January 30, 2008

RALEIGH – A West Coast success story can guide N.C. cities and towns looking to spur redevelopment. A new John Locke Foundation Spotlight report shows how Anaheim, Calif., boosted its fortunes without using economic incentives or abusing eminent domain powers.

Click here to view and here to listen to Dr. Michael Sanera discussing this Spotlight report.

“Badly needed economic development can be achieved by understanding the principles of the free market,” said report co-author Dr. Michael Sanera, JLF Research Director and Local Government Analyst. “It is possible to see great improvements in the economic vitality of an area while still respecting the rights of property owners. Through methods similar to those Anaheim used, North Carolina cities will be able to strengthen their economies without abusing their governmental powers.”

Sanera and JLF research intern Katie Bethune focused on Anaheim’s “Platinum Triangle.” Close to Disneyland and to major league baseball and hockey stadiums, the area was also home to many rundown industries in 2002, Sanera said. “In order to create the economic growth they hoped for, Anaheim leaders would have to change the character of the area dramatically.”

Mayor Curt Pringle and his colleagues rejected the use of eminent domain or other intrusive government powers to boost the area, Sanera said. “Anaheim had spent millions of dollars and infringed on many citizens’ property rights by relying on eminent domain in the 1980s,” he said. “The result was a disaster. Mayor Pringle and Anaheim leaders wanted to avoid repeating those past mistakes. They believed that by employing free-market principles, they could create a downtown that would be an asset to the community.”

Anaheim found “creative, market-friendly” ways to reach its goals, Sanera said. The city’s plan: relied on development initiated by private property owners; used overlay zoning to permit more types of development in the area; simplified permits and environmental impact reports; and loosened restrictions on items such as housing permits and inclusionary zoning.

“This hands-off approach allowed developers to let the market determine the best use of the land,” Sanera said. “Soon after the Platinum Triangle project was created, property values in the area increased dramatically, while several developers began planning new residential and commercial projects. Economic activity has increased, while billions of dollars have been spent in private development. Most importantly, the existing property owners have had the ability to do what they want with their land.”

Higher property values have caused some dislocations, but Anaheim leaders have addressed those concerns, Sanera said. “An affordable housing strategic plan has helped Anaheim address questions about low-cost housing in the Platinum Triangle,” he said. “The city has also considered a density bonus ordinance and a plan to convert former hotels into residential units.”

Anaheim’s success offers a model for North Carolina’s government officials, Sanera said. “Too many North Carolina communities consider targeted tax incentives or eminent domain to force redevelopment of downtown areas,” he said. “Anaheim’s success depends instead on a plan that reduces government regulations and stimulates private-sector investment. Billions of dollars in private investment flowed into the targeted area once government got out of the way and allowed the private sector to lead.”

Dr. Michael Sanera and Katie Bethune’s Spotlight report, “The Anaheim Solution: How N.C. cities can redevelop without using incentives or eminent domain,” is available at the JLF Web site. For more information, please contact Sanera at (919) 828-3876 or [email protected]. To arrange an interview, contact Mitch Kokai at (919) 306-8736 or [email protected].