Gentrification and Financial Policy: Tax Increment Financing and the Implications for Low-income Residents
Open Access
- Author:
- Easterling, Helen M
- Area of Honors:
- Community, Environment, and Development
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Theodore Roberts Alter, Thesis Supervisor
Theodore Roberts Alter, Thesis Honors Advisor
John Shingler III, Faculty Reader - Keywords:
- gentrification
affordable housing
financial policy
tax increment financing - Abstract:
- This paper serves as a primer on how to understand the complex issue of gentrification through the lens of financial policy. It introduces historic and current definitions of gentrification, showing how the concept has mutated over time. It reviews the relevant theories, fields of thought, findings, and analyses that have developed since the inception of the concept. Next, the paper shows how certain federally-sponsored financial policy decisions of the 1920’s through the 1980’s affected gentrification in inner-cities. Additionally, the paper identifies how the declining financial support of the federal government in revitalization efforts has increased pressure on local governments to promote revitalization. Through this analysis, I find that local governments face a trade-off between promoting economic development and maintaining affordable housing. Finally, this paper looks specifically at Tax Increment Financing (TIF), a financially based economic development tool, critically examining the effect of TIF on low-income residents. This study finds that the affordable housing strategies used by most states through TIF have not been effective in protecting against involuntary displacement of low-income residents in the long-term. TIF, therefore, should be required to be used in conjunction with Low Income Housing Tax Credits, a federally funded affordable housing strategy. Additionally, for each affordable housing unit local government takes away, one new unit of affordable housing should replace it to avoid involuntary displacement of low-income residents. Local governments should also consider developing a program to track low-income residents to promote long-term solutions for affordable housing.