Reply #143: I actually would like to study this issue more, but here goes: [View All]

[Leopolds Ghost]

There's a mathematical formula used by city administrators and planning boards used to determine if a public investment is worthwhile (any public investment, including roads and sewers and tax breaks and permission to build sought by a private developer -- and we all know how much power zoning has in America these days, the form of urban development is pretty well dictated by what the local government will allow, which is why some jurisdictions just simply don't have any buildings that aren't surrounded by a sea of parking and people tend to overlook that this is mandated by law, but that's a totally different story.)

Anyhow, it's very precise and I took a class on it but my skill in math is more geometry based, so naturally I can't remember the formula, but it is a tiered system based on the return on investment (ROI) as measured by the potential income of the occupants of the new development or people from other cities who might be attracted to use attendant services and thereby cost the city money, the objective (of the formula calculations, explicitly) being to maximize tax revenue of the new occupants and minimize city investment in city services over the long term.

The calculations are based on things like do they add students to schools (bad), do they require any social services (very bad), do they attract more than the minimum legally required low-income residents to meet standards for needs-based affordable housing quotient (if the affordable housing is not needs-based but merely offered in hopes that it will be snapped up by students and other creative types, so much the better. the solution introduced during the Clinton administration is to require all residents of HOPE VI private developments -- those pretty townhouse pods that replaced most of our nations public housing since 1990 -- are required to have credit, including former residents of the public housing project that got torn down who are technically, legally have the right to housing in the new development, but only if they obtain credit and a mortgage in the new development -- ironically shoving down their throat, in the name of "teaching poor folks responsibility", the very shit mortgage backed investments that everyone else invested in, which are dragging down the entire US economy. The reason the mortgage crisis happened is that everyone who couldn't find another way to secure their retirement put their money in these mortgages in order to justify paying inflated prices for a former tenement precisely in hopes that the former tenants would not be able to afford to return, thereby in hopes of ensuring a return on investment by staying on a perpetual depreciation ladder, despite the fact that it is still basically the same tenement, or worse, icebox architecture that looks every bit as "new and modern" as the public housing towers did when they were brand new. You stay on the treadmill as richer and richer people displace poorer and poorer people into progressively more depreciated areas until the poorest of the poor are concentrated on neighborhoods that are so bad off that the city can justify wholesale demolition.)

As urban planning profs note, the objective is to continue to house 80% of the poor in tenements elsewhere -- in buildings that are just beginning to depreciate -- because 80% of all new construction is for the top 10% in income both by design (cost of construction, rigorous parking and infrastructure requirements, etc) and intent (cap rates, as outlined, because the objective of depreciated (pre-owned) housing is to wait for it to fully depreciate -- i.e. become a slum -- before any investment can be justified by the actuarial tables that house all these calculations (as mentioned, there are very specific and technical figures that have been attached to these calculations by the city administration and real estate industry -- working hand in hand, if you believe realtors who basically regard the purpose of city administration as -- the advancement of real estate development!

Anyway, so back to the central calculation they make, which is, which populations is a developer required to serve or else make accomodations to avoid attracting. In order, they are something like (again, there are specific numerical values attached to these groups that you plug into the cap rates valuation, along with the number of people expected to be attracted to the public investment in question and the tax revenue / cost to the taxpayer generated by each group:

POSITIVE (maximize # of people attracted from these groups)

Upper income Retirees

Double income no kids

Affluent single college students

"Creative Class" Professionals

FIRE Employees (Financial Insurance and Real Estate)

Wealthy families with school-age children
(assumption is that they can and should use private school
thus generating instead of costing tax revenue)

NEUTRAL:

Lower income Retirees

Middle income college grads

Young families with infant children

NEGATIVE (minimize # of people from these groups who benefit)

Families with school age children (ANY income except wealthy)

Poor families (ESPECIALLY with children)

Anyone recieving AFDC, Food Stamps, etc.

Manufacturing / Service sector employees
(employer taxes go out of area, local gov't has to pay for services)

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Apologies for any inaccuracies. Now, it gets worse because any public investment may be studied according to cap rates (if a streetscape redesign is approved, what is the ROI in terms of increased taxes from favored groups moving into the area as a direct result? If it only benefits existing residents it is explicitly not financially justified, and the planners say "postpone until conditions improve" meaning economic conditions are ripe for new, wealthier residents to move in who would "benefit more" from said improvements.)

This cap rates doctrine, combined with broken window theory (Giuliani's pet theory, which states that minor quality of life violations attract serious crime and therefore basic maintenance of the public realm can be explicitly justified by the fewer undesirables you have in a neighborhood) and the "ownership doctrine" that all new services such as affordable housing should be engineered to "educate welfare moms in responsibile credit habits" by encouraging them to assume as much debt as the rest of America and handing out balloon mortgages on a select few units of what used to be public housing, with the remaining "owner occupied affordable housing" going to a waiting list of middle class city officials, politicians' and sheriffs' cousins, realtors, house-flippers, and other lowlifes that take advantage of city hall. Even the famous stripper in Newark who taught courses in flipping tenements as a day job.

All of whom are, of course, considered more desirable from a cap rates perspective than the impoverished families with dependent children they displaced.