2007 CPEO Brownfields List Archive

From: "Kris Wernstedt" <krisw@vt.edu>
Date: 23 Jul 2007 15:34:21 -0000
Reply: cpeo-brownfields
Subject: [CPEO-BIF] developers stated preferences re subsidies
 
Lydia and other CPEO list types,

Peter Meyer and I, along with two other researchers (Lauren Heberle and Anna
Alberini), ran a survey of over 300 private developers a couple years ago.
One of the questions we asked was about the relative attractiveness of cash
vs. tax credits at properties with known or suspected contamination.
Specifically, we presented to our developer respondents the statement:

"Tax credits are better than cash reimbursement grants as incentives for
developers" 

And the breakdown of responses we got from the private developers was:

"Never" or "Almost Never":  45%
"Sometimes":  40%
"Always" or "Almost Always":  15%

If you can't syndicate the credits, it makes sense they would be less
valuable to those with no tax liabilities.  But I think the range of
responses we got is interesting.  

We also posed a question of whether the developers preferred subsidies
offered in cash or in the form of waivers of equivalent value in public fees
associated with the project (such as those for curb cuts or for sewer or
water hookups)?  The breakdown on that question was:

prefer cash subsidies:   23%
prefer fee waivers of equivalent value:  12% 
cash subsidies and fee waivers of equivalent value equally attractive:  65%

Another interesting finding in light of the ongoing subsidy discussion on
the listserve.

Kris

*************************************
Kris Wernstedt
Urban Affairs and Planning
Virginia Polytechnic Institute and State University
Alexandria Center
1021 Prince Street, Suite 200
Alexandria, Virginia 22314
703-706-8132 (voice), 703-518-8009 (fax)
krisw@vt.edu, www.uap.vt.edu/thePeople.htm
*************************************

> -----Original Message-----
> From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On
> Behalf Of Lenny Siegel
> Sent: Monday, July 23, 2007 2:31 AM
> To: Brownfields Internet Forum
> Subject: [Fwd: RE: [Fwd: RE: [CPEO-BIF] Brownfield Subsidies]]
> 
> Date: Sun, 22 Jul 2007
> From: Lydia Tan <ltan@bridgehousing.com>
> 
> Tax Credits work well for tax paying private developers, but given that
> much of the equity that is invested in these larger scale developments
> (at least in California) comes from pension funds (who don't pay taxes),
> tax credits are not as powerful a tool across the board as an outright
> grant to a developer.
> 
> Lydia Tan
> Executive Vice President
> BRIDGE Housing Corporation
> 345 Spear Street, Ste 700
> San Francisco, CA  94105
> 415.989.1111
> 
> 
> -----Original Message-----
> From: brownfields-bounces@list.cpeo.org
> [mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Lenny Siegel
> Sent: Saturday, July 21, 2007 11:37 PM
> To: Brownfields Internet Forum
> Subject: [Fwd: RE: [CPEO-BIF] Brownfield Subsidies]
> 
> Ignacio wrote a few replies to my earlier query. With his permission, I
> am sending one of them out to the list. I think it's useful to our
> current discussion. He warns, however, that this is a simplified,
> incomplete response and reminds us that the New York state tax credit is
> totally different that tax increment financing.
> 
> Lenny
> 
> Date: 	Sat, 21 Jul 2007
> From: 	Ignacio Dayrit <idayrit@ci.emeryville.ca.us>
> 
> 
> 
> 
> Fiscal impact analysis is routinely done in large development agreement
> projects in CA.  The impacts of the project are estimated based on the
> employment, traffic, other environmental impacts, cost of public
> services (est. of police, fire, school, recreation, parks, water, power,
> etc.).  These can be costed out - cities have their own formulas.
> 
> This is calculated against the benefits - taxes (business, property),
> fees, cash contributions (yes, many developments give subsidies but yet,
> give contribitions as well) and any multiplier effects.  Then, of
> course, less the subsidies. The flow of subsidy (all cash vs. over time)
> may have an impact.
> 
> You can calculate the difference in financial impact of the TIF area by
> simply comparing the tax distribution within and outside the TIF.  I.e.,
> the TIF may distribute taxes by 50% TIF agency, 25% city, 10% school,
> 10% transit district, 5% community college, vs the non-TIF area would
> have distributed 35% city, 20% school, 15% transit, 10% comm college, 5%
> park district, xx% other special tax districts).  Housing funds are
> typically included in the city or TIF agency pots.
> 
> The kind of consultants that do this in CA include Keyser Marston,
> Economics Research Associates, Rosenow Spevacek, Applied Development
> Economics, Hausrath Associtaes, etc.
> 
> My own 2 cents is that if a city wants to throw $ into any deal, call it
> what it is.  Calling all of those subsidies a "brownfields tax credit"
> give brownfields subsidies a bad name.  Portions of these are job
> creation, infrastructure, housing AND environmental subsidies.  I figure
> it would have created too much political opposition if the subsidy was
> called too many things.
> 
> Take care.
> 
> -----Original Message-----
> From: brownfields-bounces@list.cpeo.org on behalf of LSchnapf@aol.com
> Sent: Fri 7/20/2007 7:44 PM
> To: brownfields@list.cpeo.org
> Subject: [CPEO-BIF] Brownfield Subsidies
> 
> thanks all for your comments. Not being an economist, I was just
> wondering if there was some formula that can be applied to figure out
> the taxes that are likely to be thrown off by a project without going
> into a detailed study if the project results in a "net" benefit to the
> state as  a whole.
> 
> For example, if we know a developer will be building a $200 million
> project, arent there multipliers are other metrics that can be used to
> figure out the jobs created, income taxes generated, sales taxes from
> raw  materials used and sale of condos, property taxes from the
> development, etc. This might simplistic but at least it presents an
> estimate of some of the benefits thrown off by a project that can
> offset the tax credit liability generated by the project.
> 
> I do not think that the creation of an environmental fund for use by the
> state to acquire, remediate and then sell property to developers makes
> any sense. First, the state cannot cleanup as many sites as developers
> can and certainly not in the time frame required by the market. The
> Wollman Rink in Central Park was a perfect example. The City tried for
> years to get it reconstructed.
> Trump stepped in, hired contractors that were incentivized to  complete
> the work within certain time periods (and without having to do the
> bidding
> procedures) and had the rink built in a year. When the state gets
> involved, the low bids frequently up with sloppy and sometimes  tragic
> results like what happened with the Boston Harbor tunnel.
> 
> Having done a numerous brownfield sites across the country either
> representing developers or lenders, my experience is that tax credits
> are the  most efficient and fastest way to redevelop contaminated
> properties. Loans and  grants may be ok for local governments to perform
> assessments but tax  credits work great for developers since they dont
> have to deal with bureaucratic delays and inadequate staffing, and the
> developers along with their contractors  are incentivized to get the
> project done quickly so they can then file  for their financial
> benefits.
> 
> Also, there was a comment about subsidies and  trivial level
> contamination.
> Regulators and environmental  professionals may view some amounts of
> contamination as trivial but  contamination still sends shudders through
> the development and lending community  because of the cost and timing
> uncertainty.
> 
> Despite liability reforms, many developers are still nervous about
> touching even slightly contaminated properties. I've been involved in
> situations where I  have spent more than a year explaining the benefits
> of a state brownfield program before a client was willing to pull the
> trigger on  a project. These projects are viewed as risky and high risk
> money demands  high rewards. With construction costs increasing 5-10% a
> month, any  delays can have devastating effects on the rate of return
> and  make projects uneconomical.
> 
> And of course, it seems each year we become concerned about more types
> of chemicals at ever lower levels of exposure. Thus, I would never
> underestimate the impact of "trivial" amounts of contamination at a site
> or the incentives needed to convince developers to take a risk on a
> contaminated property instead
>    of a nice undeveloped parcel or land with a fairly benign  use.
> 
> Larry
> 
> Lawrence  Schnapf
> 55 E.87th Street #8B/8C
> New York, NY 10128
> 212-876-3189  (h)
> 212-756-2205 (w)
> 212-593-5955 (f)
> 203-263-5212  (weekend)
> www.environmental-law.net
> 
> 
> 
> ************************************** Get a sneak peek of the all-new
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> 
> 
> 
> 
> --
> 
> 
> Lenny Siegel
> Director, Center for Public Environmental Oversight c/o PSC, 278-A Hope
> St., Mountain View, CA 94041
> Voice: 650/961-8918 or 650/969-1545
> Fax: 650/961-8918
> <lsiegel@cpeo.org>
> http://www.cpeo.org
> 
> _______________________________________________
> Brownfields mailing list
> Brownfields@list.cpeo.org
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> 
> 
> 
> --
> 
> 
> Lenny Siegel
> Director, Center for Public Environmental Oversight
> c/o PSC, 278-A Hope St., Mountain View, CA 94041
> Voice: 650/961-8918 or 650/969-1545
> Fax: 650/961-8918
> <lsiegel@cpeo.org>
> http://www.cpeo.org
> 
> _______________________________________________
> Brownfields mailing list
> Brownfields@list.cpeo.org
> http://www.cpeo.org/mailman/listinfo/brownfields


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