Thu 14 Dec 2006
Streetcars: tax increment financing
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Tax increment financing or “TIF” is one of a number of tools needed to finance a streetcar line on Central. If a public project such as developing a streetcar line on Central was carried out, we can assume property value in the surrounding real estate would increase and underutilized land along the line would be developed also. As a result of the development, the tax base would increase. The increased revenue or the increment, the “I” in “TIF”, would be used to finance a portion of the debt incurred.
In the December 6, 2006, issue of the Northeaster Margo Ashmore writes, “The city would use tax increment financing (TIF), a tool in which the services (schools,etc.) that benefit from increased property taxes from development forego those dollars for several years while the “increment,” the difference, pays off the development project. Such arrangements are often used to entice developers to start something in a blighted area.”
On one hand, it is true that once the development happens and the tax base increases, services do forego the benefit from the increased tax revenue but on the other hand it is important to note; (a) the largest increase in tax revenue comes from private development, the private development is spurred by the public development, the public streetcar line wouldn’t be developed without the “TIF” (b) services do recognize the gain albeit delayed.
More information on tax increment financing is available at…
City of Minneapolis TIF Policy
More information
More funding tools to come!
Originally posted by Kurt Nowacki on the old LiveNE blog
