TIFs, Gentrification, and Plutocracy

The most recent issue of my local alternative publication, Little Village, had two articles that caught my attention (Vol. 17, Issue 162, Sept. 17-30 20014). Taken together, they made an important point. I suspect that wasn’t an accident for they were printed close together as the first two articles presented.

The first article is, “The Truth About TIFs”. It is written by Matthew Byrd.

Like many other places, TIFs have been a big issue around here, as they should be since TIF funding comes from the money taken from the taxpaying public.  Here is how it has played out in this local area. A neighboring town, Coralville, has used TIFs to draw businesses away from the town I live in, Iowa City. A TIF has been used for the the large mall built in Coralville which had major impact on Iowa City’s downtown. Iowa Citians like to call it the Death Star. We used to have a nice downtown that had normal stores, but now it is filled with mostly bars, restaurants, art galleries, and expensive gift shops. The TIF-funded mall played a role in gentrifying Iowa City.

That said, Iowa City’s government has embraced this gentrification with its own TIFs. A highrise was built in downtown Iowa City using a TIF. It is a big fancy building that will add yet more expensive apartments to downtown and with room for yet one more expensive shop on the ground floor. In building this highrise, the city got rid of the benches in front of this new highrise. The area where those benches were used to be called the “People’s Park” and it was an important public space that has now been made into the front yard for the wealthy inhabitants of the highrise.

This wasn’t the original intent for TIF funding.

As the article explains, “the image of TIFs is considerably less rosy in execution than it appears in conception, particularly when it comes to the intellectual core of TIF law: the focus on blighted neighborhoods. T?he idea that TIF funds are supposed to be used to revitalize poor neighborhoods is paramount, to the point that it’s written into Iowa State Code. As the Iowa Department of Revenue explains, “Iowa code recognizes two primary purposes for [TIF funding]; namely, to eliminate slum or blight and to promote economic development.””

TIFs help blightned neighborhoods about as much as the war on poverty helped the poor. In the end, public money always seems to get redirected to the already well off. The poor get underfunded schools, unemployment, and mass incarceration while the rich get privatized education, outsourcing, and government contracts to build and operate the prisons. One of the purposes of TIFs was to create and maintain low-cost housing in neighborhoods where investors wouldn’t otherwise build or renovate.

This brings me to the article immediately following the above one, “High Rises and Higher Rents”. This article is by Shauna McKnight.

Basically, there is too little housing for too many people. Also, the housing available is simply too expensive. The article begins by pointing out that “[a]pproximately 30%” of Iowa City’s population lives below the poverty line, “compared to Iowa’s average of 12%”. On top of that, “55.6% of renters in Jonson Country are cost burdened” which is “the highest rate in all of Iowa”.

Affordable housing isn’t keeping up with the demand of population growth, specifically an increasingly impoverished population because of the recession and other factors: “the vacancy rate in Iowa City sits at half of one percent. In a normal, healthy market there is typically a five percent vacancy rate.” As the article continues a bit further on, “the problem is that the wages in the area haven’t kept up with the cost of living.” This forces many poor working class people to look for housing further away in the nearby rural areas and small towns. Cheaper housing just means more expensive travel costs. Also, where someone lives determines their opportunities such as the school their children will attend.

Many people can’t win for losing. This isn’t limited to Iowa City, that is for sure. Still, rural farming states like Iowa are being hit harder than the states in other regions. This is why the younger generation is fleeing which creates a death spiral for the local working class communities. A particularly disheartening piece of data is how, “one in five working families in Iowa have incomes that cannot meet their basic needs. This can lead to a cycle of poverty that persists across generations.”

This is where the TIF issue comes in. Why is the local government giving money to promote the building of housing and shopping for the wealthy?

“The issue of affordable housing has thrown a spotlight on The Chauncey building—which will hold both commercial spaces for area business and luxury housing units. The city plans to pay &1 million to set aside five units of affordable housing in the complex (the remaining units will be luxury condos and apartments).”

That is the official solution for the housing problem, really? We the public will pay a million dollars to get five more units of affordable housing in this town. We are being fleeced. I sometimes feel like this town has been taken over. If the local government isn’t serving most of the local population, then who is it serving?

7 thoughts on “TIFs, Gentrification, and Plutocracy

  1. It’s actually far worse in the bigger cities.

    New homes have purchase prices that mean that people will be in mortgage debt until after retirement. Apartments too have rents that are not affordable for most people.

    I suspect that map you linked previously is a matter of the fact that young people cannot afford to live in the Northeast. I’m surprised that this has not yet happened on the West Coast, perhaps due to the vibrant technology sector.

    There are other problems. In some cases it is a lack of space. The only solution is to build up I fear.

    • Many things are different in the largely rural farming states. Iowa City, like most towns in the area, is surrounded by farmland. Iowa for the most part doesn’t do crowded urbanization. What goes for a big city here would be considered puny by coastal standards.

      In theory, there is plenty of housing in Iowa and plenty of land to build housing. But in reality, most of the affordable housing and affordable land is in rural areas where the jobs have been disappearing, So, to save money, many people choose to live in old farm houses or in small rural towns, from where they commute long distances.

      They have few other options. But could you imagine driving an hour or longer in order to get to your minimum wage job at Walmart?

      Buuilding out isn’t a problem here. The problem is that the poor working class hardly can afford any housing at all. Where the jobs are the cheap housing isn’t, but there also isn’t much well-paying work with good benefits. The poor would gladlly build out or up, if they could afford it.

    • As people flee the poor rural areas, the remaining permanent underclass becomes a stark reality not easily ignored. That is even more true in a place like Appalachia, but the rural Midwest isn’t far behind. There are also those fleeing the inner cities to towns like Iowa City in the hope life will be better. Americans are fleeing in nearly all directions, although obviously few are heading to the rural areas.

      With the permanent underclass, there is nowhere for them to flee. They are stuck. They live wherever they find themselves and they find whatever work they can, but it ain’t easy. Being unemployed is difficult no matter where you live and unemployment is rampant everywhere.

      Many Ameericans are unemployed with little hope of employment. They are the permanent underclass partly because many of them are permanently unemployed or underemployed or just underpaid. For those unlucky to be unemployed, a small number get caught by the safety net, at least temporarily. For those lucky enough to be employed at all, a signficant number are living paycheck to paycheck.

      They are in an impossible situation. They can’t find good work nor can they afford housing and transportation costs. They are always cutting something out of necessity, often skipping meals or not paying bills on time.

      Few politicians care about these people. No one is likely to use a TIF to ensure they have access to affordable housing and shopping.

  2. It’s known as the poverty trap. In the developing world, it’s an endemic problem, but increasingly, it seems to be happening in the developed world as well.

    The rural areas are looking very grim in their future indeed, at least in some areas. In many cases, many towns have only one major employer. If that goes, then the town is more or less in trouble. That happened a lot with manufacturing.

    Granted, some of it was self-inflicted, but the overwhelming majority of the problems here were inflicted by the top 0.1%. Their genius as Gore Vidal famously noted was that they managed to get people to vote and act against their own long-term best interests.

    It’s the product I fear of runaway capitalism, as is the soaring inequality.

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