Does private financing of infrastructure induce or inhibit urban growth

Proposition 13 constrained local governments in California from raising property tax rates. Local governments responded by implementing private infrastructure finance methods to recover lost tax revenue and to maintain existing levels of public services. The use of private infrastructure finance techniques has generated a controversy over whether certain methods induce or inhibit urban growth. Some contend that new development "paying its own way" has made the development process so expensive, that fewer units are built. The alternative argument views private finance methods as growth inducing; these finance methods provide public facilities which support additional development.;A trend analysis tested the net effects of finance method implementation on new single-family detached unit completions of 26 cities in Los Angeles County. Net finance method effects were also analyzed with annual population density and population growth in each city. When viewed irrespective of jurisdiction, finance method coefficients did not display consistent signs; a variety of net effects were observed for the same methods. However, when jurisdiction was considered, net finance method effects were consistent within most cities. Net positive finance method effects were observed in rapidly growing cities. Cities with net negative effects had comparatively slower rates of population growth.;The dissertation concludes that net positive or negative finance method effects reflect a city's growth characteristics; finance method costs can be levied in relation to benefits to promote or discourage development and their net effects can also be influenced by local market conditions. This implies that cities may implement finance methods in light of local growth prospects. A future analysis with finance methods treated as endogenous variables is suggested.;This analysis asserts that the market responds to both costs and benefits of private financing. Any effects, whether positive or negative, are net effects: the difference between costs versus benefits associated with infrastructure. Net positive effects signify a positive difference between the benefits provided by infrastructure and the associated costs imposed on new development. Net negative effects indicate that benefits provided by a new capital facility fall short of the costs levied by a jurisdiction.