vest large amounts of mo^e+• fo: such think ~ as. ~i -front
<br />cash to start the project, a reali<'ic plan, cct^'-ac is ~~:th
<br />reputable developers, the sale o: ;-~unlc;pa' r'OnG` ar.G c
<br />dedicated follow through--all before am• real results are
<br />seer..
<br />It is also a mistake to assume that TIF is the only source
<br />of subsidies that your city tia•ill need. As interest ; ales have
<br />shot into double digits, the capitalized value of TIF
<br />revenues has fallen. For instance, ~'h ~~00~ OOOt m t annual
<br />about seven percent, a projected
<br />revenues for the trust fund could be capitalized by a bond
<br />sale of about 52.5 million. h1'ith interest rates now at 14
<br />percent, a bond sale may yield only 51.3 million. If a city
<br />~+•as hoping to use that 52.5 million to finance a 400-car
<br />parking garage, it will novr need to find 51.2 million from
<br />some other source.
<br />What to do? Start looking at such federal programs as
<br />UD.AG, Community Development Block Grants, or in-
<br />dustrial 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 tirith tax
<br />increment financing will turn out to be just puppy love.
<br />Where Do I Do It?
<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, b}r all means get some in-
<br />troduced and enacted.
<br />Enabling legislation will establish the ground rules for
<br />the location of TIFs. Most 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," v+•hen it's possible to get the legislature to call it an
<br />"enterprise district"?
<br />Most state legislation will require that the districts where
<br />TIF is used are marked by deteriorated, dangerous, or
<br />unhealthy 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 o~+'nership (or any defec-
<br />tive or unusual title conditions that prohibit an easy
<br />assemblage of land}.
<br />It ovill be up to individual cities to make a finding of
<br />these conditions, based on sound evidence. Although such
<br />a finding is legislative in nature, it must be reasonable and
<br />not arbitrary. Evidence must be carefully marshalled and
<br />The F.45.4Semo is a monthly publication for suhscrbers to the Ptannirg Advisory
<br />Service. a s:wbscription research service of the .4me:ican Planning Pssociation:
<br />lsrae: S:e1;-:-.an. Eseuu!ive Director; Frank S. So. Dee uh• Executive Director. David
<br />R 1^~raa, Director of Re~eareh.
<br />Th<_ F.=.j.`.:~mo is produ:ed a: APA: Syh~ia Le~~i~. rc^:,ca!ionsDuecto:, Grgon'
<br />!.cats:ini, Tho^..as P. Scni:F.. Editors; 3a^'~es Peters, r+d^;e Ro:hblaa, ,,is~a:ant
<br />GGI:OrS.
<br />entered into the offi::a, recc~rc T hip careful and profes-
<br />sional approach bet:ir- ~..:~:^~ the determination of ~+~here
<br />to locate the TIF district..A ~+-ell-supported and ~+•ell-
<br />reasoned finding ~+-ili dote: mine the tone and direction for
<br />everything that follo~+'s.
<br />The boundaries for the district do not have to be dray+'n
<br />like a piece of s~+'iss cheese.. ~+•ith a parcel excluded here and
<br />there because it down"t happen to be deteriorated. A sound
<br />building or parcel ma}~ be included within a TIF area, and
<br />perhaps even condemned, if it is necessar}' to the overall
<br />redevelopment of the area. On the other hand, a TIF
<br />district may not arbitrarily 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 im•estment to get the TIF cycle started.
<br />Therefore, it's a good idea to have some market analysis
<br />made early in the process. Parcels that have market poten-
<br />tial must be included in the district. Otherwise, your city
<br />will 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. ~~'ith some variation among
<br />states, the following steps should be taken:
<br />1. Creation or appointment of a redevelopment
<br />agency. The cit}' council, in some cases, actually
<br />maybe the redevelopment agency .The question of
<br />whether to create a new agency or appoint the city
<br />council is one that should be v~~eighed 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 v`'e in-
<br />dicated in the section "Where to Do It", these
<br />findings must be vaell supported, including both the
<br />conditions that require redevelopment and a
<br />reasonable potential 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 neHr 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. 1n 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 />~. Adoption of an official redevelopment plan. This
<br />Copyright _ 1?53 by American P;an^.ir.g Association. 1313 E. 60th St., Chicago,
<br />1L 60631. The American Ptaar.ing Also=ia!ion has headq;:a:tets offices a! 1776
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