A student recently asked me something interesting. Did tax increment financing impact her school in northwest Philadelphia? We did some sleuthing and learned a bunch of interesting things about Philadelphia’s real estate development initiatives and their relationship to public schools.
We were studying Pauline Lipman’s now classic book on neoliberal urban education policy, focusing on Chicago and New Orleans. Lipman was involved in anti-school closure organizing in Chicago and the book focuses on that city’s approach to development from a critical perspective.
Her basic thesis: after the stagflation crisis of the 1970s neoliberalism replaced Keynesianism as the dominant ideology for governing and globalization brought the plague of deindustrialization, cities became handmaidens to private real estate developers. The urban ruling class wanted to make their cities thriving places without the resources industry guarantees.
The new ruling class fantasy
Neoliberals have a fantasy that capitalist markets alone–a teeming self-interested sphere of entrepreneurs, big businesses, private credit, private developers, etc–can do the trick when it comes to making a city thrive post-1970.
To make their fantasy a reality, they’ve turned neighborhoods inside-out to make them appealing for people who have enough money to spend it on stuff: tourists, startups, yuppies, hipsters, college students, graduate students, and the like. Attracting these consumers required setting up housing, infrastructure, and businesses that appeal to them.
Thing is, those people weren’t in the neighborhoods yet. Instead, there were communities of diverse working class people who had made the city their own during better times. They had their own businesses, housing, and cultures. But these neighborhoods’ material conditions of existence–industrial employment and social-democratic city apparatuses–had been severely hobbled by the crises in the 1970s.
The neoliberals who came to power, so committed to their fantasy, wanted out with the old and in with the new. So they broke up the existing networks, institutions, apparatuses, cultures, and infrastructure holding the old neighborhoods together. Schools are key institutions in neighborhoods. So the neoliberals went about closing schools, weakening teachers’ unions, and encouraging/forcing those previous groups of people to move out all in the name of their fantasy.
To them, it was kind of like saying to the existing communities: We want to make this city better for you, but you’re in the way.
Lipman understands this process through the marxist geographer David Harvey’s theory of accumulation by dispossession, as well as the French urbanist Henri Lefebvre’s idea (that Harvey has expanded) of the right to the city. Accumulation by dispossession is when a ruling class forcibly accumulates property by taking it away from those who own or control it. The right to the city is a framework that asks: whose city is it? Who enjoys the city’s space? Who makes it in their image?
In this case, neoliberal urban officials relied on education policy for the ruling class’s goals of turning neighborhoods inside-out. They accumulated property by dispossessing those who had had it before, claiming a right to the city by force. Those neighorhoods of working class people did and do fight back, sometimes successfully, to reclaim their right to the city.
Lipman uses Chicago’s city planning and their reliance on charterization as an example of how school closure is part of breaking up these old neighborhoods, more recently analyzed by Farmer and Poulos. She also talks about New Orleans in the same way. Close the school. Open a new one. Let parents decide which schools to send their kids to, encourage them to move, demolish their apartment buildings, restaurants, markets, butchers, and build up fresh for the new consumers.
One thing Lipman does is zero-in on specific tactics the neoliberal urban ruling class use to dislocate existing neighborhoods in this way. One of them is tax-increment financing (TIF).
TIF for tat
Things like TIF are complicated-sounding public finance protocols which many critical education researchers tend not to get into. But Lipman does. TIF is where a city gives incremental increases in tax revenues to developers as an incentive to build in certain places. It works like this:
1) Declare a neighborhood ‘blighted’;
2) Create a ceiling for tax revenues on property in the neighborhood such that if property values there go up past a certain level, any new tax revenue on the property goes to development projects in the neighborhood and/or pays off the loans needed for the development.
It’s sort of like a city’s administrators saying to a developer: Here, if you can make this neighborhood ‘good’ we’ll give you whatever taxes we collect if the property gets more valuable than it is now. Or: Look, here’s a place we think is crappy. If you can make it less crappy you can keep the taxes we would’ve gotten from its improved property.
The ruling class officials in charge of governing this city, of looking out for everyone’s interest in it, who get elected by its people to look out for them, debase a neighborhood, shrug their shoulders, and surrender any new value created there.
Philadelphia did use TIF starting the in the late 90s, and still do, but it’s had a different outcome than in Chicago. For one thing, the TIF districts Philly made haven’t brought in as much revenue as projected. But the reasons for this aren’t uplifting.
My student and I found a great document that analyzes all the incentive programs Philadelphia has provided to developers in the last twenty years. Turns out Philly has used a suite of programs to attract development: keystone opportunity zones, jobs-based tax credit, forgivable loans, abatement of business and income receipts taxes (BIRT), tax credits for BIRT, and workforce training funds. This includes the infamous 10-year tax abatement on new real estate.
The report does look at TIFs, but there have only been a few in the last couple decades. Ed Rendell got kind of excited about them but, like the reporting said, they didn’t yield much. The key takeaway in the document is that the 10-year tax abatement is so helpful to developers that TIFs aren’t that appealing. The new fashion district construction was finaced with TIF money, though.
So the answer to her initial question was yes, Philadelphia did use TIFs in certain places, but none in her school district and none (that we could see) that targeted schools in particular. Philadelphia did charterize a third of its schools, closing more than 35 schools in 2012-2013. But, as far as we could tell, there wasn’t a relationship between TIFs and those closures.