Matt Yglesias’ proposal for reforming DC’s ANC’s

At the risk of turning Market Urbanism into Reblogging Matt Yglesias, here’s another interesting post from the blogosphere’s most famous market urbanist about reforming DC’s Advisory Neighborhood Commission (ANC) system. After discussing a recent decision by an ANC incumbent to deny Five Guys permission to open up a sidewalk cafe in an otherwise barren area until they pay up for “other community initiatives,” he claims that the problem isn’t necessarily shortsightedness vis-à-vis development, but rather “an error of institutional design”:

Advisory Neighborhood Commissions don’t have very much power or very much responsibility. But they do have a lot of power over liquor licenses, sidewalk cafes, and zoning variances. ANC members, however, have views on things other than liquor licenses, sidewalk cafes, and zoning variances. So the most reasonable way for them to achieve a diverse set of policy goals is to adopt a very stringent attitude toward liquor licenses and sidewalk cafes, and to support very restrictive zoning rules that increase the value of variances, and then to trade permission to do business for other kinds of favors.

If a fixed portion of retail sales taxes raised in a given ANC were put into a neighborhood fund controlled by the commissioners, then I bet commissioners would suddenly be less interested in swaps of these sorts and more interested in attracting businesses to their area. But instead we’ve set up ANCs in a way that encourages them to be systematically biased against just saying “yes” to local retailers.

Practical politics are not my forte, but this sounds like it could be a good idea. If it would work, I like the idea of essentially standardizing the community bribe and having it be paid in fungible money rather than less efficient in-kind donations (more parking, inclusionary zoning, etc.).  I would suppose that the system would work best if applied extremely locally, so that merchants/residents know they will directly benefit and the money wouldn’t be spent funneled into a general fund for the entire city, like it is now. In this respect, Yglesias’ proposal might have a chance in DC, since ANC’s only cover a few small neighborhoods each.

But one fear that I have is that rather than standardizing the development contribution around the current level, it would just set the bar for contributions a bit higher, with commissioners demanding further concessions on top of the tax. (Another fear that I have is that the city wouldn’t be willing to give the ANC’s money from their share, and so the tax rate would rise overall, but if this replaces the de facto taxes that ANC’s currently levy, it could be worth it.) I realize that Matt Yglesias’ argument is that they would be less likely to ask for more since they’d have a fiscal stake in the project already, but it’s possible that government officials wouldn’t act so rationally, and that they are perhaps more motivated by an overaching anti-development attitude rather than by extra revenue. And even if they are in it for the money, they might simply just not realize what side of the Laffer curve they’re on.

I should note that Yglesias’ proposal sounds similar to Donald Shoup’s idea (or did it start before him?) of on-street parking revenue being put towards a “parking benefit districts” – essentially bribing merchants and residents into allowing meter rates to rise towards a market rate by giving them the extra money collected. I know that Shoup’s ideas have been catching on, but that’s not necessarily because of the local reinvestment of the meter revenues, and I don’t even know how prevalent parking benefit districts are (commenters?).

So what do you guys think – would giving money to ANC’s make them more development- and density-friendly?