Wednesday, September 19, 2007

JG Editorial Misleads Readers About TIF Districts

There are a couple of points I want to quibble with in the JG's editorial about TIF districts. First they tell readers that TIF districts are not going to cause less money to go into the city's general fund:
Q. Does that result in less money going to the city’s general fund, schools and other uses?

A. No. Kelty suggested as much, saying, “We don’t have enough money to refurbish our schools, but we have enough money to build a duplicate baseball stadium.” Actually, taxpayers could have chosen to provide the money to refurbish Fort Wayne Community Schools and declined.

This is wrong. Of course TIF districts cause less money to flow into the general fund. By definition they sequester all the money from improvements within the district and use it on projects related to the district. The only way one can argue the JG's position is if they believe that development would have never occurred over the life of the TIF - 30 years. That is highly unlikely.

Kelty seemed to be criticizing this point but also described them as a “valuable economic development tool.”

They are. Say a new factory wants to move into the city. The government can create a TIF district, borrow money to build a road to serve the factory, then repay the bond from the taxes the TIF district generates. Only the factory, not all property owners, pays for the road. And keep in mind that without the road the TIF district made possible, the factory might build elsewhere, so there would be no new factory to generate new taxes.

Fort Wayne TIF districts account for about 3 percent of the city’s taxable property value, generating about $8.5 million in tax revenue – all of it going for projects that other property owners do not have to finance.

Using TIF districts in the scenario presented here might be a nice use but that's not what we have with Harrison Square. There is absolutely no data to suggest that any significant number of quality jobs will be created due to this project. It's been a hand-waving argument from the beginning - somehow building a baseball stadium, hotel and a national chain restaurant will cure our economic development woes. Again, highly unlikely.

Also, the 3% number the JG uses is pre-Harrison Square. The JG says that TIFs should not be overused but what constitutes overuse? Much of the city's recent significant development has been done using TIFs. As I told the city council if we continue down this path we're going to have all these nice revitalized sections of the city with nobody left to pay for basic services...

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