Opposition Growing To Public Subsidies For Retail Mega-Projects

<p>Proposed state legislation in Arizona will punish cities that offer subsidies to retail projects. Kansas City's new mayor was elected on an anti-TIF platform. Increasingly, public financing for urban revitalization is coming under attack.</p>
April 5, 2007, 1pm PDT | Alex Pearlstein
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"When local leaders in Phoenix agreed to a $100 million subsidy for a 144-acre urban village called CityNorth last month, they gave a big boost to a massive mixed-use project in a competitive market."

"But they also triggered a backlash that resulted in a state legislative push to penalize cities offering subsidies to retail projects. Under proposed legislation, Arizona cities would lose a dollar of state revenue for every dollar they offer as incentives, except in certain cases such as redevelopment or historic preservation."

"Proponents of the incentives warn that penalizing cities for subsidizing retail developments would likely send developers looking for deals in other states such as Colorado and California."

"Opposition to such incentives has surfaced in other cities. In Kansas City, Mo., last week, former city auditor Mark Funkhouser was elected mayor in part because of his opposition to tax-increment financing, a popular economic-development incentive. But such sentiment runs counter to the mood in many cities, where local officials are using subsidies to land projects such as more pedestrian-friendly town centers."

In Phoenix, "Officials say the subsidy -- and structured parking as opposed to surface lots -- will ensure a project with attractive public spaces and a more urban feel."

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Published on Wednesday, April 4, 2007 in The Wall Street Journal
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