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The Data Problem

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In 1952, the California legislature invented tax-increment financing, or TIF, to help cities finance urban-renewal projects. It allows a city to declare a particular neighborhood or district blighted and to promote redevelopment of the area. From that point on, all property taxes on any new development would go not to the schools, fire, police, and other services for which they were intended but to the city to subsidize the redevelopment.

In effect, developers would get to use the taxes they pay to subsidize their own developments. Meanwhile, the cost of police, fire, educational, and other urban services consumed by the redevelopment district would have to be covered by other taxpayers. Typically, cities would project future tax revenues and sell bonds to be repaid with those revenues. The bond proceeds would then be used to subsidize the redevelopment, sometimes by buying land with the help of eminent domain and turning it over to developers; sometimes by building infrastructure that developers would normally have to build themselves; and sometimes by giving the developers outright grants.

Today, 10 percent of all property taxes paid in California go to TIF, and every state but Arizona allows cities to use TIF for urban renewal.2 From one point of view, TIF is just a scheme by city officials to divert taxes to favored developers. But TIF-supported urban-renewal projects are always backed up with lofty documents written by urban planners. What makes planners think they can know that a particular neighborhood or district would be better off with condos instead of offices, mixed-use developments instead of single-family homes, or skyscrapers instead of low-rise buildings?

As law professor Bernard Siegan points out, land-use planners must consider “questions of compatibility, economic feasibility, property values, existing uses, adjoining and nearby uses, traffic, topography, utilities, schools, future growth, conservation, and environment” for each parcel of land. Just to determine the feasibility of one use for one site at one time “would require a market survey costing possibly thousands of dollars.”3 Planning requires data, and the amount of data needed to ensure that a plan is both efficient and equitable is simply overwhelming.

A small suburb may have thousands of parcels of land; a major city may have hundreds of thousands; a large urban area may have millions. Any given parcel might be put to dozens of different uses: single-family residential at various lot sizes; multifamily residential at various densities; small-, medium-, and big-box retail; low-, medium-, or high-rise office space; light, medium, or heavy industrial use; developed and undeveloped open space; and so forth.

No planning agency has the budget needed to do a market analysis of all the possible uses for all the parcels in their jurisdiction. Yet planners claim they can determine the optimal uses for most or all sites in an entire region—not just for today but for many years into the future, and not just considering market factors but considering social, environmental, and other nonmarket factors as well.

If the data needs for land-use planning are daunting, transportation data requirements are impossible. Transportation planners must deal not with chunks of inanimate land but with people whose preferences and tastes can vary widely. As an expression of that variation, most people make several trips each day to different work, school, shopping, home, recreation, and other locations. Imagine a million people leaving roughly 400,000 different homes and going to a similar number of different destinations several times each day. No one could possibly collect the data needed to understand all those trips.

Many planners rely largely on information provided by their hierarchical bureaucracy. As information filters up the bureaucracy, much of it is necessarily left out. The models that the planners build contain only a tiny fraction of the information available at the lowest levels of the bureaucracy. Nor is the information provided by the bureaucracy unbiased. At each level, officials with their own goals tend to pass on information that they think will promote those goals. As Anthony Downs notes, “Each official tends to distort the information he passes upward into the hierarchy, exaggerating those data favorable to himself and minimizing those unfavorable to himself.”4

Planners simplify their data collection problems by lumping things into a few classes and averaging the data for each category. Land-use planners writing the 50-year plan for the Portland urban area lumped land uses into just 10 classes. Only two of these classes, “inner neighborhoods” and “outer neighborhoods,” represented all the variation of residential land in the urban area.5 The detail that is lost from such lumping is staggering. Yet Portland’s plan has had an enormous effect on the lives of Portland-area residents since planners began implementing it in 1995.

The Best-Laid Plans

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