The new ghost town

    All across the land, subdivisions in once fast-growing areas are becoming depopulated due to unemployment, dramatic decline in prices, and of course foreclosures. The formerly expanding regions in the South, West, and northern Midwest are most heavily impacted, say the authors of a recently posted Lincoln Institute working paper, The New American Ghost Town: Foreclosure, Abandonment, and the Prospects for City Planning.
     Traditionally, housing vacancy has been recognized as a significant factor that accelerates neighborhood decline. More recently, researchers and policymakers have reframed this problem as an opportunity for adaptive redevelopment. Researchers Justin Hollander,  Colin Polsky, Dan Zinder, and Dan Runfola sought to effort to identify vacancy hot spots, analyze why these areas have declined, and tailor policy recommendations to planners and policymakers for encouraging neighborhood revitalization. They used GIS technologies to analyze housing occupancy data provided by the United States Postal Service to show how housing occupancy patterns changed during the recent foreclosure crisis, and also Global Moran’s I and Local Indicators of Spatial Autocorrelation (LISA) spatial analysis techniques to identify clusters of declining zip codes.
     Among the finding: suburban areas recorded a higher net increase in declining zip codes during the foreclosure period than other areas.

Thriving CLTs

     The National Community Land Trust Network helds its annual conference in Albuquerque earlier this week, co-sponsored by the Lincoln Institute. Senior fellow Armando Carbonell reports that the program opened with a briefing and tour of projects completed and underway by local host Sawmill Community Land Trust. These included both ownership housing (single family detached homes, duplex and fourplex casitas, townhomes, and live/work units), affordable rental units, and new senior apartments.
     David Abromowitz, a partner in the Boston law firm of Goulston and Storrs, gave the keynote address at the conference. Among other accomplishments, Abromowitz drafted the model ground lease document that helped propel the community land trust movement from a handful of trusts in the 1980s to about 250 today. He also helped to apply the ground lease in redeveloping Columbia Point, a deteriorated Boston public housing project, securing affordability in perpetuity for 400 households as part of a new 1200 unit mixed income community. Addressing the challenging times for housing in America, which he described as a “man-made tragedy for millions,” Abramowitz nevertheless reflected on bright spots of the past 25 years -- including progress in establishing the CLT model as an “improved form of property” and demonstrating, contrary to post-bubble myths, that “many families of modest means are capable of being stable homeowners,” as evidenced in foreclosure rates of less than 1 percent for mortgages in community land trusts, one-twentieth the rate for sub-prime loans. Citing the success of building “community wealth,” Abromowitz called for “bringing community land trusts and shared equity to scale,” beyond pilot programs and demonstration projects.
     Awards for lifetime contributions were presented to Abromowitz and to Charles and Shirley Sherrod, who founded New Communities Inc. in 1969, regarded as the first CLT. Shirley Sherrod was last year’s keynote speaker at the National CLT Network conference; in the intervening year, her dismissal, subsequently retracted, as USDA’s head of rural development for Georgia attracted intense media attention. The annual conference included a host of training opportunities, with courses ranging from “Green Rehab” to a “CLT Operating Software Demonstration,” and concluded with a celebration of the Lincoln Institute publication The Community Land Trust Reader, a history of the CLT movement by editor John Davis.

Temporary Haiti

     Hurricane Tomas and the recent cholera outbreak in Haiti reminded the world of the frailties of post-earthquake life in the beseiged Carribbean nation. The vast tent camps were conceived as temporary shelter, but relief workers should anticipate that much of the settlement will become permanent -- much like the informality, or slums, in the rest of the developing world, says Martim Smolka, director of the Program on Latin America and the Carribbean.
     "The camps at the far outskirts of Port au Prince are bound to become permanent occupations, as copious experience has shown throughout the Third World, with precarious services, very high transport costs and unresolved land tenure issues," Smolka said after returning from Haiti several weeks ago.
    Among the many challenges, he said, is to establish a system for at least minimally serviced land, especially difficult if the goal is to have home sites titled. Tenure rights are a major focus for international donors, influenced by Hernando  De Soto, but there is no operational cadastre system or clear criteria for allocation of the predominantly unserviced land. A cadastre project prior to the earthquake must be re-initiated. In one case, officials attempting to clear an area for occupation at the periphery of the city ran into "pirate sub-dividers" charging $350 per plot, Smolka said.
     Downtown Port au Prince  looks like Dresden after World War II, Smolka said. Only about five percent of the rubble has been removed, and the downtown and public buildings are in dismal condition. Approximately one million people are living in tents on four-by-six square-meter sites. Of the minimally needed 600,000 homes, some 28,000 units have been built, including 100 Cuban-donated houses costing $25,000 each. UN-Habitat estimates that about 40 percent of the destroyed houses could be re-occupied with some minimal subsidies. The cost of removal of rubble of a single plot is about $4,500, while the cost of a new improvised house provided by UN-Habitat is $3,500. The public transport system is confined to "toptops," pickup trucks with wooden benches; most commercial activity is conducted in the streets; UN forces have taken up the role of the army and policing.
     Smolka, a specialist in land tenure issues and informal settlement, was part of a Lincoln Institute delegation that included senior fellow Armando Carbonell, part of an ongoing initiative to provide information and advice on the housing and land policy dimension of Haiti's reconstruction.

Taxes in China

        This isn't an association typically made, but it makes sense as the next step after economic reforms: China is quietly developing a system of local public finance to better organize government tax and expenditure policies -- including the initiation of a property tax.
        China’s economy has developed rapidly following the 1978 implementation of economic reforms that facilitated investment, expanded trade, and introduced market mechanisms and practices. But reforms of China’s public finances have proceeded more slowly and with less publicity. The major tax reform, implemented in 1994, shifted a large share of fiscal revenues from local governments to the central government, but did not substantially reassign expenditure responsibilities back to the center. That means local governments kept nearly half of revenues -- but had responsibility for over three-quarters of public expenditures.
        This is a familiar scenario for the ongoing evolution of the local, state, and federal government relationships in the U.S.  According to a new study, China’s Local Public Finance in Transition, edited by Joyce Yanyun Man and Yu-Hong Hong, there are three major policy options under consideration: instituting new sources of local revenue, such as a property tax; reforming revenue transfers from the central government to local governments; and revisiting the assignment of expenditure responsibilities from local governments to the central government. A mix of all three options are most likely going forward.
        Public finance is closely tied to land use and development in China. Local governments seeking revenue have been motivated to seek more revenue from the conversion of land from rural to urban use. Conversion involves compensating farmers for their land based on its agricultural use value, and then converting the land to urban use and selling it for development at a much higher value. The difference in land values accrues to local governments.
        The revenue from land sales has been a major source of funding for investment in infrastructure capital, often required to provide services to the newly converted urban land. In areas where urban land is in short supply revenues have been significant, and the incentive to produce more revenue has led to excessive land conversions. This practice has created low-density development in the periphery of some metropolitan areas while leaving large areas of urbanized land undeveloped.
         China’s Local Public Finance in Transition reflects the proceedings of a conference co-sponsored by the Lincoln Institute and the Peking University–Lincoln Institute Center for Urban Development and Land Policy in May 2008, and will be translated into Chinese. The book includes a foreword by Lincoln Institute president Gregory K. Ingram and a final chapter on future reform by Georgia State University economist Roy W. Bahl.