Subsidizing Local Economic Development Through Tax Increment Financing

Stinson, Thomas F.

doi:10.1111/j.1541-0072.1992.tb00152.x

Cited by 11 publications

(6 citation statements)

References 2 publications

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“…Huddleston (1986) determined that some overlapping jurisdictions in a small sample of Wisconsin municipalities had to apply much higher property tax rates than they would have in the absence of TIF. Stinson (1992) found that few TIF districts in a sample of municipalities in southern Minnesota were able to generate enough gains in property tax revenue to compensate for the amount that they captured from other jurisdictions. Lehnen and Johnson (2001) assert that school districts must increase their tax rates to maintain revenue diverted by TIF, but they do not test this hypothesis in a statistically appropriate manner.…”

Section: The Impact Of Municipal Entrepreneurialism On Other Taxing Jurisdictionsmentioning

confidence: 99%

Equity and Entrepreneurialism

Weber

2003

Urban Affairs Review

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How do the socially reproductive functions of local government fare within municipalities that adopt “entrepreneurial” economic development practices? This article examines the case of tax increment financing (TIF), a quintessentially entrepreneurial strategy whose use has significant fiscal implications for the overlapping taxing jurisdictions that provide these functions. Statistical analysis of TIF's impact on the finances of school districts in Cook County, Illinois, reveals that municipal use of TIF depletes the property tax revenues of schools during the lifespan of the TIF district but that a portion of the budget shortfalls are relieved by increases in state school aid. Entrepreneurial policies can create conflict between taxing bodies unless higher levels of government take on some of the fiscal burden of these more redistributive functions.

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Section: The Impact Of Municipal Entrepreneurialism On Other Taxing Jurisdictionsmentioning

confidence: 99%

Equity and Entrepreneurialism

Weber

2003

Urban Affairs Review

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“…• • The tax increment finance district may divert substantial revenues from local school or park districts. Such jurisdictions may also be required to provide additional services as a result of development in the TIF (Huddleston, 1986;Lehnen & Johnson, 2001;Stinson, 1992;Weber, 2003). • • A concern that designation is used arbitrarily, without meeting rigorous standards for the allocation of tax revenues, that is, blight and necessity ("but for").…”

Section: Evaluation Literaturementioning

confidence: 99%

If All You Have Is A Hammer

Reese

2013

The American Review of Public Administration

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This research explores the relative effectiveness of a comprehensive set of local economic development incentives and focuses on two questions: What contributions do common development tools make to the economic health of municipalities?; and, Are there other types of local activities, not typically considered as development tools, that might be more effective in contributing to local economic prosperity? It finds that the factors most consistently and positively related to economic health are investments in the downtown, spending on basic local public services, and using no economic development incentives at all. These findings suggest one primary policy recommendation: the wisest course of action for most cities would be to eschew particularized development incentives, especially those that require tax expenditures. Keywords economic/community development, local and urban public administration/governanceThe old saying "if all you have is a hammer, every problem looks like a nail" is a good metaphor for how local economic development policy has been implemented in cities across the nation.Conceptions of what constitutes an economic development tool tend to be narrow. Most commonly, they focus on efforts to offset perceived disadvantages of a location (or to make an already attractive place more so). Combinations of subsidies and abatements to lower production costs for businesses constitute many economic development packages. 1 As a result, economic development policies tend to be highly path dependent; older tools continue to be used even while new ones are added.National surveys of local economic development practice over time, conducted by the International City/County Management Association (ICMA), show a relatively narrow list of tools and activities to be most common: collaboration between local governments and chambers of commerce; business surveys and calls on individual businesses; streamlined zoning and permitting processes; promotional and marketing materials; infrastructure investment; tax increment finance districts; and tax abatements (see Zheng & Warner, 2010). Thus boosterism, business input, and bonuses have long been the hammers of local development toolkits.

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“…Research on the use of TIFs for business development and downtown redevelopment has indicated that they tend to increase local revenues and reduce property tax rates generally through increased investment [93,94]. However, it may take many years for property value increases to pay off initial investments, and TIFs often cause overlapping tax jurisdictions, like school districts, to have to raise taxes to cover lost revenue diverted to the TIF [92,93,95,96].…”

Section: Tax Increment Financingmentioning

confidence: 99%

Sustainability and local economic development in Canada and the United States

Reese¹,

Sands²

2007

Int. J. SDP

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This article provides a description, summary, and analysis of representative efforts to deal with the challenges to sustainability that result from the predominant patterns of land use in the metropolitan areas of North America. Two broad categories of public policies are considered: management and control of peripheral growth and revitalization efforts to improve the competitiveness of older urban areas. Metropolitan efforts to achieve more sustainable development through management of new development tend to rely more on voluntary agreements that preserve local government autonomy than on regional collaborations. The regional approaches that have been implemented to date have had only limited effectiveness. Efforts to make older communities more competitive with greenfield development have focused on downtown revitalization, industrial location incentives, business incubators, and neighborhood revitalization. While most of these efforts are carried out by state and local governments, faith-based organizations have come to play an increasingly important role. Downtown and industrial revitalization initiatives frequently provide only limited benefits despite their high public cost. Business incubators and neighborhood improvement efforts appear to be more cost effective strategies. On balance, the lack of political will and the preferences of households and businesses for new, low-density developments are likely to continue to foster unsustainable forms of urban development in most North American urban areas.

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Subsidizing Local Economic Development Through Tax Increment Financing

Cited by 11 publications

References 2 publications

Equity and Entrepreneurialism

Equity and Entrepreneurialism

If All You Have Is A Hammer

Sustainability and local economic development in Canada and the United States

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