"What causes sprawl? Urban experts cite many factors. ... But another important factor [sic] are economic development subsidies like tax increment financing (TIF) and enterprise zones that have gone awry and are being abused in ways their creators never intended. In essence, taxpayers buy sprawl with the following types of subsidies.
--TIF is an arrangement in which a portion of the property tax associated with a redeveloped property is diverted into a subsidy for the developer. ... [O]ver the years, about a third of the states have loosened their TIF rules, so that even affluent areas qualify. The wealthy Chicago suburb of Lake Forest, for example, has a TIF district--and a Ferrari dealership! Pennsylvania's TIF statute allows a trout stream near Pittsburgh called Deer Creek to be TIFed because the land has "economically or socially undesirable land uses."
"--Enterprise zones, another geographically targeted program originally intended to help poor inner-city areas, have also been weakened in many states so that affluent areas can grant lucrative zone subsidies. New York, for example, allows zones to be gerrymandered non-contiguously. As a result, Buffalo's two original enterprise zones have morphed into more than 130 non-contiguous areas, thus raising questions about favoritism. A scathing Buffalo News investigative series found that "[t]he program, crafted to create business in distressed areas and jobs for the down-and-out, has transmuted here into a subsidy program for the up-and-in."
Also of interest, though a couple of years old, is this study (pdf), which showed that Wal-Mart:
...the giant retailer has received more than $1 billion in economic development subsidies from state and local governments across the [US]. Taxpayers have helped finance not only Wal-Mart stores, but also the company's huge network of distribution centers, more than 90 percent of which have gotten subsidies.