The Case for a Gentrification Dividend

Christopher Sawyer asks if it’s ok for neighbors to extort developers for money:

Naturally, the upset neighbors on Rodman Street behind this lot appealed to Common Pleas court, where many other contentious zoning issues wind up. Earlier this month, Common Pleas denied the appeal in favor of the developer. The project can move forward.

But wait–there’s a new twist. Now the group of Rodman Street neighbors headed by Doug Risen are demanding cash to drop the next round of appeals at Commonwealth Court.

One has to ask: if you’re generally against a particular development, how genuine is your opposition to a project if you’re demanding cash in exchange for your support (or in this case, non-opposition)? That doesn’t sound very ethical to me.

I would put the question a somewhat different way: would a formal system of side-payments be less costly than having so many legal battles over development projects?

Building a lot more housing and mixed-use development would have broad-based benefits for the city and for neighborhoods,  but the immediate neighbors do incur some costs along with the benefits. A new apartment building on your block might mean more competition for on-street parking spaces, or obstructed views. Maybe the first-floor retail space becomes a hot new bar that everybody likes, except the neighbors who have to deal with more street noise on the weekends.

Instead of questioning how genuine a group of neighbors’ opposition to a new development is, I’d ask how much they value blocking it. People might genuinely oppose a new development, all else being equal, but they might decide they’re willing to live with it if they can get a cash payment.

I would argue that the only thing that’s really shady about the side-payment request Chris describes is the ad hoc nature of it. Formalizing side-payments between developers and neighbors would be a good idea that could potentially cut down on the amount of money people waste doing development politics in Philadelphia – legal costs, time costs, costs of foregone development, etc.

My favorite idea is the Gentrification Dividend. Give neighbors within a 1-2 block radius of a new building a portion of the tax increment the city collects from the new building. Whenever a new building gets added to the tax rolls, the city collects more property tax revenue. What if neighbors got some of that new revenue? Any time a new building goes up within 1-2 blocks of your building, you get a check in the mail from the city. Everybody gets the same amount, no questions asked.

This would create a constituency for more development, and sap some of the NIMBY energy opposing new housing construction. Right now there’s no immediate cost for the neighbors opposing new housing. But if the city started mailing out Gentrification Dividends, some of the opponents might decide they want cash more than they don’t want new development.


  1. Now you’re going the right direction, glad you finally agree with me that what you’re proposing is an unlawful taking and compensation is warranted.

    Oh, and please stop the “I’m for deregulation, Republicans should be happy” stuff. What you’re actually for is taking something valuable, something others have worked hard to create, and give it to someone else. It’s not deregulation you support, it’s socialism.

    I don’t blame you. Your age group thinks everything should be given to them. I blame my generation, your parents. We did one crappy job raising you and now we pay the price.

    By the way, no comment on the woman beater you work for? My hope is that you have some sort of conscience on this.

    • Jon Geeting says:

      I am agreeing with nothing of the sort! It is absolutely not a taking by any stretch of the imagination. There is nothing wrong with rezoning so that more people can move into popular neighborhoods. This is merely a proposal for buying off some of the opposition that could be less costly than the current system. The best possible option would be form-based zoning with by-right development, and no side-payments.

      This is a proposal for deregulating the land market. You are for government regulation capping the housing supply in popular neighborhoods. You think it’s ok for the government to tell business owners they can’t open in popular locations, and developers that they can’t build new housing where land is expensive. Go ahead and defend it on the merits, but there’s no way around the fact that that’s the statist Big Government position in this debate.

  2. “there is nothing wrong with rezoning so that more people can move into popular neighborhoods” — and take what was created by someone else and change it with no compensation to the people who were there first.

    This is a proposal for socialism by a generation that is too lazy to go out and earn it themselves.

    I think it’s not ok to change the rules and take something from someone else, something they built with their sweat and their money, and give it to someone else.

    It’s not a big government position, it’s a property rights position.

    • Jon Geeting says:

      LOL the strong property rights position is that everybody gets to do whatever they want with their own land. You have a weak property rights position, where the government can ban developers from building certain kinds of structures on their own land.

      • See, in the real world where most of us live (not sure what world you live in), investments have been made and homes purchased based in part on the zoning rules that were in place at the time of the purchase.

        If you change those rules, you impact the reasons I made my investment, and in fact take that part of my analysis away.

        A good example is someone who bought a house based on zoning restrictions in place limiting the number of units. You increase the number of units, I no longer have what I thought I had and I’m not living where I wanted to.

        No doubt your response to that person would be, “Move.” My response to you is, “Go somewhere else, I was here first.”

        I win that argument because I am a stakeholder. Someone living in NYC is not a stakeholder, and their desires, if different from mine, should be completely ignored.

        If you start from scratch with a new city – like I bet you do in policy class – then you can go with your approach and best of luck to you.

        • Jon Geeting says:

          You’re ridiculous. Who makes investments thinking that public policy will never change? You’d have to be an idiot.

          • Actually no, it’s not ridiculous. The zoning changes you’re advocating here just don’t happen except in failed cities like Allentown. In successful cities like Bethlehem it is exceptionally rare.

          • Jon Geeting says:

            All I’m advocating for Bethlehem is to make it easier to build streetscapes like Main Street. Everybody loves Main Street.

          • That’s already done in Bethlehem they have beautiful main streets.

          • Jon Geeting says:

            They have one block worth of good Main Street action + 4th Street on Southside (which still has a pawn shop on the best block) + some nice residential-only streets. It’s time to make most streets in the CBD the same as the really good block of mixed-use buildings.

          • 3rd Street is good, 4th Street is good, all the stuff up by Lehigh is good, Main Street is good, Broad Street is good, the Steelstacks area is developing nicely, and tons of festivals that bring people in to the entire city.

            Maybe you should visit more often?

          • Jon Geeting says:

            3rd, 4th, Broad, Lehigh, and everything except for the key part of Main Street are all woefully underdeveloped. Those areas can and should support 3-4x as many businesses and apartments.

          • Then you don’t advocate Main Street, you advocate NYC.

            And that’s ok.

            Just be honest with what you want.

          • Jon Geeting says:

            LOL John listen to yourself. adding an average of two stories to those blocks would be the difference between Bethlehem and NYC? There’s no middle ground between Bethlehem and the largest city in the country really? What about the dozens of successful mid-sized cities with higher pop density than Bethlehem?

          • Ok let’s come at it from another angle – what you’re proposing would dramatically change Bethlehem, you have to agree with that.

            Here’s the rub – what do the people who are there want? What you want, and what I want, doesn’t matter. We’re not stakeholders and our opinions don’t matter.

            I advocate for them being able to make their own decisions. You advocate that you want to make the decision for them and if they don’t agree with you they’re maroons.

            Bethlehem is very successful. Why would you want to fuck with that? You could be wrong and we could end up with another Allentown on our hands.

          • Jon Geeting says:

            That might be where we disagree, because I don’t agree that would dramatically change Bethlehem. Adding an average of 2 stories to the CBD zones would simply create a larger market for the things Bethlehem is already doing well. We do know what people want in Bethlehem. They like the increase in restaurants and quirky retail and events and nightlife. There’s more stuff to do. But there could be even more stuff to do! That’s not a change in direction, it’s just more of what people already like.

    • Jon Geeting says:

      I also think you’re mistaken that it’s “taking” anything. If a popular neighborhood gets even more restaurants and shops and nice multi-family housing, the land values are going up, not down.

      • Maybe. Maybe not. There are no certainties Jon.

        Under your proposal there’s the same chance that instead of restaurants and shops we’d get porn shops and strip clubs. Hardly property value drivers and not something most people want to live next door to.

        • Jon Geeting says:

          It’s perfectly possible to zone out nuisance retail. Ever hear of an overlay district?

          • A month ago you were ok with strip clubs. Now you want certain zoning restrictions but not others.

            What is your position, other than you want shit given to you for “free?”

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