Build It, and They Will Prosper?

Copyright 2016 Kelly Wilson, Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Copyright 2016 Kelly Wilson, Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Do sports stadiums generate net economic benefits for the community? 

The consensus is generally no. Economists say that sports teams spur little new spending in the community. 

While stadiums are limited in use, politicians and developers claim that a stadium is a win for local communities. Proponents say that sports facilities improve the local economy by creating construction jobs, generating new spending, attracting tourism and multiplying local income and job creation. Advocates argue that new stadiums spur so much economic growth that subsidies are offset by revenues from ticket taxes, sales taxes, and property tax increases.

These arguments may overstate the benefits of stadiums. Economic growth takes place when a community’s resources become more productive. Increased productivity can arise from economically beneficial specialization by the community or from local value added. Building a stadium is good for the local economy only if it is the most productive way to make capital investments and use its workers.

Still, there are non-economic benefits, such as community pride and cultural activity. Some projects, such as the NFL Rams’ return to Los Angeles, which occurred with limited financial obligations for Los Angeles taxpayers, provide a valuable lesson in how to attract sports teams and new stadiums based on a market’s strength rather than subsidies.

Calculating the economic and fiscal impacts of a development is crucial when deciding on whether or not a project should break ground. RSG has extensive experience in projecting tax revenue from projects and can help determine if a sports stadium or other large municipal investment would be a good idea in your community!

Written by Jeff Khau, a Senior Analyst at RSG

Could Now Be the Time for a CRIA?

Copyright American Planning Association Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Copyright American Planning Association
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

AB 2492 extends Community Revitalization and Investment Areas to wealthier regions of the state, without much change to financial benefits of these tax increment financing (TIF) districts.

Last month, RSG discussed the limited financial benefits of Enhanced Infrastructure Financing Districts, one of several newer tax increment financing tools that provide limited benefits similar to redevelopment financing. Community Revitalization and Investment Authorities (CRIAs) are similarly structured and provide these tools AND opportunities for other community development tools. These characteristics have attracted some of our clients to evaluate their benefit. As it turned out, most of California could not benefit from a CRIA given the narrow socioeconomic requirements. 

However, just this week, the Governor signed Assembly Bill (AB) 2492 (Alejo) into law that makes changes to CRIAs, so we took a hard look at these changes and how they affect cities looking for help on community development projects. As it turns out, AB 2492 primarily expands the net on eligibility for CRIAs, but fails to provide much needed new capital to communities.

Here are the main changes:

  • More communities qualify – a greater number of lower income neighborhoods qualify because AB 2492 allows wealthier areas of the state to identify CRIAs in areas that have a median income less than 80 percent of the city or county median income, not just the state;
  • More flexibility - Added flexibility in measuring what parts of communities qualify by allowing the use of census tracts and/or block groups;
  • Any California Environmental Protection Agency-designated “disadvantaged community” automatically qualifies for CRIA - this certainly helps some very low and low income neighborhoods that would otherwise not qualify under the old law; and
  • Some added financial benefit – in addition to tax increment generated by the CRIA, special districts may now have the authority to allocate funds from certain tax and assessment revenues to the CRIA.  Cities and counties already had this ability.

We would love to see more done to make these districts more attractive by:

  • increasing the amount of tax increment revenues,
  • lowering the costs for startup, and
  • providing some other efficiencies like those RSG outlined in last month’s article for EIFDs. 

It’s important to note -  qualifying alone does not mean this tool is right for you.  It’s important to look at the financial feasibility carefully before jumping ahead.

Written by Jim Simon, a Principal at RSG

Are CRIAs or EIFDs Right for You?

Community Revitalization and Investment Authorities (CRIA) and Enhanced Infrastructure Financing Districts (EIFD) are receiving a lot of hype as the “new” redevelopment options. While they offer many valuable tools, they have many restrictions. CRIAs and EIFDs are not one-size-fits-all solutions and may not work for every community.  

The major benefit is the ability to collect tax increment revenues and issue bonds to fund projects such as infrastructure and building improvements, environmental remediation, business assistance, and affordable housing. Unlike EIFDs, CRIAs allow the use of eminent domain, but they also mandate a 25% set-aside for affordable housing.  A big hurdle is that either your agency’s share of property tax must be large enough to fund desired projects or other taxing agencies must agree to contribute. Lastly, CRIAs can be challenged by a protest vote, and EIFDs require voter approval to issue bonds

The main questions to consider are:

•    Do CRIAs or EIFDs fund the projects we need?
•    Are the proposed boundaries eligible?  
•    Will my agency’s share of property tax revenue be enough to fund projects, or will there be enough support from other taxing agencies to share the cost?
•    Will elected leaders and the community support a new CRIA or EIFD?

RSG can help you determine which tool is best, based on your area’s eligibility and needs.  Call us to learn more.

Written by Suzy Kim, a Senior Associate at RSG

Considering All Options in the Affordable Housing Toolbox

In the National Housing Institute’s blog “Rooflines,” Alan Mallach, former director of housing and economic development for Trenton, NJ, encourages us to consider which tools are most effective in creating affordable housing. Sometimes, apartments and houses can be purchased and restricted to residents of certain income levels more cost-efficiently than building new affordable housing. Average existing homes in cities like Dallas and Phoenix (Mallach’s examples) can be bought for under $200,000 while building affordable housing can cost over $200,000 per unit.

Mallach doesn’t argue against new construction. In places like San Francisco, the market for existing homes is incredibly expensive. A per-unit construction cost of $300,000 or more is “still a good deal.” Mallach urges consideration of all affordable housing tools.

RSG maintains and analyzes a database of California’s affordable housing tax credit projects. The database for 4% projects shows that per-unit costs range from $85,000 to $782,000. Acquisition and rehabilitation may not be cheaper than new construction, depending on the specific market and the specific project.

RSG can analyze the market and project results to maximize the effects of affordable housing spending. If you wonder whether spending money on acquisition or new construction will provide the most benefit in your community, contact RSG today!

Written by Dima Galkin, an Associate at RSG

The Pros and Cons of Gentrification

In our last post, we provided a definition for gentrification. What are its impacts?
“The hipster-hating mob ignores evidence that gentrification helps eradicate gang violence, strengthens the local economy, and encourages diversity in neighborhoods separated by racial lines. These positives far outweigh the only logical advantage to opposing progress: cheaper rents and Spanish colonial architecture that will crumble like Jenga pieces in the next big earthquake,” according to an opinion article by Art Tavana in LA Weekly (“Just Say Yes to Gentrification,” January 2015.)

However, Isaac Simpson, in the companion article, “Gentrification Is a Form of Oppression,” points out that gentrification can also lead to displacement, eviction, forced homelessness, police violence, and destroyed communities. He adds that though it may be done with good intentions, the result can be devastating to the residents who are pushed out of the path of development. Gentrification can also cause clashes between classes instead of bringing people together as a community.

While gentrification can benefit an area by decreasing crime, improving the economy, and increasing property values and taxes, it can have the negative consequences of pricing out former residents, changing the culture of the community, and causing resentment. Are the benefits and costs unevenly distributed? If so, are there tools available to mitigate this phenomenon? We will explore this question in our next post.

Written by Brett Poirier, a Research Assistant at RSG

Consensus Building

Public involvement is more than just a process. It often determines the outcome.
Because a new development in a city can have a big impact on local residents and business owners, cities should understand the gravity of why public participation is important and also the risks involved with conducting second-rate outreach.

For example, Eric Jaffe of CityLab writes about a bridge project in Philadelphia that almost fell through because city planners were not aware of changing preferences and, more importantly, the social shift happening on the neighborhood level:

When talk of a new bridge had first surfaced, it was common for urban bridges to look and function just like highway bridges. Bike lanes, pedestrian access, and the concept of limiting travel lanes to slow down traffic hadn’t been part of the original design discussion; the goal was moving cars.
The people had also changed. Neighborhoods at both ends of the bridge had gentrified over that time period, and the stale highway design that former residents had approved — or, perhaps, felt resigned to accept — now received a chilly reception.

It’s important to engage in the public for several reasons: The public is a rich source of ideas. Community members understand their region's transportation issues and challenges. Outreach leads to representation from broad and varied segments of the communities. And federal law often requires projects to include public participation. 

Lack of funding is the top reason behind most lackluster attempts at public participation. Cities can solve this by budgeting more money upfront for community meetings. This can save money in the future in:

•    Legal fees spent in litigation
•    Staff time spent educating the public
•    Delays in development and construction

Communication is the key to success, and RSG can help with that communication.

Written by Jeff Khau, a Research Analyst at RSG.

Living La Vida Localvore

Many cities today are coming out with campaigns to encourage their residents to "buy local" – but what does this really mean?

A "localvore" is a person dedicated to eating food grown and produced locally. There are a lot of good reasons to eat locally grown and produced food: expending less resources packaging and transporting it, supporting the local economy, being healthier without processing and preservatives, being safer and being honest about the food source and the growing/producing process.

Buying local goes well beyond food. Today, more than 150 groups from Austin, Texas, to Portland, Maine promote the idea of "local first" or "buy local" campaigns, encouraging people to buy from independent, locally-owned businesses. Aside from feeling good about supporting local businesses, there are economic benefits too: An economic impact study found that 55.3% of revenue from locally-owned businesses goes back to the local economy versus 13.6% from national chains. Many of these businesses try to set themselves apart by being actively involved in the community.

If your city doesn’t already have a "buy local" campaign, here are six ways to start one in your community:

  1. Talk to groups,
  2. Advertise,
  3. Publicize,
  4. Recognize,
  5. Reward, and
  6. Entertain.

Build awareness, host networking events, reward people for their loyalty, and eventually, people will change their buying habits and be glad they did.

Buying local is a change in attitude, and it can change the community.

Written by Jeff Khau, an Analyst at RSG

Ciclovia Comes to Orange County


What if we could change the way we view the role and purpose of our streets?  That’s what many cities in the U.S., including two in Orange County, are trying to do by hosting their versions of Ciclovia.

Ciclovia began in Bogota, Colombia.  The principal idea is to close off certain main streets to automobile traffic and to give bicyclists, skaters, strollers, runners and walkers the chance to use the street.  The idea has certainly caught on.  San Francisco began its own version of the event, called “Sunday Streets,” in 2008, and San Mateo County did the same with “Streets Alive San Mateo County” in 2009.  Los Angeles has hosted its “CicLAvia” since 2010 with increasing frequency every year.

Recently, this trend reached Orange County.  On October 5, the same day as Los Angeles’s most recent CicLAvia, Santa Ana closed Main Street from Santa Ana Boulevard to Warner Avenue.  The event was titled “Sunday on Main Open Streets (SOMOS).”  Attractions included karaoke stages, a rock climbing wall and informational booths from organizations like the Orange County Fire Authority and America on Track.  It also gave local businesses the opportunity to showcase what they offer to potential customers who might not otherwise discover them, like the OC Roller Girls roller derby team.  The route diverged from Main Street to connect to the P.E. Bike Trail, which represents the fact that Santa Ana encourages biking and active lifestyles every day of the year, not just during special events.

Not to be outdone, Garden Grove put on “re:imagine Garden Grove” on October 12.  The winding route included the northern half of Garden Grove Boulevard, Main Street, Euclid Street and another part of the P.E. right of way, which Garden Grove has turned into a temporary bike and pedestrian path (and which hopefully will become more than temporary).  Garden Grove’s event had similar attractions as Santa Ana’s, as well as food trucks serving a variety of culinary treats.  In addition, Garden Grove closed off sections of the event area to bicyclists, allowing only pedestrians.  (Bicyclists could walk with their bikes.)

The open street events in Santa Ana and Garden Grove went well.  By the author’s estimation, both events were heavily attended.  Traffic signs and barriers, along with the local police force, helped to ensure the safety of all participants.  Local businesses seemed eager to take part in the events, and larger businesses were able to adjust by directing drivers to side-street entrances. While the shock of limited access and increased traffic may have bothered some drivers, advance notice and increased awareness should help to minimize potential negative reactions to these types of events.  Moreover, the event organizers did a good job customizing the flavor of each event to the local municipal character.  And the events themselves were a lot of fun.

As quality-of-life factors play an important role in the ability of cities to attract residents and visitors, the growing popularity of open street events like CicLAvia, SOMOS and re:imagine Garden Grove mark an important shift in the perception of the purpose of our streets and their potential use.  More significantly, the idea of complete streets — that streets need to be planned, designed, operated and maintained for use by walkers, bicyclists and people riding transit, as well as automobiles — will help cities provide the benefits of open street events year-round.

Written by Dima Galkin, who is an Analyst at RSG.