Public Development: Using Land as a Capital Resource

<p>Public development burgeoned in the 1980s in response to a particular set of conditions in real estate markets and fiscal pressures facing local governments, and a shift in values favoring entrepreneurial behavior. The combination of forces gave public agencies an economic rationale for taking aggressive positions, as developers, to capture the benefits of rising land values.</p> <p>Aggressive public development was as unconventional as it was risky. When cities regulate real estate development to safeguard public interests, tax private property to provide public services, or grant subsidies to promote economic growth and keep businesses from moving out of town, the lines between public and private spheres appear clear (if not precise). The risks are political more than economic. When, however, public agents aggressively develop publicly owned land, their role is entrepreneurial and the risks are financial. Achieving certain types of goals through calculated risk taking was a posture that cities with strong real estate markets seemed well positioned to take in the 1980s. This essay explains what gave rise to the public's entrepreneurial behavior, and how the nature of its goals drove this form of government intervention in land markets.</p>