Blight Bonds

One questionable avenue to funding for Ed Blakely's city plan referred to below is through the issuance of what are being called "Blight Bonds". As Karen explains here, the proposed process works like this.

1) The city places liens on homes it has determined are blighted or abandoned... largely flood damaged properties that have not been gutted or repaired by the owner. (Read Karen's post for allusions to the several problems the city has in making these determinations.)

2) The city then borrows money against these expropriated properties and uses it to fund... Blakely's poorly defined "investment incentives" for private businesses and developers.

If you're thinking (like I am) that that's a pretty nasty prospect, take heart. As the T-P reports this morning, the scheme may not be given legal clearance despite the mayor's claim that it has been done before.

Nagin said Thursday that he is "very comfortable" with the blight bonds "because Philadelphia has done them." He added that when city officials recently visited several New York investment houses, "they confirmed that that's a very viable option for us."

Philadelphia, which in 2001 issued the first of $296 million in blight bonds, is considered the pioneer of the concept. But that city's program was far different from the one envisioned in New Orleans.

Philadelphia's blight bonds closely resembled traditional general obligation bonds, according to Rob Dubow, executive director of the Pennsylvania Intergovernmental Cooperation Authority, which monitors Philadelphia's spending.

The city of Philadelphia "borrowed money to address blight," Dubow said, but did not use blighted properties as security, as is being suggested by Nagin. The $300 million was aimed at projects such as demolishing houses and removing abandoned cars. Under an agreement with the redevelopment authority, which issued the bonds, the city each year dedicates $20 million toward retiring the debt.

One of Karen's commenters offers this assessment

The blight bonds aren’t going to work. The City, even if they are able to change the LA Constitution to allow “quick take,” no insurance agency will grant title insurance to NORA until the Eminent Domain constitutional amendment is challenged. And without title insurance, no bank will issue bonds.

And there you have it; another bad.. potentially evil.. idea of questionable feasibility. Just another day in post-K happyland.

Oh.. did I mention that Karen and the Squandered Heritage crew will be on this week's NPR Weekend Edition with more on this? Well okay, then.