Institute's two-year project evaluating smart growth policies in the U.S., is now available at:

https://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=1572

— ANTHONY FLINT, Lincoln Institute of Land Policy