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Stop Sprawl
Sprawl Costs Us All

Corporate Subsidies

In poll after poll, Americans express overwhelming support for protecting green space. Yet, year after year, we pay developers to pave over these precious places. Not only do we lose key habitat, storm buffers and natural places to recreate and relax, but we're paying for it through higher taxes. In 1998, voters passed 70 percent of a record 240 smart-growth initiatives on state and local ballots. That year, voters also approved over $7.5 billion in new funding to protect open space. And this trend shows no signs of dying out: In March, California voters approved the biggest open-space bond measure in state history.

Many Americans would be shocked then to learn that as we fight to protect these precious open spaces, millions and perhaps billions of dollars are being given out by state and local governments to encourage their destruction. Why? Because state and local governments are playing a cynical shell game of incentives to lure development to their region.

It works like this: Big corporations promise towns and cities development projects that will create lots of jobs. All the community has to do is pony up some money in the form of undeveloped land, tax discounts, sweetheart utility deals, massive road projects or even straight cash. And, since most communities feverishly compete against each other in this giveaway game, companies shop around for the best deal.

Corporate Subsidies

All this would make sense if these pay-outs benefited our communities. Unfortunately, this is rarely the case. Many times the promised jobs don't pan out. Even if they do, the tax-breaks and incentives lavished on the businesses frequently undercut any economic gain-especially in the case of subdivision development, which usually results in a net loss of revenue for communities.

And then there are the environmental losses. Wetlands, for instance, store and then slowly release flood waters, cutting the damage from massive downpours. Paving wetlands over or plowing them under increases the risk of flooding. Floods have killed almost 1,000 Americans over the past 10 years and damage has cost us an estimated $45 billion. Communities that preserve wetlands and flood plains tend to fare better during floods.

Wetlands also act as natural filters by removing toxins from the watershed before they reach streams and rivers. And they serve as habitat for a wide range of species. Despite the critical importance of wetlands-and the economic benefits of protecting them-we are still destroying well over 100,000 acres a year.

A recent U.S. Department of Interior report highlighted 42 federal programs that subsidize wetland destruction. Just seven of these programs cost an estimated $7 billion a year.

Other types of open space are also valuable. Forests cleanse the air and soak up global-warming gases. Parks and open spaces provide aesthetic and recreational benefits that are hard to calculate but easy to miss.

Unfortunately, not only are we losing these crucial open spaces and paying a steep environmental price, in many cases we are actually paying developers to destroy them.

Paying to Sprawl

One of the most expensive cases of paying to sprawl is unfolding in New Jersey's Hopewell Township. The Merrill Lynch corporation was promised well in excess of $200 million in subsidies to help build a massive office park on mostly undeveloped farm and woodland. This project, which will chew up 450 acres of open space, is inaccessible by public transportation and far from shops, homes or stores. Due to its location in a mostly rural area it is sure to increase sprawl.

The subsidies offered read like a sprawl wish list: $77 million for road improvements and $24 million for an eight-mile sewer line-not to mention $135 million for equipment and an $8.3 million dollar sales tax break. Yet all these subsidies haven't guaranteed that Merrill Lynch will keep its workers in state. In fact, the company recently announced plans to cut 800 jobs from its New Jersey workforce.

This is not an isolated case. Wisconsin's Commerce Department has more than 50 incentive programs under its purview, and over the past 13 years has handed out more than $1 billion worth of incentives. Breaking down these incentives geographically, we find that Milwaukee's suburbs rank as the second biggest recipient of incentives at $37.9 million.

Yet despite the billions of dollars communities spend trying to attract jobs and businesses, these subsidies often play only a marginal role in where companies choose to locate. When corporations decide to move, they tend to look more at factors like the quality of the labor force and the region's overall quality of life. This is the ultimate irony of the subsidy game: Taxpayers in existing cities and towns are paying through the nose to attract or keep companies, yet those same companies are still likely to thumb their nose at a community by moving elsewhere.

Chief executives and top managers at 118 foreign-owned companies with operations in North Carolina were asked to rank the factors that influenced their decision to come to the state or to expand operations. For the period between 1997 and 2006, North Carolina has committed more than $1.72 billion in tax relief and business incentives to attract and retain companies. But in the survey, executives said that the quality and availability of labor and transportation, the overall quality of life and the general business climate were the most important factors in their decisions. Tax incentives, location assistance from government agencies, government financing efforts and state marketing assistance ranked at the bottom. (27)

Despite this evidence, elected officials across the country describe incentives as a necessary evil and make it eminently clear that they won't be the first to lay down their arms in the competition for jobs and businesses. So officials in Columbus, Ohio, didn't blink when asked to help finance the development of 6.2 million square feet of retail space in outlying areas like Easton, Tuttle Crossing and Polaris.

Likewise, Jefferson County in Colorado didn't hesitate when multi-billion-dollar corporate giant Gateway Computers asked for hundreds of thousands of dollars - even though it would contribute to the sprawl already eating up the potential host town of Lakewood. Charlotte, N.C., gave the nod right away to a demand for $161 million worth of tax incentives to build a new plant in a neighboring rural community. (28) And, in Pennsylvania, Allegheny County officials are more than happy to provide over $20 million in tax financing for Deer Creek Crossing. (29) This will facilitate the construction of 243 acres worth of retail space on an undeveloped area that includes almost seven acres of valuable wetlands.

There is an alternative. We must demand that local officials consider the true costs of development deals and we must push for businesses to pay their full, fair share of these costs. Only when we end the hidden subsidies that pay for sprawl will we be able to break this destructive cycle.

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