Good Jobs First today released a new in-depth article about the nation’s most controversial kind of economic development subsidy – “TIF, Greenfields, and Sprawl” – just published in Planning and Environmental Law, a journal of the American Planning Association.
See it on our
The article includes a segment on the most notorious current TIF dispute in the nation: in New Mexico, where radical TIF deregulation threatens to undermine funding for state and locally funded public services.
ARTICLE SUMMARY: Tax Increment Financing (TIF) is an economic development incentive tool funded by diverting the incremental increase in property and/or sales tax created by redevelopment or new development within a geographically defined TIF district.
As originally enacted in most states, TIF was intended to reverse private-sector disinvestment in older, urban areas with physical “blight” or contamination, so its use was not widespread. However, over the past three decades, some states have loosened their TIF-targeting criteria; in other states, courts have granted localities wide latitude in defining “blight.” In the same decades, federal aid to cities declined, and some states enacted legislation or ballot initiatives causing “fiscalization of land use,” or a tax base-driven distortion of local governments’ development priorities.
For all these reasons, TIF is now increasingly associated with “greenfield” or sprawling projects, including big-box retail. A few retail chains have become especially aggressive seeking TIF, such as Cabela’s, the outdoor sporting goods company. And a mixed-use new urbanist project by the partnership Forest City Covington on the edge of Albuquerque will benefit from a very large TIF tax diversion.
Because such applications are so far astray from TIF’s original pro-urban mission, and because TIF often diverts large amounts of revenue for many years from other bodies of governments—especially counties and school boards—it has become the United States’ most controversial economic development subsidy.