Tax Increment Financing -- better known as TIF -- is the city's major financial tool for encouraging the redevelopment of neighborhoods -- and a frequent topic of controversy.
TIF is used to pay for public improvements and for developer assistance is specified districts. The city pays up front for the work then recaptures the money from the new property taxes generated by the new development. When the improvements and subsidy are paid back, the district is dissolved and all the taxing bodies share in the increased property taxes generated by the new development.
Controversy enters the picture if the city and developer disagree over how much subsidy is required for the project to succeed -- or if other developers complain about their competitors receiving aid when they don't.
This week, Isthmus asked the mayoral candidates about changing TIF policy.
How should the city revamp its tax-incremental financing policy?
We need to improve the tax-incremental financing (TIF) policy in a way to ensure that it's applied consistently, and that everybody knows the rules up front. We also need to be realistic in how we budget TIF. Right now, only $5 million is budgeted for TIF, even though the city spends over $20 million.
But after the $5 million that was budgeted has been spent, every TIF proposal must receive a super majority vote by the Common Council. This adds another layer of political bureaucracy to the process.
We also need to understand that the purpose of TIF is to revitalize blighted neighborhoods, and we need to be more conscious in where we invest our resources. TIF can change the dynamics of an area and can help stabilize a neighborhood, but only if it's used wisely. Part of fighting crime and poverty includes identifying areas for TIF investment, such as Allied Drive and other challenged neighborhoods.
The city should proactively identify these areas and solicit proposals, rather than wait for developers to approach the city with proposals.
We should focus TIF on its original intent, which are public infrastructure improvements in blighted areas. We have primed the pump enough for downtown housing development.