“Walk today through the parts of my hometown of Charlottesville, Virginia, that underwent “urban renewal,” and you start to grasp the policy’s failures nationwide. The southern city that’s home to Thomas Jefferson and UVA is defined by charming historic neighborhoods. But several downtown areas disrupt this fabric with an oddly suburban aesthetic of parking lots and insular apartment complexes. Without foreknowledge, one might guess that these resulted from a free market that plopped down modern development without regard for context. But the opposite is true.
Throughout the 1960s and 1970s, Charlottesville’s government demolished these areas, most notably Vinegar Hill, a functioning black neighborhood. Aiming for slum clearance, the city razed nearly 40 structures, replacing them with a road and empty lots slated for redevelopment; and moved the tenants into public housing. But not until 20 years later did Vinegar Hill attract an anchor development—the Omni hotel—and the neighborhood remains underwhelming. Much of Charlottesville’s black community, meanwhile, remains in the government projects, which are mired in crime and unemployment. And the episode itself is universally despised, prompting a city apology in 2011.
But perhaps the main strike against many projects was their lack of success. Another rationale had been that such developments would finally place modern uses onto prime real estate, helping cities generate more tax revenue. But like in Charlottesville, many cities saw their targeted lots sit empty for years. A Buffalo housing project that was approved in 1954, and that displaced 2,200, had little development a decade later, causing one local to quip that the 29-block stretch could lead “plane pilots to assume the city was constructing a landing strip.” Another project in Pittsburgh’s Lower Hill neighborhood that displaced 8,000 residents still had large vacant parcels after 25 years. A 1966 study found that urban renewal projects averaged over a decade to complete, and many businesses that finally emerged failed to reverse decline, or defaulted.
“In one city after another,” wrote Teaford, “middle and upper-income Americans shunned areas whose reputations had been so odious that they required renewal.”
TIF also plays an unfortunate role as an enabler for eminent domain, which would otherwise be unaffordable for cities, argues Cato Institute economist Randal O’Toole. Since urban renewal ended, some of the worst cases of localities seizing private property for private uses—like Detroit’s demolition of Poletown for a G.M. plant–were TIF-funded. Since 2005, such takings were further validated by the Kelo v. New London case. The decision—which found that New London, Connecticut could, in the name of economic development, raze resident Susette Kelo’s home for a Pfizer plant—was blasted by critics, and countered by pro-property rights legislation in most states. But this hasn’t prevented further government looting. A 2006 Los Angeles deal cleared 30 businesses for a development spearheaded by the W Hotel. Denver, which was employing aggressive redevelopment plans before Kelo, has since declared much of its historic Five Points neighborhood blighted. And a recent state court ruling found that the New Jersey Casino Reinvestment Development Authority could demolish an Atlantic City man’s home—and dozens more—for a development near the recently-shuttered Revel casino (which three years ago received $260 million in TIF money). Two decades before, courts had prevented this authority from razing another home to expand a casino for Donald Trump. But the recent case was decided under a more confiscatory legal climate.”
Beyer, Scott. Forbes 11 May 2015.