Tax increment financing
The original intent of a TIF program is to stimulate private investment in a blighted area that has been designated to be in need of economic revitalization.
If the projects are public improvements paying no real estate taxes, all of the repayment will come from the adjacent properties within the TIF district.
The completion of a public or private project can at times result in an increase in the value of surrounding real estate, which generates additional tax revenue.
TIF was designed to channel funding toward improvements in distressed, underdeveloped, or underutilized parts of a jurisdiction where development might otherwise not occur.
[5] Tax increment financing was first used in California in 1952 and there are currently thousands of TIF districts operating in the US, from small and mid-sized cities to large urban areas.
to consider tax increment financing: lobbying by developers, a reduction in federal funding for redevelopment-related activities (including spending increases), restrictions on municipal bonds (which are tax-exempt bonds), the transfer of urban policy to local governments, State-imposed caps on municipal property tax collections, and State-imposed limits on the amounts and types of city expenditures.
Considering these factors, many local governments have chosen TIF as a way to strengthen their tax bases, attract private investment, and increase economic activity.
With successful revitalization comes gentrification with higher property values and taxes, and the exodus of lower income earners.
[17][18] Successful city revitalization can't be achieved by megaprojects alone—signature buildings, stadiums or other such concentrated development efforts.
Written by staff writer Ben Joravsky, the articles are critical of tax increment financing districts as implemented in Chicago.
[3] Currently, the 2nd largest TIF project in America is located in Albuquerque, New Mexico: the $500 million Mesa del Sol development.
At that time new TIF subsidized projects under consideration included the "redevelopment of the old Gates Rubber Factory complex at I-25 and Broadway, and the realization of Denver's ambitious plans for the downtown Union Station area.
"[2]: 6 Denver's urban landscape was transformed from 1995 through 2005 through TIF-subsidized projects such as "the landmark resurrection" of the Denver Dry Goods building, the Adams Mark hotel, Denver Pavilions, and REI flagship store, Broadway Marketplace shopping area and the demolition of the old Woolworth's building, the relocation and expansion of Elitch's into the Six Flags Elitch Gardens Amusement park, the redevelopment of Lowry Air Force Base and the redevelopment of the old Stapleton airport – "the largest urban infill project in the nation.
In 2005 the "diversions of tax revenue to pay for TIF subsidies [represented] an annual cost of almost $30 million to Denver taxpayers, and [were] rising rapidly.
"[2]: 2 Cities use TIF to finance public infrastructure, land acquisition, demolition, utilities and planning costs, and other improvements including sewer expansion and repair, curb and sidewalk work, storm drainage, traffic control, street construction and expansion, street lighting, water supply, landscaping, park improvements, environmental remediation, bridge construction and repair, and parking structures.
While arrangements vary, it is common to have a city government assuming the administrative role, making decisions about how and where the tool is applied.
If the project is moderately successful, this would mean that a good portion of the expected annual tax revenues (in this case over $2,000,000) would be dedicated to other public purposes other than paying off the bond.
[4] In April 2012, it was proposed that the Alberta government change regulations so that the Community Revitalization Levy (CRL) could be applied to remediation costs "incurred by a private developer.
"[4] The designated levy zone for the Rivers District CRL is wider than the East Village, making it financially sound since it collects taxes for twenty years on its anchor building, the 58-storey Bow tower, and from developments in nearby Victoria Park (Calgary).
Local politicians expressed concern about the funding model, which proposed that the city would front between $440 and $690 million of the projected cost, most which would only be recouped over a long period of time.
"[4] As of 2015, Toronto's mayor John Tory plans on creating a levy zone to finance a C$2.7 billion SmartTrack surface rail line project spanning 53 kilometres.
