Neoliberal capitalism is universal in its domination, if nothing else. From the fast-growing tent cities in Portland, Oregon to the hideaway camps in Burlington, Vermont; from the men living in boxes in Baltimore to the folks living next to garbage dumps in Manila, the results of property speculation motivated by a neoliberal dream of easy wealth are everywhere. One can go to any city in the capitalist world and see some edifice being built where there were once homes or small shops. After a little bit of research, one will usually discover this construction is some kind of so-called public-private venture which in reality will benefit the private investors in the equation considerably more than the public side. Indeed, the likely results for the public will be higher housing costs, less public space and more police (private and public) whose job is to regulate the public’s use of the private space.
This is the scenario currently playing out in the downtown area of Vermont’s largest city, Burlington. Although small in size when compared with the megalopolises of the world’s great cities, Burlington serves as the largest urban area in the mostly rural state. Its downtown has long been one of those public spaces where certain streets are actually privately managed, except for the policing. Rules for public speaking, tabling, busking and other activities are made by a management corporation that coordinates with the city administration on legal issues and enforcement. The arrangement represents a compromise reached between advocates for open public space and those who see the primary purpose of the downtown as one of generating profits for the businesses located there. Over the years, this has fomented debates about young people hanging out downtown, transients panhandling, musicians busking, and citizens engaging in grassroots political activity. In recent years, this has resulted in more restrictions on many of these activities, despite performances and protests opposing those restrictions.
I mention this history to introduce the current battle being fought over this part of Burlington. In short, the pro-developer mayor, with most (if not all) of the City Council in his pocket, is attempting to foist a multimillion dollar bond on the city’s residents that would help a private developer renovate a shopping mall in the heart of downtown. This project would further limit public use of the downtown area by non-shoppers, enlarging the commercial space and creating condos unaffordable to most working people. The development corporation hoping to do this renovation, Devonwood Corporation, is represented in the Burlington venture by Donald Sinex, its founder and partner since 1997 (Bloomberg.com). Neither Sinex nor his corporation undertakes projects for the public interest. This project is an investment. Like any capitalist entity, Devonwood exists to make a profit. Of course, this does not mean it is against using public funds to make that profit. According to the developer and citizen’s committee formed to challenge this development project, the Coalition for a Livable City, the mechanism Devonwood hopes to use to get the public monies is called a TIF, which is an acronym for Tax Incremental Financing.
How do TIFs work? Let me excerpt from the Coalition’s website:
Tax Incremental Financing (TIF) is part of the new mall-project’s funding source for “reclaiming” the streets lost to downtown Burlington during Urban Renewal. Burlington voters will be asked to vote on using $22 million in TIF funds to finance the rebuilding of streets that will serve to improve Don Sinex’s development project and increase his income, but the streets, which the city will maintain, will not be public. They will be private streets which Sinex can close down for private events. Because of the way TIF works, a large proportion of tax revenue generated by a new project (in this case 75%) has to go to paying back the TIF loan over a period of 20 or 30 years, leaving only 25% to pay for expensive infrastructure costs (which may not be enough for a project of this scale). But what is TIF and why do some people see it as free money while others see it as a dangerous gamble (it has been outlawed in California!)? The following is excerpted from an article called “Tax Incremental Financing: A Bad Bargain for Tax Payers,” by Daniel McGraw, published on a site called Reclaim Democracy: Restoring Citizen Authority Over Corporations:
TIFs have been around for more than 50 years, but only recently have they assumed such importance. At a time when local governments’ efforts to foster development, from direct subsidies to the use of eminent domain to seize property for private development, are already out of control, TIFs only add to the problem: Although politicians portray TIFs as a great way to boost the local economy, there are hidden costs they don’t want taxpayers to know about. Cities generally assume they are not really giving anything up because the forgone tax revenue would not have been available in the absence of the development generated by the TIF. That assumption is often wrong….
Almost every state has a TIF law, and the details vary from jurisdiction to jurisdiction. But most TIFs share the same general characteristics. After a local government has designated a TIF district, property taxes (and sometimes sales taxes) from the area are divided into two streams. The first tax stream is based on the original assessed value of the property before any redevelopment; the city, county, school district, or other taxing body still gets that money. The second stream is the additional tax money generated after development takes place and the property values are higher. Typically that revenue is used to pay off municipal bonds that raise money for infrastructure improvements in the TIF district, for land acquisition through eminent domain, or for direct payments to a private developer for site preparation and construction. The length of time the taxes are diverted to pay for the bonds can be anywhere from seven to 30 years….
But even if the dedicated tax money from a TIF district suffices to pay off the bonds, that doesn’t mean the arrangement is cost-free. “TIFs are being pushed out there right now based upon the ‘but for’ test,” says Greg LeRoy. “What cities are saying is that no development would take place but for the TIF.…The average public official says this is free money, because it wouldn’t happen otherwise. But when you see how it plays out, the whole premise of TIFs begins to crumble.” Rather than spurring development, LeRoy argues, TIFs “move some economic development from one part of a city to another.”
In short, TIFs are a mechanism to use public tax monies to help private developers acquire and develop spaces for their own benefit, while also hoping to provide a profit to those businesses leasing the developed space and possibly adding to a city’s tax base. However, it is usually the rest of the city’s taxpayers who actually pay the loan and the interest involved, not the TIF-developed enterprises. (For complete article, see here.)
Let me get back to Burlington. Since the election of Bernie Sanders to the mayoral position in city government in 1980, Burlington city government had been dominated by Democrats and Progressives. In the early years of Sanders’ mayoralty, several projects creating public space and re-democratizing city government were established. These efforts resulted in a beautiful park that runs along the Lake Champlain shoreline that borders Burlington western flank. They also created an entity known as Neighborhood Planning Assemblies that put some power back into city residents’ hands and made their councilors answerable to the people they were elected to represent. These efforts and other democratic grassroots endeavors were the result of the Progressives’’ determination to create a genuinely democratic city. Unfortunately, as time went on, the Progressives’ lost much of their socialist tinge (indeed, some of the original councilors and city workers were members of various new communist groups in the 1970s and 1980s) and gave in to the creeping neoliberalism invading every other community in the US. After Progressive Mayor Peter Clavelle had been in office for a couple years (mid-1990s), Progressives were beginning to sound like their Democratic and Republican colleagues as they touted the benefits of public-private relationships with developers, financiers, and other mega-corporate entities looking to gain a greater foothold in the city. By the time Progressive Bob Kiss had taken over the Mayor’s office, this love for the corporate merger saw his office and his fellow Progressives on City Council actively supporting the war criminal Lockheed Corporation in its efforts to invest millions of dollars in Burlington with the city helping to foot the bill. That endeavor was vehemently opposed by numerous residents and, along with the repercussions from an ill-advised loan from Citibank to fund what should have been a publicly-owned internet and cable TV network, forced Kiss out of office. Since then, a former developer turned Democratic Party politician named Miro Weinberger has occupied the mayor’s office in Burlington.
Opposed by residents to the left of the Progressives sitting on the City Council, Weinberger’s reign has seen his office push through the hiring of Brandon del Pozo as police chief of the city. Since his hiring, there have been two police murders of citizens in the city—both of the victims being individuals with psychological issues, neither of them armed with a gun. In addition, a popular hip-hop club seems to have been targeted for special police harassment. Some people believe this harassment is due to the fact of its multiracial clientele. For those who don’t know del Pozo’s history, he was one of the architects of the NYPD’s much maligned “stop and frisk” policy and was also part of the NYPD intelligence unit that spied on Muslim citizens in their mosques and other community spaces. Despite loud and popular calls by citizen groups for public hearings about his hiring, the Mayor and the City Council pushed through his appointment refusing to delay it until such hearing could be scheduled.
Like most cities in the current time, Burlington has a large number of homeless residents. Most of these residents live in various motels or in encampments in the woods along the aforementioned lakeshore. In the past, the police have walked through the encampments and familiarized themselves with the folks living there, arresting those with warrants and encouraging those who need medical care to seek it. However, they have not raided the camps in a few years, at least in my recollection. However, if del Pozo and Weinberger have their way, this policy could quickly change. After the brutal murder of a transgender individual in a camp on Burlington’s south side, the two men held a press conference where they expressed appropriate condolences for the victim and their determination to bring the killers to justice (they were apprehended in San Diego, CA a few days later). However, it was another statement by del Pozo that caught the attention of anti-gentrification activist Albert Petrarca and others. “The city’s principal option at this point is to say (to the homeless in these camps), ‘We don’t know where you’re going but you can’t stay here,’” the chief said. In other words, the cops are going to clear the encampments. Petrarca pointed out how this action was just another part of the ongoing gentrification of Burlington. After all, the woods where the murder took place are the planned site for another gentrification plan in the city’s South Side that includes the extension of a beltline highway into the city. Petrarca argues that the police fill the role of pushing those who can’t afford to live in Burlington out of the city.
In terms of the housing question, Burlington has high rents, low vacancy and a constantly expanding population. Despite an ongoing call for rent control in the city, there has never been a genuine effort in city government to pass a law establishing it. Instead, the solution suggested is one that calls for the construction of more units. I have lived in Burlington and the next won over on and off for almost twenty-five years. In that time, many more units of housing have been built and housing costs have never stabilized, much less gone down. This fact gives lie to the argument that more construction will decrease rents. It is my belief that one of the reasons rent control has never been seriously considered at the city government level is because the residents who vote in the city elections include a fair number of small landlords. This is true whether they vote Progressive, Democrat, or Republican.
Besides the desire to present the situation many residents of Burlington, Vermont find themselves in, this article is meant to illustrate the pervasiveness of neoliberal capitalism. No city or town in the United States (and most of the rest of the world) is immune from its reach. The other truth in this is that neoliberal capitalism is not something separate from the system of capitalism itself. It is part of its natural progression.