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+ +•esl large amounts of mone+• tr~r ~u~h thing as. ~c~-front
<br />czsh to start the project. areal.='ic plat.. cc~^'ract< <ti;th
<br />reputable developers, tie ~a1e c•::^unir,r a:: c~nd~ a.^.d a
<br />dedicated follv~+• through--all berore am• real results are
<br />seer,.
<br />It is also a mistake to assume that TIF is the onl}• source
<br />of subsidies that.}'our~i~t' >,+•ill need. As interest rates'r,ave
<br />shot into double digits, the capitalized value of T1F
<br />revenues has faller.. For instance, vrhen interest rates were
<br />about seven percent, a projected .5200,000 in annual
<br />revenues for the trust fund could be capitalized b}• a bond
<br />sale of about. 52.5 million. 1~'ith interest rates no~• at 14
<br />percent, a bond. sale ma.' }•ield only 51.3 million. if a city
<br />was hoping to use that 52.5 million to finance a 400-car
<br />parking garage, it Hill no~~• need to find 51.2 million from
<br />some other source.
<br />1~'hat to do? Start looking at such federal programs as
<br />UD.AG. Community De~•elopment Block Grants, or in-
<br />dustzial development bonds; state programs if you have
<br />them:. and more money from users or developers. Be
<br />prepared for the long haul; or your infatuation ~+•ith tax
<br />increment financing will turn out to be just puppy love.
<br />V1,rhere Do I Do lt?
<br />Those states that permit tax increment financing do so
<br />through enabling legislation. If your state does not have
<br />enabling legislation for TIF, by all means get some in-
<br />troduced and enacted.
<br />Enabling legislation ~+•ill establishthe ground rules for.
<br />the location of TIFs. tilost state legislation says that a TIF
<br />must be in a "slum" or'blighted" area, or in a '"redevelop-
<br />- ment'• or "enterprise" district.-The need to correct the con-
<br />ditions in these areas supplies the public purpose for tax
<br />increment financing: However, if you have anything to do
<br />with drafting this legislation, make sure that terms like
<br />redevelopment or enterprise district are used instead of
<br />slum or blighted area. why give a redevelopment project
<br />an additional stigma by officially calling it a "blighted
<br />area," ~+•hen it's possible to get the legislature to call it an
<br />'"enterprise district"?
<br />'+4ost state legislation will require that the districts where
<br />TIF is used are marked by deteriorated, dangerous, or
<br />unhealth}• conditions. Besides the more obvious physical
<br />or social manifestations of these conditions, the enabling
<br />legislation may find it necessary to provide for the allevia-
<br />tion of:defective street layouts; faulty lot layouts (in rela-
<br />tion to size, adequacy, accessibility, or usefulness); tax
<br />delinquency; and a diversity of ownership (or any defec-
<br />tive or unusual title conditions that prohibit an easy
<br />asemblage of land).
<br />It v`•ill be up to individual cities to make a finding of
<br />these conditions, based on sound evidence. Although such
<br />a f ind•,ng is legislative in nature, it must be reasonable and
<br />not arbitrary: Evidence must be carefully marshalled and
<br />entered into the offi..e rrcrrd. This careful and protes-
<br />sional approach hegi^- duct^s. the determination of ~~ here
<br />to locate the T1F distract. :~ ~~•e11-supported and ~+~ell-
<br />reasoned finding ~~~ill determine the tone and direction for
<br />everything that follows.
<br />The boundaries for the district do not have to be dray+•n
<br />like a piece of s~ciss cheese, ~+'ith a parcel excluded here and
<br />there because it doesn't had i,en to be deteriorated. A sound
<br />building or parcel ma}• be included ~+•ithin a TIF area, and
<br />perhaps even condemned. if it is necessary to the overall
<br />redevelopment of the area. On the other hand, a TIF
<br />district may -not arbitrarih• reach out to include sound
<br />areas just to enlarge the tax base.
<br />An implicit condition of TIF-one that is sometimes
<br />overlooked-is the market potential of the district.. If there
<br />isn't a market for development, then there won't be enough
<br />potential private investment to get the TIF cycle started.
<br />Therefore, it's a good idea to have some market anal}•sis
<br />made earl.' in the process. Parcels that have market poten-
<br />tial must be included in the district. Otherwise, your city
<br />~+•ill find itself giving a party to which nobody comes.
<br />How Do I Do It?
<br />Let's start with the assumption that your state already
<br />has TIF enabling legislation. l~'ith some variation among
<br />states, the following steps should be taken:
<br />1. Creation or appointment of a redevelopment
<br />agency. The city council, in some cases, actually
<br />may be the redevelopment agency. The question of
<br />whether to create a ne~• agency or appoint the city
<br />council is one that should be weighed carefully and
<br />dispassionately, and should reflect the individual
<br />conditions of each city..
<br />2. An official finding of the need for redevelopment,
<br />and a delineation of the project area. As we in-
<br />dicated in the section "la'here to Do It", these.
<br />findings must be ~+•ell supported, including both the
<br />conditions that require redevelopment and a
<br />reasonable poten±ial to actually do so.
<br />3. Start-up and staffing of the redevelopment agency.
<br />The first question is ~+'hether to use. existing staff or
<br />to hire new staff. In order to-make this decision, the
<br />agency must first define its objectives so that it can
<br />find the staff most competent to achieve those
<br />objectives.
<br />4. Creation of the redevelopment trust fund that will
<br />receive all future tax increments. In order to avoid
<br />possible litigation, this step needs to be coordinated
<br />and approved by all the taxing authorities that will
<br />contribute to the trust fund.
<br />5. Adoption of an official redevelopment plan. This
<br />• ""' " ""~~~ - 7313E trC''t' sc Chicago
<br />The F.?5'~'.-rno is a morthl}' p;:F!ication for seFxr.!+ers to the Pfannirg Adrisory
<br />Sr-; ice. a •c5scrip::on resE arch ser~•ice of the .4:rerican Pia:in:ng °<sc+c~a:ion:
<br />1•.aE' e'o:!-:-.an. E~erv:is~e Dir,-c:or. Frank 5. So. D:,^ctc Exectaire D.; ec;or: Das•id
<br />R .. -rr.a. ~urcwr of Fesearch.
<br />'`,r i :'._ ..:. mo ig r-c.d-a:.•d a• .=..°A~ Sy'.~':a Le~ci>. Pc^::ca:.ens D:rrct~r C:,~gon~
<br />Ti.: ^as P c;r'•h Ed.:on; la:-es f e':N.S. AGrC.E Fo:hbla:;. A•~a:<ai
<br />
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<br />CoP}•right _ :9E3 by .4rrrncan P.ar.^r.^.g .Assocuhon. ••
<br />It. P~63i. The %.^rri<ar Plac.r.rg t<. ,c;at:can has heacc::ar;rrs e:!ices at 1776
<br />\tassa.:F.•_se's Acr_ \.1+'.. l•,:a~-irr'on DC ?~36.
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