Monday, April 24, 2006

The Anaheim-Houston free-market approach to development

The Wall Street Journal had an op-ed a couple weeks back holding up Anaheim as a model city redeveloping the right way without eminent domain - and what they describe sounds remarkably like what we do in Houston. I know I've expressed more support in the past for economic development eminent domain than most people are comfortable with, but I still admire and support the Anaheim-Houston approach.
Economic redevelopment is a serious, complex issue, but it isn't always done this way; and Anaheim, just north of Garden Grove, is proving it. Although the community faces similar problems, its city council, led by Republican Mayor Curt Pringle, is taking a more freedom-friendly approach to revitalization: protecting property rights, deregulating land uses, promoting competition, loosening business restrictions and lowering taxes.

Anaheim's old downtown was obliterated in the 1970s through past uses of eminent domain and urban renewal. Now, the city (population: 328,000) wants to build a new downtown, and the target location is called the Platinum Triangle, an area of one-story warehouses near Angel Stadium. In the typical world of redevelopment, officials would choose a plan and a developer, offer subsidies and exclusive development rights, and exert pressure on existing property owners to leave the area. Instead, Anaheim created a land-value premium by creating an overlay zone that allowed almost any imaginable use of property. Because current owners could now sell to a wider range of buyers, the Platinum Triangle is booming, with billions in private investment, millions of square feet of office, restaurant and retail space, and more than a dozen new high-rises in the works.

The area is developing quickly, without controversy and without a single piece of property taken by eminent domain. Early signs point to an enormous success. "Too often, I hear my colleagues in local government . . . say that Kelo-type eminent domain and redevelopment policies are their only tools to revitalize cities," Mr. Pringle recently said. "I have a simple message . . . Visit the Platinum Triangle."

The previous planning commission and city council were harsh on small businesses seeking variances; the new council (which took office in December 2002) began overturning one commission decision after another, with the goal of giving local residents and businesses as much leeway as possible.

The council waived fees for homeowners undertaking renovations, on the grounds that the city would gain in the long run by the increase in property taxes. Anaheim also waived fees for business start-ups for three months; some 2,000 new businesses formed in 2005, an increase of one-third from the previous year. It also passed a tax amnesty and eliminated business taxes altogether for home-based businesses. Most cities don't like to allow churches to build new worship centers, because tax-exempt churches typically locate in commercial and industrial areas, taking properties off the tax rolls. Anaheim has eliminated most hurdles for approving new churches. Its housing plan also avoids "inclusionary zoning" -- an increasingly popular approach to mandate that builders set aside certain amounts of "affordable" housing.

"Mayor Pringle is a god in our world," says Kristine Thalman, CEO of the Building Industry Association of Orange County. "He gets it. He understands the regulatory issues and some of the impediments to development."


At the urging of then-Councilman Tom Tait, a Republican with libertarian leanings, he began to look at the command-and-control nature of local planning. He (the mayor) found a surprising ally in Councilman Richard Chavez, a liberal Democrat who agreed that the old rule-bound system was holding back opportunities for the city's emerging Latino community.

Mr. Chavez said he didn't know what to expect from Messrs. Pringle and Tait, but that both helped him early on in protecting the interests of some local businesses that were facing unfair treatment from the city. "Curt created a sense of trust," he says. That trust led to "incredible growth, incredible energy for the city and a success at providing housing at every level. . . . I get very little negativity, even from those on the left side of the aisle." Hermetic partisan politics drop away, evidently, in the face of verifiable success.

In many ways, the Kelo case incited a national property-rights mutiny, with hundreds of localities passing laws that limit the scope of the eminent domain power. Anaheim's circumstance is instructive in a different sense: By decentralizing bureaucracies and loosening cosseted government regulation, it has confirmed the vitality and audacity of private enterprise. The city has made itself a laboratory for free-market thought.


At 1:21 PM, April 25, 2006, Blogger Tory Gattis said...

Sorry for the delay - I stack up WSJs and read 'em on the weekend, but had to skip a weekend or two because of a crazy schedule. I have a couple other WSJ articles in the queue too.


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