[CPEO-BIF] Subsidies

Fri Oct 27 05:29:42 PDT 2006

Apologies for the spelling typo's:  I wrote that last message on my
Blackberry while on a train, but I think the meaning nonetheless came
through.  BJT

	-----Original Message-----
	From: brownfields-bounces at list.cpeo.org
[mailto:brownfields-bounces at list.cpeo.org] On Behalf Of Trilling, Barry
	Sent: Friday, October 27, 2006 8:03 AM
	To: pbmeyer at louisville.edu; brownfields at list.cpeo.org
	Subject: Re: [CPEO-BIF] Subsidies

	Peter Meyer and  I actually agree more than we disagree except
with regard to the efficiency and wisdom of claw  backs.  I object to a
non-market oriented approach that has no upside and that is subject to
post-hoc second guessing that may result in discouraging optimum
participation in the brownfield develoment process.  Rather than
clawbacks, why not borrow a page from the private sector and use a "risk
sharing" approach to inventivize goal attainment, followed bt program
evaluation and adjustment?  For example, the public entity could award
an amount to the developer for an amount  with a clearly articulated and
quantifiable negotiated goal which, if not met, requires some refund,
and if exceeded, requires some bonus to the developer.  That would be a
rational arms length process that would encourage participation and
disincentivise poor performance.  Barry

	-----Original Message-----
	From: brownfields-bounces at list.cpeo.org
<brownfields-bounces at list.cpeo.org>
	To: 'Brownfields Internet Forum' <brownfields at list.cpeo.org>
	Sent: Fri Oct 27 02:20:12 2006
	Subject: Re: [CPEO-BIF] Subsidies

	Having worked in local economic development for some 30 years
and
	brownfields for over a decade, I have to agree fully with Barry
Trilling
	on the ideal for determining what subsidies are appropriate. But
I still
	disagree with him completely on the real possibility of the
calculation
	being seriously undertaken at the local level. Thus some sort of
ex-post
	monitoring, holding recipients responsible for what they
promise, is needed.

	Sharon Barr accurately points out that, "... it is very hard to
come up
	with a perfect formula that also works in the dirty nitty-gritty
world
	of political influence and decisionmaking. One cannot
underestimate the
	role of politics in this arena ..."  This is the reality. Her
	observations echo academic research and informal narratives
about
	economic development practice that have been around for decades.
The
	public sector generally has to rely on the applicants for
financial
	support for the data it needs to assess their applications ...
and it is
	not realistic to assume that there will be no distortion of the
	information provided in order to increase the chance of getitng
funding.

	The political pressures on local officials are actually more
acute in
	the case of brownfields than in 'normal' economic development.
Efforts
	to influence decisions come not merely from developers
interested in
	potential profits from brownfields, but also from neighborhoods
and
	community based organizations concerned for pollution abate and
human
	and environmental health risk reduction.

	The possibility of deriving a single allocation formula for
brownfield
	support is further confounded relative to the grant of support
for
	traditional economic development efforts due to multiple
objectives  As
	Sharon noted, traditional economic development has focused on
jobs,
	incomes, and property value increases, while brownfield
redevelopment
	efforts include additional objectives, including housing
provision,
	protection of human health, preservation of environmental
conditions.

	In light of these concerns, it is inappropriate for public
policy to be
	grounded wholly in a belief in the possibility of objectivity in
subsidy
	provision, or in calculations of public rates of return. Barry,
and
	others who have agrred with him, are correct that any
retrospective look
	back and imposition of accountability might discourage some
developers
	from engaging in some brownfield projects.

	However, the increased efficiency and effectiveness of public
spending
	on brownfields that such accountability could generate must also
be
	considered. Any subsidy funds provided that are not needed to
make a
	project economically viable are funds not available for other
possible
	subsidies that could actually increase the number of brownfields
	redeveloped. The issue is not one of "subsidize or not" but
rather of
	the allocation of public funds to maximize attainment of public
	objectives through that spending.

	We can all agree that we want to see the limited brownfield
funds
	available have the greatest possible impact on the rate of site
	mitigation and redevelopment. We may all also agree that we
would prefer
	to see more public funds available. To the extent that
additional
	appropriations depend on demonstrated effectiveness in
utilization of
	current funds, increased accountability can lead directly to
future
	expansion of public funding for the reclamation of contaminated
lands,

	Peter Meyer

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