Re: Financial topics
Posted: Sun Oct 07, 2012 1:37 pm
You make some excellent points. But, in the state of Washington, which I am familiar with, the methodologies to do this type of thing have been developed in law, regulation, and case law over the past two or three decades.gerald wrote:Not quite - the suburban population overwhelms the city -- the population of Detroit is not huge it is around 710,000 (down from a high of 1,800,000 in 1950 ) and the Detroit Metro population outside of Detroit is is around 3,600,000Reality Check wrote:BTW.
The Obama administration has proposed a solution to the problems of cities like Detroit.
Replace the Detroit city taxing district, with a much larger regional taxing district, that allows the huge population in the city to vote to tax the smaller, but richer, population and businesses in the surrounding suburban cities and towns, so the Detroit regional government can be controlled by the Detroit city politicians, and the Detroit city politicians will once again have a seemingly unlimited source of other peoples money to spend.
( five times that of the city) http://en.wikipedia.org/wiki/Detroit
The proposed solution sounds like a prelude to civil war or revolution. I have talked at some length to people who moved from Detroit. Their expressions of fear and monetary loss was quite strong, mixed with anger.
If the federal government would try that, -- the city telling the suburbs what to do,-- the reaction could be something quite unexpected.
In the case of cities like Detroit, where the population is relatively small in the city itself, selectively targeting surrounding business areas where the number of employees and the value of the real property is high, but the number of residents is relatively small, could massively increase the tax base many times in terms of taxable real estate value, sales taxes based on where the sale is made at shopping malls and other retail businesses, and workers incomes subject to city income taxes based on where they worked, while avoiding the residential areas and the resulting massive increase in voters that would dilute the inner city vote. Once the city has the legal tools to absorb selective portions of the surrounding tax base, it can be selective in how it uses those tools.
Some examples from Washington state of existing tools for doing this type of thing:
1. Growth plans, for each city, are now mandated by state law. Once a city designates neighborhoods outside it's boundary as part of it's targeted growth area, as part of it's mandatory growth plan, and the plan is approved by the county, then, by state law, no other city can absorb those neighborhoods into it's city boundaries . The legal, economic and public policy theory of these statutes, regulations and case law is the idea that "controlled growth" is always better for the common good and more cost effective than uncontrolled growth. The county, in which the area targeted for city growth is located, must, by state law, approve one plan for that area when only one plan to grow into that area is submitted. Only if multiple plans, from multiple cities, to grow into the same area are submitted may the county modify or reject all but one of the plans. Once an area has been targeted and approved by the county as part of a cities growth plan, no other city may incorporate that targeted growth area and it is reserved for the growth of the approved city only. For this reason cities negotiate treaties to carve up the available growth areas and avoid duplicate requests that allow the country any opportunity to delay, modify or reject.
2. State law requires, that any property within so many hundreds of yards of a sewer line, must abandon it's septic tank, and at the property owner's sole cost and expense, pay to have the sewer system extended the remaining distance to their property, and pay the city to hook up to that sewer line, including paying off previous LID financing to pay the capital costs of extending the sewer line miles outside the city. Then, of course, additional property owners are within so many 100s of yards of where the first property owner paid to have the sewer line extended to. And so on, and so forth. Cities kindly finance these sewer expansions with bonds and allow the property owners to pay the capital costs ( principle plus interest, plus bond origination fees ) off over several decades ( or until the property is sold to a new owner). These capital costs become priority liens attached to the property and having a priority over mortgages, by state law. Municipal water and sewer services, by state law, may be extended down any street that is in a cities growth plan and targeted for the city's expansion. Cities extend municipal sewer and other municipal utility services miles at a time down roads outside their city limits ( but in their growth plan area ) with the ultimate goal of having property owners near those expanded utilities lines, but outside the city, "voluntarily" request utility service, and as part of that "voluntary request for service" agree to pay back "their portion" of the previously expended capital costs of extending those utilities miles outside the city, and also "volunteer" to join the city in the future, thus increasing both the cities utility customers and their tax base, while at the same time forcing the new customers to "voluntarily" pay the capital costs of extending the sewer service several miles down the road in the first place.
3. Utility coercion. City utilities such as sewer, and water, once extended to properties outside the city, give the cities a unique political and economic power over the property owners to which municipal utilities are now provided. Utilities, such as water and sewer, are monopolies in WA state. Both public and private utilities are monopolies. Private utilities are regulated as to price and policy, municipal and other "public utilities" are not. Courts have determined that once cities have provided utility services to a property outside the city limits, the cities can give their sewer and water customers ( the property owner served by the water or sewer utility ) a choice: "sign a power of attorney over to the city, to allow the city, at any time the city so desires, to petition the city, on behalf of the property owner, requesting the city extend the cities boundaries to include that property" or have your water and sewer turned off by the city until such time as you sign such a power of attorney and deliver it to the city. Revoking the power of attorney, or otherwise objecting to the voluntary request once the power of attorney is exercised by the city, will also result in all city utilities being shut off. Courts have upheld the power of the municipal utilities to make such demands a condition of providing utilities. Once such a power of attorney is signed, and exercised by the city, the only "vote" that must take place is the city council voting to add the "petitioners property" to the city. By state law no one, tenant or owner, can live in a home without proper sewer or septic tank service, and no septic tank can be allowed to exist on a property if a sewer line is available within so many 100s of yards.
Obviously the WA state examples do not address one city absorbing another. But it does demonstrate how creative state legislatures have become in "legally forcing" property owners outside of cities to "voluntarily" pay, after the fact, the capital costs, plus interest and fees, of extending city utility services many miles down streets ( streets that are outside of the city limits ) so that those utility lines will now be near properties that are miles outside the city , and also "legally forcing" the same property owners to then "voluntarily" request the city to add their property to the city's tax base.