Embedding futurity in urban governance: Redevelopment schemes and the time value of money

Abstract

Whether appraising development projects or underwriting bonds to finance infrastructure, municipal governments rely on “time value of money” (TVM) techniques to discount and convert hypothetical future cash flows into objects of knowledge in the present. I analyze these calculative techniques through participant observation and interviews with professionals involved in redevelopment projects funded by Tax Increment Financing (TIF) in the Midwestern United States. I find that the TVM assumptions used in models to estimate future values help embed financialized modes of futurity into governance, leveraging the tax base for entrepreneurial urbanism. I describe the contexts in which these techniques are used and, drawing on the literature on the social construction of value, the future imaginaries they perform. I explain why the local state adopts the private sector’s low discount rates and the material effects of this mimicry: inflated estimates of future property values, which are capitalized into larger amounts of public subsidy and, possibly, higher actual values. Future values are also the basis for co-rent-seeking, whereby the state attempts to repay debt on infrastructure through the production of surplus value in land. With institutional support, the techniques and assumptions underpinning these land value capture strategies intensify development and create a reinforcing spiral of asset appreciation.

“Revenue Generating Machines”? London’s Local Housing Companies and the Emergence of Local State Rentierism

“…By adapting to and participating in a political economy of rentierism, local housing companies represent a form of local statecraft in which “future asset values are a critical focal point for urban governance” (Weber 2021:504) prioritised over concerns to satisfy social need. As such, urban managerialism is not displaced by but is made contingent on the local state acting, at least in part, as a financial landowner and successfully monetising land.…”

“They had already sold”: Uncovering relations among the local state, the market and the public in the case of municipal housing privatization in Rosengård, Sweden

“…Recent writings on local state power (of which some are referenced above) situate the urban politics of late entrepreneurialism within variegated geographies (e.g. Beswick and Penny, 2018;Ormerod and MacLeod, 2018;Penny, 2021;Weber, 2021). This body of work emphasizes how local governmental bodies and actors are embedded in the wider political economy, internalizing social conflicts and contradictions while simultaneously pushing for certain place-bound interventions.…”

“…In the U.S. context, Peck and Whiteside (2016), among others, address the deep ties between local public bodies and (financial) markets (see e.g. Weber, 2021). Moreover, Belotti and Arbaci (2020) explicate how social housing providers in Italy undertake financial innovations, and Deruytter and Bassens (2021) highlight how Flemish municipal cooperatives internalize debt, while extending local statecraft.…”

Planning Just Futures

“…Indeed, the future city is crowded with the speculations of architects, developers, appraisers, residents, neighborhood groups, and investors, among others. These actors share many of the same predictive tools and rely on similar assumptions about time, embedded in devices like discount rates (Weber, 2020). They are influenced by popular trend-watchers and consulting firms, who, as modern day prophets, harmonize diverse imaginaries into more uniform and influential expectations (Linovski, 2019;Powers, 2019;Weber, 2019).…”