THE IMPACT OF MUNICIPAL FISCAL CRISIS ON EQUITABLE DEVELOPMENT.

• Author: Tyson, Christopher J.

Introduction 883 I. Redevelopment Authorities and Land Banks 888 A. History 890 B. Redevelopment Authorities and Land Banks Today 896 II. Redevelopment's Vulnerability to Municipal Fiscal Crisis. 907 III. The Role of Federal Policy 912 Conclusion 917 INTRODUCTION

President Trump's Opportunity Zone program, Jay-Z's "Buy the Block" mantra, and Black Lives Matter's rallying cry to "defund the police" all have something in common: they reflect the growing concerns around how best to generate the capital necessary to revitalize inner-city neighborhoods. If these neighborhoods are to be revitalized in ways that benefit the people who live there, much more is required than offering tax credits for the wealthy or even Black entrepreneurship. If local governments are to redirect resources, there must be specificity about where those resources should go and their purposes. All of this must happen in accord with the principles of equitable development. This requires, among other things, new approaches to old institutional models. Redevelopment authorities and land banks offer a pathway forward.

Equitable development refers to an approach to community economic development that ensures everyone participates in and benefits from the spatial and economic transformation of communities--especially low-income residents; Black, Latinx, and immigrant communities; and others historically at risk of discrimination, exploitation, and being left behind. (1) This approach intentionally focuses on both eliminating inequities and making accountable, catalytic investments to ensure that historically marginalized residents can "live in healthy, safe, opportunity-rich neighborhoods that reflect [and affirm] their culture," prevent their displacement, "connect to economic and ownership opportunities," and provide them with influence in "the decisions that shape their neighborhoods" and lives. (2) Equitable development has emerged as an oft-used shorthand for redeveloping disinvested communities (3) and is part of a growing and expansive discourse concerned with affordable housing, gentrification and anti-displacement policies, environmental justice, placemaking, spatial inequality, and the persistence of structural white supremacy. It is related to the growing academic and public interest in cities, urban revitalization, and urban policy.

Disinvested communities not only reflect the resource mal-distributions undergirding racial and spatial stratification in cities, but they also represent the spatial dimensions of the United States' racial caste system. (4) The deeply entrenched nature of our nation's racialized urbanism renders equitable development much easier to define than to actualize. Transforming neighborhoods that were intentionally and systematically disinvested over decades in ways that include existing residents and improve their life chances continues to bedevil the most well-intentioned and well-resourced urban development efforts. The prospects for truly equitable development are challenged by the ongoing displacement of Black, Latinx, and other historically marginalized residents from gentrifying urban spaces, the affordable housing crisis, and the acceleration of inequality wrought by the COVID-19 pandemic.

Concurrently with the growing conversation around equitable development is the rise of social impact investing and new tax credit policies to incentivize investment in marginalized and disinvested communities. (5) While there is cause for optimism, scholars have highlighted the limits of these approaches and their market-based orientations for producing lasting and systemic disruptions of the cycles of marginalization and disinvestment. (6) The reality is that private resources or firms alone cannot bring about a transformation of the economic, social, and spatial conditions of disinvested neighborhoods in ways that are equitable. Moreover, the transactional nature of private-led efforts rarely strengthens the institutional or community capacity necessary to create sustainable, long-term, positive impacts on the lives of the individuals and families most affected. It was federal, state, and local government policies that created the disinvestment and spatial injustice in the first place. Therefore equitable development requires considerable financial support and regulatory direction from federal, state, and local levels of government and robust, ongoing engagement with people who live in disinvested communities.

Some cities have existing institutional infrastructures that can be powered to advance equitable development aims. City-led blight remediation efforts, federally funded and city-administered home rehabilitation programs, and other redevelopment projects, public housing management, and land value capture efforts are some of the common approaches, but they often fall short of remedying root causes of disinvestment and can sometimes result in the management of disinvestment rather than its eradication. Redevelopment authorities and land banks (RALBs) provide opportunities for community-led, equitable, and well-resourced neighborhood-scale transformation and are therefore best positioned to lead and facilitate equitable development efforts. (7) Their urban and neighborhood-scale focus provides the most intense engagement with the social, economic, and spatial dynamics which drive persistent disinvestment. These entities often have close ties to local government and local communities. As governmental entities, they can leverage their governmental authority and statutory power to support cooperative efforts among communities, capital, and government.

RALBs already coordinate with many of the vehicles most associated with community economic development. Community land trusts, affordable housing policy and project development, social impact investing, tax credit entities, and other devices are most effective when part of a coordinated redevelopment strategy executed through a local agency, which is focused on and empowered to address land, economic, and community development in a comprehensive, coordinated manner. RALBs deliver that focus where they exist. But not all cities and regions have such entities, and the powers of public finance authority, distressed property management, code enforcement and blight elimination, and the resources necessary to do urban planning, community engagement, and law and policy reform may often be spread amongst various local government agencies and nonprofit entities that are not always coordinated, aligned, or adequately resourced.

While many RALBs are supported by dedicated funding sources that may be insulated from episodic financial crises, this is not always the case. Many rely heavily on the general fund of city governments and are therefore especially vulnerable to the current municipal fiscal crisis. (8) This threatens the prospects for RALB-led equitable development efforts as RALBs may be less of a priority for cash-strapped local governments than the traditional approaches to urban disinvestment--namely policing and incarceration. These approaches are entrenched in the operational logic of local governments and are usually prioritized in local government budgeting processes in a way that redevelopment is not. The budget priority afforded to policing and incarceration is understandable and to some degree necessary and inevitable. But extensive data verifies the limits of law enforcement to stabilize disinvested communities and the greater efficacy of building up those communities through equitable development approaches. (9)

As calls for decarceration and policing alternatives grow, (10) RALBs must be elevated in the fiscal priorities of local governments.

RALBs--the public institutions best suited to address the problems of urban disinvestment--are leading change in many places and their expansion into other metropolitan areas is an under-appreciated but vital component to ensuring equitable development. The growing municipal fiscal crisis threatens the funding sources for existing RALBs and, by extension, the achievability of equitable development. Part I of this Article explores the history of RALBs and the vital role they can play in implementing equitable development. Part II addresses how RALBs are especially vulnerable to municipal fiscal distress given the investment and coordination necessary to bring about meaningful, impactful equitable development require a level of resource deployment most local governments cannot support at scale. Part III explores how federal policy and resources can support RALBs, ensure their financial stability, and thereby increase the opportunities for equitable development over the long term.

1. REDEVELOPMENT AUTHORITIES AND LAND BANKS

   The American Planning Association (APA) has defined redevelopment as "one or more public actions that are undertaken to stimulate activity when the private market is not providing sufficient capital and economic activity to achieve the desired level of improvement." (11) Redevelopment authorities are organized under state law and authorized to acquire, assemble, and dispose of property in a specific urban area where disinvestment has occurred or is occurring. (12) They marry real estate development with governmental powers, such as the ability to create special taxing districts, issue municipal bonds, lead and coordinate comprehensive urban planning efforts, and, in some cases, exercise eminent domain powers. They develop the vision and assemble the land, capital, and partnerships necessary for major project development. The APA has identified redevelopment authorities as critical to refocusing resources towards regional growth within centralized "cities, urbanized areas, inner suburbs, and other areas that are already served by infrastructure and supported by urban services." (13)

   Land banks are governmental or non-governmental entities that acquire, hold, manage, and develop problem...