Moderator: Robie Suggs, Chief Lending Officer, Cincinnati Development Fund
Speakers: Shannon Morgan, Managing Partner, Renovare Development and Brian Potts, Managing Partner, The Ridgewood Group, LLC, Springfield, OH, and Ryan Bates, CEO, Bates Development
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In this second webinar in the series, “Building Equity and Market Strength in Legacy Cities: Context-Driven Equitable Development,” speakers present emerging programs driven by for-profit developers to build local market strength, often with a focus on meeting the needs of existing residents or supporting minority contractor business development. The first webinar, Equitable Development Programs for New Construction in Weak Markets, takes place February 28.
Moderator
Robie Suggs is responsible for all lending-related activity, including loan processing, underwriting, construction management and credit risk/asset management. She builds and maintains strong relationships with developers, nonprofits, business owners, and financial partners to originate, underwrite, and close loans in support of CDF’s mission and resident-driven community plans. She came to CDF from First Financial Bank, where she was Vice President of Strategic Partnerships, Economic Development, and Community Outreach.
Speakers
As Managing Partner of Renovare Development, Shannon Morgan is a housing expert and experienced leader with a diverse real estate background, specializing in building, rehabilitation, and development within urban areas, rural main streets and communities in numerous states throughout the country. Shannon has vast experience in working with various tax credits, brownfield developments, and transit-oriented projects; completing thousands of units of mixed income housing with a focus on projects that promote sustainability, urban revitalization, and a sense of place. Shannon is actively engaged in maintaining relationships with key stakeholders, legislators, local units of governments and aligned interest groups to develop and support policies and legislation affecting federal and state smart growth housing and development. She has championed several different pieces of legislation that were passed both federally and at the state level.
Brian Potts is the Managing Partner of The Ridgewood Group, a firm that specializes in the acquisition, revitalization and management of single family and multifamily properties. Mr. Potts focuses his work on value-add projects in core urban neighborhoods in Springfield and Dayton. He received his Bachelor of Business Administration from The Ohio State University and his Master’s in Accounting from The University of Illinois Urbana-Champaign. Mr. Potts also holds an Ohio Real Estate Broker’s License. Brian resides in Springfield with his wife and two children.
Ryan Bates is CEO of Bates Development, a Louisiana certified minority real estate development company focusing on incentive development by utilizing low income housing tax credits, federal and state historic tax credits, and state/federal agency programs for funding. Ryan has completed developments for multifamilyaffordable housing, market rate housing, hotels, and commercial usage. Ryan also currently serves as Vice President of Development for IDP Properties, a boutique real estate development firm headquartered in Valdosta, GA that invests in and redevelops affordable housing communities. Ryan is responsible for real estate development and new business opportunities in the Louisiana Market. Ryan is a board member for the Urban Development Fund, a New Market Tax Credit Development Entity.
Equitable Development Programs for New Construction in Weak Markets
February 28, 2023 | 12:00 p.m. - 1:00 p.m.
Free, offered in English
Moderator: Beverley Loyd, Managing Director of Lending MI and OH, IFF Speakers: Cory Riordan, Executive Director, Tremont West Development Corporation, Matthew Madia, Director of Real Estate Services, Neighborhood Allies (Pittsburgh), and Brian Ogawa, Senior Commercial Real Estate Associate, Port of Greater Cincinnati Development Authority
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This webinar is the first in a two-part series, “Building Equity and Market Strength in Legacy Cities: Context-Driven Equitable Development.” Register separately for the second webinar.
Weak market conditions severely limit policy and programmatic options for addressing inequity in legacy cities. But equitable real estate development is possible with creativity, local knowledge, and sensitivity to protecting burgeoning market strength.
In this series, we examine strategies identified in the working paper that promote equitable outcomes while also protecting against overstepping and diminishing the market strength essential to sustained revitalization. We also share efforts led by private developers to strengthen real estate markets through innovative, equity-driven approaches.
This webinar series will interest practitioners in legacy cities who want to learn about policies and programs that can work in weak markets. Strategies covered range from emerging interventions to more established programming aimed at ensuring the gains from economic development benefit all residents.
Webinar 1: Equitable Development Programs for New Construction in Weak Markets
February 28, 2023
This webinar will present detailed examples of strategies applicable in weaker real estate markets that can deliver equity benefits in novel ways. These strategies are suitable for local actors working in places that cannot sustain broad inclusionary housing policies or exactions due to the lack of market strength, political will, or both.
Moderator
Beverley Loyd, CPA is Managing Director of Lending for Michigan and Ohio at IFF, a nonprofit financial institution. In her role, Beverley develops and implements strategies to serve the needs of nonprofit clients throughout the region, while providing leadership to a team of experienced lenders who are passionate about community development. With more than 20 years’ experience in commercial lending, Beverley brings her expertise in designing financial solutions for organizations of all sizes throughout Michigan and Ohio. Before joining IFF, she worked as a bank officer focused on the commercial and real estate markets for several Detroit-based banks. Beverley obtained her Master’s Degree in Finance at Walsh College and a Bachelor’s in Business Administration, with an emphasis in Accounting at the University of Michigan-Flint. She has taught Accounting, Finance, and General Business courses for more than 15 years at the graduate and undergraduate levels. She is a Certified Public Accountant, with experience in audit and taxation. Beverley has spent a lifetime dedicated to community service by participating in numerous charitable events, serving on nonprofit boards and committees, supporting fundraising activities that provide scholarships to local students, conducting financial workshops, and other programs and activities. Family is the joy in her life with 3 daughters, 2 granddaughters, and 3 grandsons. She also enjoys travel, gardening, and home improvement projects.
Speakers
As the Director of Real Estate Services, Matt Madia leads Neighborhood Allies’ Centralized Real Estate Accelerator. The Accelerator is a new, comprehensive, and community-based real estate model aimed at increasing the flow of capital to development projects in low-income neighborhoods and creating wealth-building opportunities for traditionally underserved residents. Prior to joining Neighborhood Allies, Matt served as Chief Strategy and Development Officer at Bridgeway Capital where he where he underwrote and structured community development and small business transactions and worked with community and regional leaders to direct additional resources to underserved neighborhoods. Matt brings with him a decade of financial tool development in the development sector and has raised nearly $25M in grants and $40M in structured debt. Previously, he spent six years as a policy analyst at a Washington DC-based public interest group, analyzing and lobbying for regulations and legislation more protective of consumer health, worker safety, and the environment.
Brian Ogawa is a Senior Commercial Real Estate Associate for the Port of Greater Cincinnati Development Authority. His responsibilities include pre-development financial underwriting and analysis of due diligence items for strategic dispositions, acquisition, and developments for multi-family and commercial properties. Ogawa also serves as project manager for stabilization and environmental remediation projects, which includes soliciting bids, managing budget, and contractors. Prior to joining the Port, Brian served as a development analyst and senior development officer with the City of Cincinnati’s Department of Community and Economic Development. In this role, he managed the underwriting and approval process for incentive packages for large-scale real estate development projects, including tax increment financing, loans, grants, and tax abatements. He also worked closely with the neighborhood stakeholders and managed multiple grant programs geared towards revitalizing neighborhood business districts. Brian received his undergraduate and graduate degrees from Xavier University.
Cory Riordan has served as Executive Director of Tremont West Development Corporation since 2012. During his tenure with the organization he has worked to expand quality of life initiatives for all residents through expansion of healthy food access, creation of recreation programs, and development of commercial activity that serves the residents of the neighborhood. Cory has also guided planning and development processes that have resulted in millions of dollars of investment in the Tremont neighborhood. Over the past few years, the organization is taking a more active role in ensuring affordable housing. Previously, Cory served as the Executive Director of St. Clair Superior Development Corporation on the near east side of Cleveland. He believes strongly in the work of community development corporations and their ability to help build great neighborhoods. He believes in the people of Cleveland and their communities to overcome challenges and work together for a bright future. Cory obtained his Master’s Degree in Urban Planning Design and Development in 2007 from Cleveland State University and a Bachelor’s Degree in Political Science from Ohio University in 2002. He lives in Cleveland with his wife and two children.
Register separately for the second webinar in this series, which will concentrate on programs driven by for-profit developers to build local market strength, often with a focus on meeting the needs of existing residents or supporting minority contractor business development.
Main image credit: General Building Contractors Association
This program provides an opportunity for recent PhDs, one to two years post-graduate and specializing in public finance or urban economics, to work with senior academics.
Lincoln Institute Scholars will be invited to the Institute for a program on May 17–19, 2023, that will include:
presentations by a panel of journal editors on the academic publication process;
a workshop in which senior scholars comment on draft papers written by the Lincoln Institute Scholars;
an opportunity for the Lincoln Institute Scholars to present their research; and
a seminar in which leading scholars in public finance and urban economics present their latest research.
Home values catapulted upward during the COVID-19 pandemic, with the median price of an existing single-family home rising an astonishing 44.3 percent between the third quarter of 2019 and the same period this year, according to the National Association of Realtors.
While fast-rising mortgage rates have helped slow that runaway price growth, home values in many areas have plateaued at new heights.
As communities update their assessment rolls to reflect higher home values, they can adjust their tax rates downward to avoid increasing residents’ tax bills. But even when those tax bills do rise, various forms of property tax relief can help communities ease the burden, especially for seniors and low-income homeowners.
“It’s so important that the property tax be stable and affordable,” says Joan Youngman, senior fellow at the Lincoln Institute of Land Policy, author of A Good Tax, and coauthor of the Policy Focus Report Property Tax Relief for Homeowners.
Making a Good Tax Better
The property tax is an essential—and relatively efficient—way to fund local government. Unlike income and sales taxes, the property tax remains fairly steady through the booms and busts of the business cycle. Its high visibility and tangible trade-offs promote civic engagement and transparency around local spending decisions. And the property tax can actually be a fairly progressive revenue raiser, taking a smaller share of homeowners’ incomes as earnings fall.
This is especially true in areas that provide some form of property tax relief—such as Boston, which has offered residents a generous homestead exemption for decades.
Such an exemption reduces the property tax owed on a principal residence, either by protecting a portion of the property’s value from taxation, or by offering a partial credit against the tax bill. It’s a fairly broad and simple policy tool—but it’s also a powerful one that can make the property tax more equitable.
That’s important, because research has found that low-priced properties can be overassessed—and thus unfairly overtaxed compared with more expensive homes, potentially creating a regressive and inequitable tax structure that punishes poorer homeowners.
“It’s inherently difficult to assess really low-priced properties,” says Daniel McMillen, professor of finance at the University of Illinois at Chicago. “A small mistake translates into a high percentage.” On a $900,000 home, McMillen explains, an assessment that misses the mark by a few thousand dollars is almost negligible. “But at $90,000, then $5,000 or $10,000 is a pretty serious error.”
In a new working paper, Lincoln Institute fellow Ron Rakow shows how a homestead exemption can easily and completely compensate for such errors.
When analyzing assessment data in the Boston area, Rakow found that, despite a tendency for low-priced properties to be overassessed, the effective property tax rate wasn’t regressive at all. In fact, because the homestead exemption offers proportionally more relief for lower-priced homes, Boston’s property tax was actually significantly progressive.
“We’ve done a little bit more research into some of the concerns about assessment equity,” Rakow says, “and it’s really revealed how effective homestead exemptions can be.”
A Progressive Tax Tool at Work in Boston
Different types of homestead exemptions exist, but here’s how Boston’s program works: The taxable value of a homeowner’s principal residence gets reduced by a flat dollar amount, equivalent to 35 percent of the average assessed home value in the city that year. In 2021, that meant the first $295,503 of a primary residence’s value was exempt from property taxes.
So if a Boston resident’s condo was assessed at $395,000 that year, the owner would only have to pay property taxes on the last $100,000 or so of the home’s value—a discount of roughly 75 percent. The resident-owner of a $1 million property would get a more modest discount of 30 percent, while owners of second homes and investment properties pay full freight.
The flat dollar amount, which automatically adjusts annually, is an important feature. Some programs exempt a set percentage of a property’s value—the first 10 percent, for example—but that doesn’t add any progressivity to the tax, since high-priced homes benefit at the same rate. (Flat dollar homestead credits—which allow all residents to receive, say, $200 off their property tax bill—also offer progressively more relief for lower-value homes.)
The simplicity of Boston’s program makes life easier for residents and city officials alike.
“One of the big advantages for a flat dollar homestead exemption or credit over other types of property tax relief is that it can be very easy to administer, and for taxpayers to participate in,” says Adam Langley, associate director of tax policy at the Lincoln Institute and coauthor of the report Property Tax Relief for Homeowners. While other policies target relief more narrowly to lower-income homeowners or seniors, and are thus more cost-effective, Langley says, they’re also more complicated to operate and to apply for, bringing down participation rates.
Boston’s exemption program requires homeowners to apply only once, after which they’re automatically enrolled until they move, sell the home, or die. The city has partnered with the Massachusetts Department of Revenue so it can use income tax records to verify residency status. “Before, in order to establish residency, we used to have people bring in copies of utility bills and all kinds of other documentation,” says Rakow, Boston’s former assessing commissioner. “Now we can establish residency just by doing a quick check against the income tax records, so that made the administration of the exemption much easier—and it also made it a lot more difficult to cheat.”
Notably, Boston’s exemption doesn’t cost the city any revenue, or shift the tax burden to businesses; it just rebalances the same total residential tax levy toward higher-value homes.
It’s also optional for the city. Massachusetts law doesn’t require communities to offer a homestead exemption; each city and town has the option of providing an exemption of up to 35 percent of its average property value. But even if a home’s total value falls under the local exemption threshold, state law does require homeowners to pay something: the exemption tops out at 90 percent of a property’s value. That helps keep homeowners involved and invested in local spending decisions.
The Need for Equity and Relief
Whether they pay their property taxes directly or through a mortgage escrow service, most homeowners are aware of increases to their tax bill. So with property values skyrocketing, local governments should be reducing their tax rates accordingly, Youngman says, despite the temptation not to.
“It’s very hard for local governments to turn away what we call ‘silent tax increases’—where you never change anything on the books, but suddenly the revenue is raised,” Youngman says. But it was fast-rising property tax bills that inspired twentieth-century tax revolts like California’s Proposition 13, which limited assessment increases to 2 percent annually—and led to erratic and inequitable taxation.
By essentially decoupling assessments from market values, policies like Proposition 13 create inequity on multiple levels. First, two families that own identical properties can end up with wildly different tax bills depending on when they purchased the home, putting new homebuyers at a disadvantage. At the same time, owners of homes that are rising in value the fastest receive a larger tax break than those whose home values are appreciating more slowly, even though the latter often have lower incomes and less wealth. “That is an example of a solution that can raise unanticipated problems,” Youngman says.
A homestead exemption is a much more fiscally sound and equitable way to ease the property tax burden on residents. And that equity is sorely needed in places where low-priced homes are being overassessed. Even a relatively small homestead exemption—a fraction of the size of Boston’s—can essentially erase such unfairness, McMillen has found. He analyzed data for almost 10,000 municipalities and found the highest concentration of tax regressivity and inconsistency in homes assessed below $100,000. “And what that means is that a fairly modest homestead exemption can just take care of all the regressivity,” he says.
How modest? In Chicago, the first $30,000 or so of a home’s value is exempt from the property tax, McMillen says—and that seems to be enough to overcome any assessment inequities.
“It’s a really reasonable, logical approach,” McMillen says. “It’s not that much different from saying, ‘We’re not going to charge an income tax on people who make $10,000 a year, but by the time you get up to median income, you’re going to pay a healthy income tax.’”
“It does mean the tax burden will get transferred to higher-income people,” McMillen adds. “But you can make an argument right now that it’s being transferred to lower-income people, because they’re being taxed at higher rates than they ought to be.”
Jon Gorey is a staff writer for the Lincoln Institute of Land Policy.
Image: Jon Gorey
Peking University–Lincoln Institute Center Celebrates 15th Anniversary
By Katharine Wroth, November 28, 2022
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This fall marked the 15th anniversary of the Peking University–Lincoln Institute Center for Urban Development and Land Policy (PLC). Established in 2007, the center has become a leading authority on land policy issues in China, including the property tax, municipal finance, land and housing policies, and land conservation. To celebrate this milestone, the PLC held an event on November 4 that included commemorative remarks, a formal recommitment to the partnership between the two institutions, and several academic presentations on urban development and climate change.
“The Lincoln Institute works globally on topics largely relating to land policy, and the joint center is an exceptional platform for our China program,” said Katie Lincoln, chief investment officer and board chair of the Lincoln Institute, who delivered congratulatory remarks by video. “During the past 15 years, the center has held numerous conferences, undertaken research and demonstration projects, shared in scholarly exchanges, and happily gained recognition both in and out of China.”
In addition to Lincoln, several current and former leaders from the two institutions joined the celebration virtually or in person, including Jin Zhang, vice president of Peking University; Jianhua Lin, former president of Peking University; Yansong Li, former vice president of Peking University; George W. McCarthy, president of the Lincoln Institute; Gregory Ingram, former president of the Lincoln Institute; and Joyce Man, former director of the PLC.
“We are now at a difficult time of Sino-U.S. relations,” said former PKU President Lin. “But I believe that the mutual trust between our two institutions and the confidence about the value of what we do will continue to be a foundation for us to cooperate and move forward.”
Former Peking University President Jianhua Lin delivers remarks at the PLC’s 15th anniversary celebration. Credit: Courtesy of PKU.
During the event, Zhang and McCarthy signed an agreement for continued collaboration between the two organizations. “In the next few years, the PLC will add a new focus on land use and climate change, in support of China’s ambitious goal of achieving net-zero carbon goals by 2060,” noted McCarthy. “The PLC also will help the Lincoln Institute in its global efforts to address the climate crisis. The unique cooperation between the Lincoln Institute and PKU over the last 15 years has been fruitful for China, the United States, and the world in [finding land-based solutions to] economic, social, and environmental challenges. We are excited to embark on another five-year journey together.”
The center, which conducts research, training, policy analysis, academic exchanges, advisory services, and demonstration projects throughout China, also invited several scholars, fellowship recipients, and others who have been involved with its work over the years to share reflections.
“I worked with PLC for more than ten years, from winning the Peking University–Lincoln Center scholarship, to guiding students to participate in the center’s fund application, to becoming a partner of the center’s work and research,” said De Tong, associate professor at Peking University Shenzhen Graduate School. “Scholars at the center have become my inspiring mentors and friends, and colleagues at the center have also become comrades-in-arms at work and friends in life.”
PLC invited former scholarship recipients and other collaborators, including De Tong of Peking University Shenzhen Graduate School, to share reflections at the event. Credit: Courtesy of PKU.
The center has launched an essay contest open to those who have been involved with the PLC over the years, from scholarship recipients to business collaborators to conference participants. Five winning essays, selected in January, will receive a small monetary prize; a copy of the Lincoln Institute book Infrastructure Economics and Policy: International Perspectives, coedited by José A. Gómez-Ibáñez and Zhi Liu, who leads the PLC as director of the Lincoln Institute’s China program; a copy of Advanced Economic Geography by Canfei He, dean of the College of Urban and Environmental Sciences at PKU and associate director of the PLC; and publication on the PLC website.
The second half of the day’s events was structured as an online forum on climate change and urbanization in the context of China’s dual-carbon goal, which seeks to reach peak carbon by 2030 and achieve carbon neutrality by 2060. Leading policy makers and scholars from China, Hong Kong, and the United States shared their latest thoughts and studies on topics including green building, urban equity, and urban-rural integration, drawing an audience of more than 600 researchers, planners, and others.
“The dual-carbon goal is a major challenge for China, but also presents new opportunities for China’s continuing urbanization,” said PLC Director Liu. “Urbanization and carbon net-zero has been a hot topic in China’s policy debates, which have been getting more substantive and concrete over the last two years. I found myself learning a lot from these presentations, which deepened my understanding about the challenges and opportunities that the goal of carbon net-zero will bring to our urbanization for the next few decades.”
Forum topics and presenters included:
the evolution and future of green building, by Dr. Baoxing Qiu, former Deputy Minister of the Ministry of Housing and Urban-Rural Development;
carbon reduction models for commercial real estate, by Professor Siqi Zheng of the Department of Urban Studies and Planning of MIT;
equity and governance under China’s dual-carbon goal, by Professor Shenjing He from the Department of Urban Planning and Design of the University of Hong Kong;
carbon reduction through urban agglomeration, by Professor Ming Lu from Antai School of Economics and Management, Shanghai Jiao Tong University; and
urban-rural integration and rural revitalization, by Professor Shouying Liu from the School of Economics of Renmin University.
Visit the “Our Work” section of our website to learn more about the PLC and to find information about how to connect with the center on WeChat.
Lead image: Lincoln Institute President and CEO George W. McCarthy and Peking University Vice President Jin Zhang celebrate the renewal of the collaborative agreement that established the Peking University-Lincoln Institute Center for Urban Development and Land Policy. Credit: Courtesy of PKU.
Course
2023 Fundamentals of Municipal Finance Credential
May 8, 2023 - May 12, 2023
Online
Offered in English
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As communities continue to struggle with effects of the pandemic and meet an array of urgent needs, from affordable housing to infrastructure, sound municipal finance practices have never been more critical.
While an influx of federal funds is helping local governments serve their residents and invest for the future, these funds are limited, temporary, and often competitive. Communities need to build the capacity to spend federal money well, with equity, efficiency, and sustainability at the center of their decisions. Further, they need to be prepared to adequately and fairly generate their own revenue, especially when federal funding diminishes.
Whether you want to better understand public-private partnerships, debt and municipal securities, or leading land-based finance strategies to finance infrastructure projects, this five-day online program will give you the skills and insights you need as you advance your career in local government or community development.
Overview
This program was created by the University of Chicago Harris School of Public Policy’s Center for Municipal Finance in partnership with the Lincoln Institute of Land Policy. This course will include modules on the following topics:
Financial Analysis for Land Use and Development Decision Making
Public-Private Partnerships
Environmental, Social, and Governance (ESG) in Municipal Finance
Upon completion of the course, participants will receive a certificate signed by both organizations. For planners maintaining their AICP credentials, this course provides 16 Certification Maintenance (CM) credits from the American Planning Association.
Course Format
The live virtual programming will last approximately 3.75 hours each day, and the additional coursework—viewing prerecorded lectures and reading introductory materials—will require up to two additional hours each day.
Who Should Attend
Urban planners who work in both the private and public sectors as well as individuals in the economic development, community development, and land development industries.
Cost
Nonprofit and public sector: $1,400
Private sector: $2,400
Local property taxes and state aid each have flaws, but a thoughtful combination of these two revenue sources is the most effective recipe for funding a high-quality K–12 education for all students, according to a new Policy Focus Report published by the Lincoln Institute of Land Policy.
In Rethinking the Property Tax–School Funding Dilemma, authors Daphne A. Kenyon, Bethany Paquin, and Andrew Reschovsky explain how local property taxes foster civic engagement and provide stable funding, while state aid is critical in reducing disparities among school districts caused by differing levels of property wealth and differences in the money needed to provide high-quality education.
The report explains the advantages of the property tax compared to other local taxes and demonstrates how states can adopt policies to address criticism of the property tax. A well- designed system of state aid can offset differences in per-pupil property values and in the costs of providing quality education. State-funded property tax credits can reduce economic hardships for taxpayers facing high property tax burdens, especially those with low incomes. And unjustified differences in property tax bills among owners of similar properties can be addressed through more frequent and accurate assessments. The authors explain why the majority of states still fail to provide all students an adequate education and recommend policies to strengthen both funding sources with the specific goal of improving student outcomes.
Five state-level case studies illustrate the practical nuances of state education finance and property tax policies and offer important lessons for policy makers. California’s Proposition 13 limited property taxation and accelerated a shift toward state funding at the expense of local control and student academic performance. A more modest property tax limit in Massachusetts proved more flexible and, combined with targeted state aid and robust accountability standards, has not impeded strong academic results.
South Carolina’s implementation of a local-for-state tax swap in 2007, which fully exempted homeowners from paying local school property taxes and increased reliance on the sales tax to fund education, demonstrated how unreliable sales taxes can be in an economic downturn. Despite a long history of school funding litigation, Texas still relies heavily on property taxes to fund its schools. Failure to continually adjust its state funding formula for rising costs and property values has led to higher property tax burdens on homeowners. Last, in Wisconsin, the state’s property tax revenue limit restricts school districts’ ability to increase spending, and the state equalization aid formula does not account for differences in school districts’ needs and costs.
“As a former state education official, I would have loved to have had a report like this to help me get up to speed on the critical issues around school finance policy,” said Carrie Conaway, former chief strategy and research officer at the Massachusetts Department of Elementary and Secondary Education and senior lecturer at the Harvard University Graduate School of Education. “The report provides a very clear explanation of the role played by the property tax in funding public education and describes the complex issues involved in designing effective state aid systems. Anyone involved in or interested in school funding policy will benefit from reading this report.”
“A perennial target in state education finance legislation, the property tax remains a much-discussed and asked-about topic in my work with state legislatures,” National Conference of State Legislatures Senior Fellow Daniel G. Thatcher agreed. “This report will guide policy conversations about how to improve the sustainability, stability, and fairness of property tax systems, and also in education finance systems writ large.”
Rethinking the Property Tax–School Funding Dilemma offers specific reforms that state governments—as well as localities—can make to balance revenue needs, funding realities, and other considerations. Notably, states must resist calls to stop using local property taxes to fund schools while also improving the equity and efficiency of their property tax systems.
The authors also recommend that states maintain sufficient “rainy day funds” to draw upon when state tax revenues decline and that they target more local aid toward schools that require additional support to provide their students with an adequate education. Finally, the federal government also has a role to play in supplementing funding in low-spending states according to need, as well as in helping remedy learning losses from the COVID-19 pandemic.
“Understanding the relationship between local property taxes and state school aid is critical for understanding how public schools are funded,” said Lawrence O. Picus, professor of education finance and policy at the University of Southern California Rossier School of Education. “This Policy Focus Report provides concise guidance about the use of property taxes and the importance of state funds to equalize disparities in property tax revenues for schools. It is a must-read for anyone interested in, or part of, the school finance policy process, and an excellent introduction for those who want to dig deeper into these relationships.”
While specific reforms will necessarily vary across different states and localities, the authors stress that targeting state education funding is essential in closing equity gaps and overcoming the persistent effects of the COVID-19 pandemic and their disproportionate impact on students of color, English-language learners, and disabled students.
Equally important is a well-functioning property tax system that avoids overly burdensome restrictions while offering “circuit breakers” and other forms of targeted relief to homeowners in need. Ultimately, the authors offer readers the tools for “overcoming the shortcomings of both funding sources, enabling state school funding systems to give all students an adequate, quality education equitably and efficiently.”
Mayor Yvonne Denise Aki-Sawyerr took office in Freetown, Sierra Leone, in May 2018, after serving as head of the Freetown City Council. A finance professional with over 25 years of experience in the public and private sectors, she had previously been involved with the campaign against blood diamonds and was instrumental in the response to the Ebola crisis in 2014. She has delivered two TED talks, about turning dissatisfaction into action and the capital city’s initiative to plant a million trees, and was named to the Time 100 Next list of emerging leaders and the BBC’s 100 Women list.
A leader in the C40 Cities global network, Aki-Sawyerr launched the Transform Freetown planning initiative and appointed Africa’s first chief heat officer, to confront the impacts of climate change. She holds degrees from the London School of Economics and Freetown’s Fourah Bay College, and is married with two children. She spoke with Senior Fellow Anthony Flint in the fall. Their conversation has been edited for length and clarity.
Anthony Flint: Could you talk about the Transform Freetown initiative as a planning and action framework, and your assessment of its progress?
Yvonne Aki-Sawyerr: I ran for office in 2018, motivated by concerns around the environment and sanitation. My campaign message, “for community, for progress, for Freetown,” translated into Transform Freetown. It focuses on four categories: resilience, human development, healthy city, and urban mobility.
Resilience includes environmental management; it also includes urban planning, because you cannot separate the two, and revenue organization, because sustainability will only come from the city’s ability to sustain and generate revenue itself. The healthy city cluster includes sanitation, which goes very closely with environmental management for Freetown and many African cities. If you think about climate change, our teeny-weeny contribution to climate change, a lot of it actually comes from methane, from open dumping, but it also has huge health implications. So in the healthy city category was sanitation, health, and water.
What we did was, having come into office with those high-level areas of concern, we had 322 focus groups with about 15,000 residents to get their views on affordability, accessibility, and availability of services across those sectors. We invited the public sector, private sector, and the international community via development partners and NGOs to participate in roundtable discussions.
Out of that process came 19 specific, measurable targets that we’re working toward under Transform Freetown. We report against them every year back to the city, back to our residents. It really has been a way of introducing greater accountability, of holding our own feet to the fire, and it’s very much community owned and community driven.
AF: Among all the climate threats the city faces, you appointed a chief heat officer. Why was a chief heat officer necessary and what have been the results thus far?
YA: I’m asked often, how do you get ordinary people interested in climate change? In our case it’s not hard, because the consequences of climate change are intensely felt in our parts of the world. We suffer greatly from flooding and landslides, hence my concern with the environment and being able to mitigate those impacts.
The [Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center] really got us thinking about the fact that there are more deaths from extreme heat than there are from the more visible and tangible disasters like the floods and landslides. Extreme heat, particularly where water is in short supply, is a major impact of the warming climate.
In our case, the vulnerable are mainly those living in informal settlements. That’s 35 percent of our city’s population, and in those informal settlements, the housing structures are typically made from corrugated iron. With increased temperatures, you’re effectively living in an oven. The other aspect of that is we have an informal economy. Around 60 percent of women in our city are involved in trading. Most of our markets are outdoors, so you’re sitting in the sun all day long. Doing that under the intense heat means that [other] negative health consequences are exacerbated.
With the chief heat officer, we now are going to be able to embark on some research, collecting data to identify the heat islands; anecdotally, we have a sense of where those are, mainly in the informal settlements, but potentially also in the middle of the city. We need to be able to make arguments to challenge what’s going on with the lack of building permits, and land use planning being devolved to the city, and the massive deforestation that continues unabated.
The chief heat officer has worked with market women and gotten funding from Arsht-Rock to install market shade covers in three of our open markets. It’s great to see the enthusiasm of the women and them saying, “Are we going to get this all the way along the market? We can see where it’s starting, where it stops, but we need it too.”
Newly installed shades in the markets of Freetown, Sierra Leone, help residents cope with extreme heat. Credit: Courtesy photo.
AF: What are your hopes for other climate mitigation projects, including the initiative to plant a million trees? How did that come about, and how is it going?
YA: Well, it came about because there’s an appreciation that we were losing our vegetation and that [worsens] the effect of extreme weather events, [as when heavy rains led to massive mudslides in 2017]. The lack of forestation is a major part of that. The goal is to increase vegetation cover by 50 percent.
Planting the million trees is the long-term plan, but in the meantime, you still have the runoff from the mountains filling the drains with silt. Our annual flood mitigation work identifies the worst of these areas and clears the silt so that when the rains come, the water can still flow. On a smaller scale, we’ve also been able to build something like 2,000 meters of drainage in smaller communities. Beyond that, we’ve invested heavily in disaster management training and capacity building.
The thing about climate change impacts is they are really pervasive. If people are experiencing crop failure outside of Freetown, it will eventually drive a rural-urban migration because they’re unable to sustain their livelihoods and they’re going to come to the city looking for some means of making a living.
That pressure of population growth in the city is something else that we have to deal with—whether it’s introducing the cable car to improve transportation and reduce greenhouse gas emissions [or encouraging] the government to devolve land use planning and building permit functions so that we can actually introduce land management actions, which save life and save property but also protect the environment and prevent people from building properties in waterways and streams and canals, which currently happens. All of this is made worse by not using legislation and urban management tools such as land use planning and building permitting in a constructive manner.
AF: Could you describe Freetown’s property tax reform efforts, and the outcomes you’ve seen, in the overall context of municipal fiscal health?
YA: We worked on this property tax reform moving from 37,000 properties in the database of a city that’s a capital city with at least 1.2 to 1.5 million people—37,000 properties. When I came in, it was clear that that was not reflective of reality, but also the manual system that they operated, literally with a ledger book, was not really fit for purpose in the 21st century.
One of our 19 targets is to increase property tax income fivefold. To go about doing that, we secured funding and partnerships to digitize. We changed from an area-based system to a point-based system. We worked on that by taking a satellite image of the entire city and building an algorithm to give weightings to features [like roofs, windows, and location], then comparing that against a database of 3,000 properties whose values were determined by real charter surveyors. We got the old-type assessment done. We were able to identify outliers and refine the model and eventually build a model which we now use as our property base.
Through that process, we moved from 37,000 properties to over 120,000 properties. That meant we were able to meet our target of increasing our property tax revenue from [$425,000 to over $2 million]. That in itself is the pathway to sustainability and being able to invest.
A big part of fiscal health is that sustainability, but . . . unfortunately, the Ministry of Local Government [halted collections while developing national tax reform guidelines]. We were without revenue for about a year. We have started re-collecting, but as you can imagine, compliance levels will take a long time to recover.
AF: Where do you find inspiration in the face of so many challenges?
YA: From the fact that we have been able to make a difference in the lives of Freetonians. We’ve been able to test and to see how much can be achieved if one is given the space to do so. We know that so much is possible and so we keep going.
Anthony Flint is a senior fellow at the Lincoln Institute, host of the Land Matters podcast, and a contributing editor to Land Lines.
Lead image: Mayor Yvonne Aki-Sawyerr. Credit: Courtesy photo.
Graduate Student Fellowships
2023 C. Lowell Harriss Dissertation Fellowship Program
The Lincoln Institute's C. Lowell Harriss Dissertation Fellowship Program assists PhD students whose research complements the Institute's interest in property valuation and taxation. The program provides an important link between the Institute's educational mission and its research objectives by supporting scholars early in their careers.
The application deadline is 6:00 p.m. EST on March 3, 2023.
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