Lawmakers debate bill giving developers new powers

[statler]

Lawmakers debate bill giving developers new powers
By Scott Van Voorhis | Wednesday, February 13, 2008 | http://www.bostonherald.com | Real Estate

Real estate developers could run their own mini-cities, taking land and levying taxes, under a controversial proposal set for debate today at the State House.

Builders, with the help of newly created development districts, could raise hundreds of millions by issuing tax-exempt bonds and even force other property owners to give up land for their plans.

Critics contend the proposal would create a bunch of new, developer-controlled mini-cities, armed with extensive powers and even their own municipal seals.

?They operate like feudal fiefdoms,? said Shirley Kressel, head of the Alliance of Boston Neighborhoods. ?They are property ownership-based powers. They are not democratically elected.?

Supporters argue such development districts are needed to help builders foot the bill for expensive road and utility work when undertaking major projects.

?I don?t see this as a separate form of government,? said state Rep. Lida Harkins, the bill?s main sponsor. ?I see it as a financing tool and a way for communities to invest in a project that may be beneficial.?

But it?s not just the power to issue bonds and raise money like a city government that angers critics. Such districts would also have the power to effectively take private property, Kressel contends.

The new bill actually gives principals in the district power to purchase or acquire private land both inside - and outside - the development zone itself and equates the district with a municipal agency.

A previous version of the bill, defeated two years ago, gave the districts explicit eminent domain powers. The latest version does not specifically mention those two words, but would still allow developers to build on any land in their district, even if they don?t own it, Kressel said.

Harkins said the new bill would require that the development districts get board of selectman or town meeting approval. But she admitted that only 80 percent of property owners need to approve the district.

?Still, there?s no easy way to do this,? Harkins said. ?It would have to go through all the local processes.?

Jay Doherty, developer of the $3 billion Westwood Station project off Route 128, said he has not taken a formal position on the bill, though he would certainly consider taking advantage of some aspects of it, if it passes. His development team is footing the bill for $140 million in infrastructure work.

But he acknowledged the concerns of critics, including the fear it could lead to unwarranted land takings. One way to ease that concern would be to limit such districts to land controlled by the developer in question.

?The problem in this state is that we have a massive deficiency in infrastructure,? Doherty said. ?You can?t have job growth without renewing or rebuilding infrastructure.?

Despite the controversy, Harkins said she expects the bill to be passed later this year.
Article URL: http://www.bostonherald.com/business/real_estate/view.bg?articleid=1073164

Link

 

[BarbaricManchurian]

Re: The Economics of Building in Boston, Part 2

“They operate like feudal fiefdoms,” said Shirley Kressel, head of the Alliance of Boston Neighborhoods. “They are property ownership-based powers. They are not democratically elected.”

blah blah blah, shut up bitch! At least this will be a tool against stagnating development, hopefully it will actually get some more development off the ground and developments are better if they're master planned, and that includes government.

 

[underground]

Re: The Economics of Building in Boston, Part 2

I read the first few sentances and thought, "Shrily Kressel is going to need a new pair of pants after reading this," and then, sure enough, the article is all about her and her complete missunderstanding of development, economics, government, and democracy. I've read her website, "Boston Neigborhood Alliance" or whatever it's called, and she keeps bringing up, over and over again, this issue of public officials not being elected. It's like she won't rest until every government employee stands for election, even the postman. Here's my plea: Shirley, please stop talking for one millisecond and think about what your asking. The US tried having bureaucracies staffed with elected officials and it led to the worst kind of graft and incompetence. Look at Reconstruction. Hell, look at FEMA!!!

 

[Ron Newman]

Re: The Economics of Building in Boston, Part 2

This bill is NOT a good idea, as it creates political subdivisions of the state that do not have a republican form of government. These new governments would not be elected by all of the people living in them, or even all of the property owners.

My state rep (Denise Provost) helped sustain a Romney veto of this two years ago -- and she doesn't normally agree with Romney about anything.

Democracy is precious. Anything that would erode it should be resisted.

 

[vanshnookenraggen]

Re: The Economics of Building in Boston, Part 2

In India and China the government is spending billions on infrastructure improvements. I'm all for small government but this is one area where I feel the government needs to retain control, if not have more control. This bill just looks like another attempt to privatize everything in America. This needs to be stopped.

 

[underground]

Re: The Economics of Building in Boston, Part 2

Saying that the biggest problem with BIDs is that they are some how undemocratic fails to really understand the issue. The decision to form a BID is made democratically; I think the Herald quotes the bill as saying 8 out of 10 need to be in favor. That's a higher threshold than needed to amend the Constitution. The real issue is that BIDs allow areas that are more willing to pay taxes more services than areas that aren't willing to pay taxes (we have to ask if that's a distributive model we really want to follow). I'm not saying that BIDs have always resulted in this situation, I'm just saying that they have and can. Therefore, to me at least, the main problem with BIDs is that they are supposed to be a cheap tool for infrastructure development, but they haven't been used as such. Does that mean that we should part and parcel do away with the general idea, or does it mean that we just haven't perfected it yet? I think it's just that we haven't perfected it. I think that we should include measures for greater disclosure within BIDs both in terms finances and governance. I also think that the chain-of-command between BID boards and city government needs to be more clear in that we need to know that in limited circumstances, the city government can superceed the BID board. For our purposes, we have to remember that the bottome line is that city infrustructure is horrible and not getting any better anytime soon under our current system.

 

[vanshnookenraggen]

Re: The Economics of Building in Boston, Part 2

I didn't see any mention that this was a BID. I'm all for BIDs, I've seen them work wonders in New York and I think Boston would benefit from them. What this article seems to say is that it would let one person, not a coalition of local businesses, control an area, which seems undemocratic.

 

[Ron Newman]

Re: The Economics of Building in Boston, Part 2

These are not BIDs, they are something else entirely.

 

[underground]

Re: The Economics of Building in Boston, Part 2

Amongst the hysterics of the Herald and Shirley, it's hard to figure out exactly what's being discussed in the article, so here's the text of the bill in question: masschc.org/H159_2007_Ch40Tannotated.doc.pdf They're calling it a "Special Improvement District," but it's a BID.

 

[ablarc]

Re: The Economics of Building in Boston, Part 2

^ Link

 

[Ron Newman]

Re: The Economics of Building in Boston, Part 2

Taxation without representation was a bad idea in 1775 and is stlil a bad idea today.

The proposed districts have taxing and land-taking powers, but are to be governed by "prudential committees" which are not democratically elected by either the residents or the property owners within the districts.

 

[underground]

Re: The Economics of Building in Boston, Part 2

Let me distil the process laid out in the bill:
Step 1) Someone decides they want a BID (or whatever you want to call it).
Step 2) A SPECIFIC plan gets drawn up outlining/limiting the project's where, when, why, what, and how.
Step 3) 80% of real estate in the proposed district has to be on board.
Step 4) The local government, whether that be a city council, board of selectman, or town meeting, has to be presented with the plan.
Step 5) There is a public comment period.
Step 6) The local government votes on whether or not to allow the BID.
How is this method of levying tax any less democratic than our current? Under standard opporating proceedure localities use majority vote. There's still majority vote here, the difference is in who's initiating it. In a sense, it's more democratic because it relys on citizens being active is seeking tax instead of being passive and simply receiving it from the gov.

 

[briv]

Re: The Economics of Building in Boston, Part 2

I can see the need of these "Special Improvement Districts" to streamline the development process -- which simply does not work in this city or state. The proposal does raise some concerns though.

I seriously doubt it will happen this way, but this would be my ideal way of implementing these special districts:

All SIDs would be laid out in a single, clear and comprehensive state-wide plan created by a special state agency. Before developers get involved at all, any lands sitting within the SID should be already acquired by the state. This includes any lands that need to be taken by eminent domain.

Any developer that takes on an SID should be strictly bound by the comprehensive state plan. The state should also allow multiple developers to develop any given SID, and perhaps even sell individual lots to the highest bidders. Any new infrastructure required within any SID should be built out by the developers, the cost distributed proportionally among all parties. Once complete, ownership of any infrastructure should transfer to the town or municipality within which the SID exists. Also, once buildout of the development is complete, it's SID status should expire forever.

I really dont like the idea of creating "political subdivisions" in established cities and towns. Once completed, any SIDs should be totally absorbed by the municipalities within which they are built.

PS.
I split this thread off from "The Economics of Building in Boston, Part 2".

 

[Ron Newman]

80% of real estate in the proposed district has to be on board.

In a democratic system, people vote, land doesn't. We long ago abolished property-owning as a qualification for voting. Even the 80% don't get to vote on the district's governance once it is established.

What if 80% of the people in the district live in the remaining 20% of the land? They have no rights and no representation whatsoever.

 

[Hoss]

Ron,

So, here's another question for you: what if, in your City of Somerville, the owner of Assembly Square made its land and IKEA's land into one of these new districts? The Home Depot, the old movie theater, none of that would be in the new district. Only the land that is already going to be redeveloped by Federal Realty and/or IKEA would be in this new district. Wouldn't that make sense instead of the oversight exercised by the City now? Wouldn't it save municipal resources from being expended on that area when they could be better focused on Union Square, Green Line, etc...?

I'm not saying I agree with what I just wrote, I'm just saying it could be an interesting way for both the developer and the City to benefit.

 

[Ron Newman]

I'm not sure what advantage Federal Realty and IKEA would get from that. They already own the land, and are building much of the infrastructure as well as a development that has received its approval from the city.

Why would they want to go to the trouble of raising their own taxes, which they would pay to themselves, instead of just spending their own money directly?

 

[underground]

In a democratic system, people vote, land doesn't. We long ago abolished property-owning as a qualification for voting. Even the 80% don't get to vote on the district's governance once it is established.

What if 80% of the people in the district live in the remaining 20% of the land? They have no rights and no representation whatsoever.

The taxes being imposed are property taxes, so the 80% tie in to property ownership is appropriate. Also, city council, town council, or town meeting has to approve the creation of the district (tax plan included) before we even get to the taxation stage. What I'm getting at is, there are plenty of democratic safeguards in place here. Furthermore, if we are going to demand that every decision our government makes be voted on by everyone, and if we are going to demand that every government officical be elected by everyone, we are going to find ourselves in an unworkable situation. We'd have to get rid of the post office, the military, the IRS, and basically every other bureaucratic agency. The fact of the mater is, in a complex society, we have to rely on a certain level of delegation of authority, and that's not a bad thing. Think about taxes in general. We don't have state and national elections about every bit of the tax code. Instead, we the citizenry have elections for representatives who in turn empower the IRS to work out the details of the tax code.

 

[Ron Newman]

But these districts have no democratic safeguards. They can tax residents who did not even support their creation, and the residents have no power to subsequently vote out the government of the district. This is fundamentally wrong.

 

[underground]

Democratic Safeguards Called for Under House Bill 159:
1) 80% of property to be taxed must agree to form District.
2) Town Council, City Council, or Town Meeting must approve District. Note that Town Council and City Council members are directly elected officials.
3) District must elect Prudential Committee to govern District
4) Every 5 years, City Manager (or whoever/whatever serves that role) appoints new Prudential Committee. Note: City Manager is either a directly elected official or is appointed by other directly appointed official(s).
5) The right of citizens to sue Districts is preserved.
6) District is disolved after the improvements laid out in their original plan are complete, or after 40 years have passed. Districts can lobby for more time, but they have to go back to City Council, Town Council, or Town Meeting. After disolution, all improvements revert back to the original municipality.

 

[Ron Newman]

Where does the bill say that the Prudential Committee is elected? How often is it elected, and who is eligible to vote in this election? If it is periodically elected, why would a City Manager appoint a new one every five years?