Fiscalization of Land Use (FOLU)

a term used especially in California after the 1978 Proposition 13, to describe local governments making land-use decisions based on what is expected to generate higher tax revenues. In particular, favoring commercial development, which produces sales tax revenues, over residential development, which generates more limited property tax revenues due to Prop 13. This dynamic is considered one driving force of the widening housing deficit in California since the 1970s.

While the phenomenon may be often attributed to or associated with Proposition 13, in in a general sense it may occur anywhere where land-use decisions have fiscal impacts on the government body making the decision. Local governments have long sought to attract and retain key revenue-generating activities such as markets and factories. Pendall [1999] notes: "Fiscal impact studies tend to show that most housing types generate less property tax revenue than they demand in local services (Livingston and Blayney 1971; Hughes 1974; Commonwealth Research Group, Inc. 1995)."

In American Babylon, a history of 20th-Century East Bay San Francisco, the author discusses cases of the new suburban towns south of Oakland deliberately attracting major industrial tenants and limiting housing, in order to promise residents the lowest property tax rates possible. [citation needed].

References

Misczynski, D.J. (1986). "The fiscalization of land use." in: J. J. Kirlin and D. R. Winkler (Ed.) California Policy Choices.
Pendall, Rolf. 1999. “Opposition to Housing: NIMBY and Beyond.” Urban Affairs Review 35 (1): 112–36. https://drive.google.com/open?id=1pt6_CKnturB0dJn1lO-oFaWPlCDDQ4Sq.