©2019 Spencer T. Clayton ALL RIGHTS RESERVED
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©2019 Spencer T. Clayton ALL RIGHTS RESERVED TAX ABATEMENTS AND GENTRIFICATION: HOW GOVERNMENT POLICY DISRUPTS COMMUNITIES by SPENCER T. CLAYTON A dissertation submitted to the Graduate School-Camden Rutgers, the State University of New Jersey In partial fulfillment of the requirements For the degree of Doctor of Philosophy Graduate Program in Public Affairs Written under the direction of Richard A. Harris, Ph.D. And approved by ____________________________________ Richard A. Harris, Ph.D., Committee Chair ____________________________________ Paul Jargowsky, Ph.D. ____________________________________ Lorraine C. Minnite, Ph.D. ____________________________________ Adam Okulicz-Kozaryn, Ph.D. Camden, New Jersey May 2019 ABSTRACT OF DISSERTATION Tax Abatements and Gentrification: How Government Policy Disrupts Communities by SPENCER T. CLAYTON Dissertation Director: Richard A. Harris, Ph.D. Urban municipal governments often face challenges when redeveloping their distressed centers. In 2000, the City Council of Philadelphia passed a series of bills modifying its existing residential tax abatement policies to expand their eligibility and to make them last for ten years. The timing of the passage of these bills also corresponded with Mayor John Street’s Neighborhood Transformation Initiative (NTI), which aimed to prepare land for redevelopment. The combination of the revised abatement policies and NTI created a series of competing interests for politicians, business owners, and community organizations. Utilizing a methodological design consisting a historical critical analysis based on urban regime theory, GIS, and regression analysis, this dissertation profiles the formulation, implementation, and impact of Philadelphia’s tax abatement policies from 2000 to 2010. It also proposes a mechanism by which government policies can facilitate or accelerate gentrification. Results show support for a relationship between the incidence of tax abatements and gentrification. ii Acknowledgements First, I would like to thank my Lord and Savior Jesus Christ. I would like to thank my family and friends for their constant support through my lengthy academic journey. I could not have done this without you. To my mother Julia, thank you for always believing in me. To my wife Tia, thank you for supporting me through all the unpredictability that comes with getting married and purchasing a home while writing a dissertation and starting a new job. Your faith never ceases to amaze me. I love you. To my mentors at the Conference of Churches in Hartford, CT, thank you for encouraging me to pursue doctoral studies. I doubt I would have done it without you. To my Rutgers friends, classmates, and colleagues, thanks for always encouraging me to keep moving forward. Your kind words mean more than you will ever know. I would also like to express the deepest appreciation to my committee chair Professor Richard A. Harris, whose guidance has made this dissertation possible. I am grateful for my committee members, Professor Paul Jargowsky, Professor Lorraine Minnite, and Professor Adam Okulicz-Kozaryn whose expertise has impacted my ability as a scholar. A very special gratitude goes to the Eagleton Institute of Politics for choosing me as a Governor’s Executive Fellow, which represented a turning point for me during my time at Rutgers, and to the Senator Walter Rand Institute for Public Affairs for the opportunity to put my research skills in action and to gain real-world experience as a student. You both played major roles in how I found my desire to work as a quantitative researcher in a government agency. iii Thank you all for the role you played in bringing me to this day. Table of Contents Chapter 1: Introduction ....................................................................................................... 1 Contributions to the Field ............................................................................................... 2 Defining the Problem: Gentrification and Displacement................................................ 4 Plan of Study ................................................................................................................. 14 Chapter 2: Literature Review and Theoretical Framework .............................................. 15 Gentrification ................................................................................................................ 15 Tax Abatements ............................................................................................................ 18 Community Power ........................................................................................................ 24 Theoretical Framework ................................................................................................. 27 Conclusion .................................................................................................................... 31 Chapter 3: Research Methods ........................................................................................... 33 Part 1: Critical Historical Analysis ............................................................................... 34 Part 2: GIS and Data Preparation .................................................................................. 37 Part 3: Regression Analysis .......................................................................................... 50 Chapter 4: Critical Historical Analysis ............................................................................. 60 History: Choosing the Issue .......................................................................................... 60 Abatement Creation: Setting the Agenda ..................................................................... 67 iv Abatement Changes: Managing Perceptions (Manipulation) ....................................... 70 Conclusion .................................................................................................................... 85 Chapter 5: Descriptive Analysis ....................................................................................... 88 Factor Analysis ............................................................................................................. 88 Descriptive Statistics ..................................................................................................... 90 GIS Mapping ................................................................................................................. 91 Conclusion .................................................................................................................. 101 Chapter 6: Regression Analysis ...................................................................................... 103 Regression Results: Multivariate Regression ............................................................. 103 Regression Results: Two-Stage Regression: Stage 1.................................................. 105 Regression Results: Two-Stage Regression: Stage 2.................................................. 107 Conclusion .................................................................................................................. 111 Chapter 7: Implications, Conclusions, and Avenues for Future Research ..................... 113 Appendices ...................................................................................................................... 118 References ....................................................................................................................... 132 Curriculum Vitae ............................................................................................................ 146 v List of Tables Table 1: Philadelphia Neighborhood Map Legend ........................................................... 10 Table 2: Property Tax Collected 1999-2015 in $ millions ............................................... 64 Table 3: Abatement Changes ............................................................................................ 73 Table 4: Factor Analysis Results (rotated)........................................................................ 88 Table 5: Factor Analysis Results - Factor Loadings (rotated) .......................................... 89 Table 6: Descriptive Statistics .......................................................................................... 91 Table 7: Ordinary Least Squares Regression Results ..................................................... 105 Table 8: Two-Stage Regression Results - Stage 1 .......................................................... 107 Table 9: Two-Stage Regression Results - Stage 2 .......................................................... 109 Table 10: Strength of Instrumental Variable Model ....................................................... 110 vi List of Figures Figure 1: Philadelphia Neighborhood Map......................................................................... 9 Figure 2: Philadelphia Tax Abatement Heat Map 2000-2010 .......................................... 12 Figure 3: Hypothesis 1 ...................................................................................................... 29 Figure 4: Hypothesis 2 ...................................................................................................... 30 Figure 5: Theoretical Model ............................................................................................. 31 Figure 6: Total Methodology Framework........................................................................