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April 10th, 2008
Local Tax Sharing Programs Improve Sustainable Development Prospects

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PR — A report released this week, Improving Economic Health and
Competitiveness through Tax Sharing
, assesses the experience of local
governments with schemes that share portions of tax revenues in order
to get better development results and avoid sprawl. The report also
provides solutions for many of the problems identified in the Environmental Law Institute’s Ten
Things Wrong with Sprawl,
released in 2007.

Cities, townships, and other local governments
compete for tax base in ways that often lead to wasteful abandonment of
existing infrastructure, and to the rapid development of lands on the
exurban fringe that later demand more taxpayer-funded services. This
cycle of tax-chasing behavior produces undesirable fiscal results and
even worse socioeconomic and environmental results. After examining
options for Pennsylvania communities and reviewing tax sharing programs
in communities across the Northeast, ELI finds that such programs can
slow the rate of abandonment and improve regional approaches to
development.

James McElfish, Director of ELI’s Sustainable Use of Land Program,
notes that tax sharing together with joint planning made possible the
redevelopment of the former Homestead Steel Works in the Pittsburgh
area. "Treating this massive brownfield site as a redevelopment
opportunity that could benefit multiple communities, rather than as an
opportunity for windfall taxes," according to McElfish, "meant that it
could proceed in a systematic way rather than in disjointed competition
among the boroughs where the former steelworks had operated." Other tax
sharing approaches, such as those in the Twin Cities area of Minnesota,
and in Dayton, Ohio, have helped assure that development in a
fragmented metropolitan area helped all the communities rather than
just a fortunate few.

The report notes that tax sharing can occur under various forms of
state legislation, and that pilot projects can help validate tax
sharing as an economic and environmental strategy in states where there
is massive fragmentation of local governance and taxing powers over
land uses. "Environmentalists and land use experts are not used to
thinking of state laws governing local taxes as a driver of land
development, much less as an agent of urban abandonment," says
McElfish, "but the absence of tax sharing mechanisms in much of the
northeast has led to unfortunate development patterns. This has been
bad for the environment, as well as for the economy."

This project was funded by the Heinz Endowments with additional support
from the William Penn Foundation. The report may be viewed through the
following link: http://www.elistore.org

The Environmental Law Institute is a independent, non-profit
research and educational organization based in Washington, DC. The
Institute serves the environmental profession in business, government,
the private bar, public interest organizations, academia, and the
press. Contact Info: please contact: Brett Kitchen at 202-939-3833
email: pressrequest@eli.org Website : Environmental Law Institute

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