Why Are Cities Still Subsidizing For-Profit Development?

Photo of Kansas City Live! by Wikimedia Commons

But at what point should cities make this decision to stop subsidizing for-profit development? And how do they know when enough is enough? That’s the question being asked in Kansas City and in cities around the nation as downtowns bounce back from years of abandonment only to find that developers still expect the aid they were receiving when downtowns were far less profitable places to be.

“Urban leaders still tend to overpay for development because they internalized low civic self-esteem bred by decades of being told they were too polluted, too dangerous, or too school-deficient to attract investment,” says Greg LeRoy, executive director of Good Jobs First, an organization that advocates for economic development policies that lead to better job opportunities for working families. “When the back-to-the-cities trend started taking root, albeit very unevenly, cities were so glad to finally land deals that they routinely overpaid, not having a solid grasp of the demographic and market forces they should have been channeling instead of subsidizing. It’s especially true for retail and entertainment projects, which generate very poor-quality jobs. I have yet to find a city that has figured out how to ‘take the foot off the pedal’ and stop over-subsidizing, even when gentrification becomes a problem.”

Sandy Smith writing for Next City about Kansas City’s KC Live development, and and why cities are still paying developers to build in their downtowns—despite the fact that many downtown areas have become profitable again.

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