Monday, May 14, 2012

Strategic “Blight” Designation in Missouri

As most land use professors are well aware, having land declared “blighted” isn’t always such a bad thing.    

The potential disadvantages of official “blight” designation are obvious.  Properties in declared “blighted” areas can be particularly susceptible to takings by eminent domain, as famously highlighted in Berman v. Parker, 348 U.S. 26 (1954).  Official designations of blight can also depress property values in some situations due to a perceived stigma commonly associated with blighted land.  

Why, then, would anyone want their real property to be declared “blighted”?  The reason, of course, is that officially blighted property can qualify for special tax benefits or programs in many jurisdictions.  If parcels are eligible for huge tax breaks only if they are officially labeled as “blighted,” then getting that label can suddenly be more a blessing than a curse.

An ongoing political debate in Columbia, Missouri, showcases this ironic aspect of redevelopment policy.  Missouri statutory law provides that new real property improvements in “enhanced enterprise zones” (EEZs) can qualify for generous property tax reductions.   Companies that invest in redevelopment within an EEZ can also receive state income tax breaks.  A group of government officials in Columbia have thus been seeking to have nearly half of the city designated an EEZ.  Unfortunately, EEZ designation requires that the entire EEZ area be declared blighted.  In Columbia, the proposed blighted area would encompass vast portions of the city where retail outlets are succeeding and businesses appear to be thriving. 

Sadly, those in favor of the EEZ proposal in Columbia argue that declaring half of the city to be blighted is necessary to enable it to compete statewide for new manufacturing and other jobs.  At least 118 Missouri communities--comprising one third of the land area of the state--have already declared themselves blighted to take advantage of the EEZ statute, giving them a leg up in attracting private redevelopment dollars. 

Should state redevelopment policies be structured such that local officials must declare large amounts of their communities to be blighted to have any chance of competing for private investment? 

Those interested in exploring this topic from an academic perspective will find plenty of published scholarship on LexisNexis or Westlaw to distract them from grading final exams for at least a few hours.  For a convenient launching point, consider Colin Gordon, Blighting the Way:  Urban Renewal, Economic Development, and the Elusive Definition of Blight, 31 Fordham Urb. L. J. 305 (2004).

Troy Rule

http://lawprofessors.typepad.com/land_use/2012/05/a-case-study-in-strategic-blight-designation-.html

Community Economic Development, Development, Economic Development, Eminent Domain, Local Government, Politics, Redevelopment, State Government | Permalink

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