Paul L. Caron

Thursday, December 2, 2021

Shanske & Niemeier: Subsidizing Sprawl, Segregation, And Regressivity — Sublocal Tax Districts

Darien Shanske (UC-Davis; Google Scholar) & Deb Niemeier (Maryland), Subsidizing Sprawl, Segregation, and Regressivity: A Deep Dive into Sublocal Tax Districts, 106 Iowa L. Rev. 2427 (2021):

Much ink has already been spilled demonstrating that our current built environment was—and is—the product of numerous policy decisions. Some of these decisions are accidental (as with the mortgage interest deduction provided by the federal income tax), some can be reasonable at times, but are problematic overall (as with local power over zoning), and some are outright immoral (as with redlining). This Essay will demonstrate yet another policy tool that has contributed to the current structuralization of the built landscape: the sublocal tax district. These districts are very common, but are also, by virtue of their nature and spatial heterogeneity, very difficult to study.

As we will demonstrate with a deep dive into their use in Sacramento, California, such taxing districts, by design, primarily enable low-density, urban fringe development. This low-density urban expansion then motivates further investments in schools and other services to meet the needs of the spatially expanding population. County and local governments then create new service-aimed and school sublocal tax districts to meet these needs. Our goal is not to demonize these districts or blame them for the many problems that are characteristic of the current built environment. Rather, our primary goal is instead to demonstrate that these districts represent a significant subsidy for a problematic development pattern that is already encouraged in numerous other ways. Aided by this demonstration, we will then outline some of the many reforms that could improve these districts.

Our built environment is the result of decades of decisions or non-decisions. Sublocal tax districts are one tool that has contributed to current problems, though in almost all cases not nearly the most important one. Nevertheless, achieving the change we need will require using all available tools, and that requires taking an inventory. Sublocal districts are hard to study. In this Essay, we attempted to shed light on what they are and how they function. We think that our data points to some commonsense reforms, not outright abolition. For instance, we think that developers can make money without building in flood plains and that taking away a subsidy to develop in environmentally sensitive areas hardly constitutes a major imposition on the autonomy of individuals and communities. That is to say that the major harms these districts contribute to can be mitigated with minimal costs to the benefits they might provide in certain contexts. And, if redesigned thoughtfully, these districts could help improve development patterns across multiple dimensions.

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