Income Disparity Part Two Or What Is Wrong With This Picture?

In the previous post (Income Disparity 10-20-13) Analysis took advantage of a perfect storm of news articles appearing in The Newark Advocate to understand how and why income disparity is as it is, with the middle class shrinking, and the lopsidedness vigorously continuing to grow. No attempt was made to critique what was being proposed re: the picture presented of vitalizing downtown Newark through subsidizing the developers. What if Liz Argyle and Steve Layman succeed with their intentions to create more residential housing units in downtown Newark? Will Steve or Liz move their families downtown to take advantage of these new urban living opportunities? Since Liz and Steve will probably not be relocating, what benefit will be promoted to attract tenants considering that 43% of Newark’s residential housing is already non-owner occupant? Why should someone choose to live in a retrofitted school house or next to a moldy abandoned jail rather than apartments or condo’s in other parts of town that are already within close proximity to restaurants, grocery stores, and shopping outlets; places that are open in the evening and weekends, when the tenants are home from work (ask Jerry McClain about downtown Newark during those times)? Will Mr. Layman and Mrs. Argyle primarily rely on tenants qualifying for government subsidized housing? How does that play with all those folks clamoring for less government (or no government) as well as less taxes (or no taxes) in order to grow our economy with less regulation and tax cuts for top earners (the job creators)? The picture of subsidizing more residential housing units through public assistance to the developers of such housing in a city that has one of the highest percentages of non-owner occupant residential housing in the state is ludicrous. It makes about as much sense as subsidizing the building of another gas station on a street that already has one on each corner.

In a previous post (Ohio Tax Credit 3-26-13) Analysis looked at what all goes into “developing” the farm land in places like New Albany, Rt 79 south of Heath, Pataskala, etc. Within that dynamic, the one embraced by the state’s JobsOhio and local CIC’s, there is a concerted effort to attract tenants on the part of multiple entities. The developers who purchased the farmland (by the acre) long ago for a song are only too willing to “build to suit” any new tenants (as this enhances the value of their speculative real estate investment). As that post points out, tenants moving into these industrial parks are given various tax cuts, credits and breaks, some as much as 100%! All this is touted as a win-win with developers (landlords) eager to get tenants along with the ensuing construction business for their subsidiary companies. Municipalities are eager for the commerce generated as well as taxing the workers enabling that commerce. Why isn’t this the model promoted for the vitalization of downtown Newark?

Perhaps because that model gives all the perks and benefits to the tenant, serves and values the tenants of these developments rather than the current one that puts landlords (developers) first. What about this for a picture: the city of Newark offers 100% municipal income tax breaks for those opting to commit to a 15 year residency in downtown Newark. As with Liz and Steve, the state could offer a 25% income tax break, with the federal government providing 20% off the prospective resident’s income taxes. Reason to move downtown, that’s for sure! Indeed, reason for current landlords to upgrade their properties, on their own (like their industrial park counterparts), through locally available financing . “The community’s wealth will be there when they are ready.” Downtown employees who relocate their residences would not only have more discretionary income to spend on downtown business (making for a resurgence) but would appreciate the time saved not driving to and from work, the health benefits of commuting on foot, and the money saved on vehicle expenses like gas and insurance. Many business owners who currently rent would look to own the buildings their offices are located in since they could use the home business tax credits for their second floor residences. Maybe Steve and Liz would choose to live downtown above their businesses. Impossible you say? If folks like Jay Hottinger can support and pass legislation creating all the incentives for corporate tenants in New Albany there is no reason it couldn’t be done for residential individuals in cities like Newark, Cleveland, Youngstown, Mansfield, etc. On the federal level, I’m certain Pat Tiberi would get lots of support from his colleagues who are the representatives of constituents in cities like Detroit, Gary, Cleveland, etc. If the potential residential tenants of downtown Newark were offered similar incentives as those of the industrial parks, venture capitalists would be only too eager to oblige with development. Demand creates supply is the model of capitalism that Christopher Columbus sailed on, isn’t it?


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3 Responses to “Income Disparity Part Two Or What Is Wrong With This Picture?”

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