Local Government Tax and Land Use Policies in the United States: Understanding the Links

By Helen F. Ladd; Lincoln Institute of Land Policy | Go to book overview

to this mix, as has occurred when the state became involved with property tax distribution and education, the distribution of the increment presents a nearly intractable problem.

To prevent these problems, legislation must be enacted to ensure that TIF is used appropriately. The California case study indicates that this legislation must be continually examined for appropriateness. In California, blight is now defined in a series of complex statutes, penalties for not replacing housing are significant, and interjurisdictional fiscal flows are set by formula. But even in this case, redevelopment agencies are still searching for exceptions. 27

TIF can be a desirable tool if it is correctly monitored. The project can generate a revenue stream that can be turned into a self-financing instrument. But it only works correctly if it is carefully planned, monitored and implemented under the light of public scrutiny.


NOTES
1.
TIF was later expanded to finance the construction of affordable housing for low and moderate income residents, in itself a controversial activity ( California State Senate Committee, 1996).
2.
This discussion will follow the California redevelopment process ( California Debt Advisory Commission, 1995). Other states typically follow this same process.
3.
This debt can be issued by the local agency without a vote of the populace.
4.
This debt is not automatically tax-exempt. However, careful structuring of the issue and definition of purpose enables the issuing agency to make the debt exempt.
5.
In reality, this almost never happens.
6.
For example, in California, interest income and grants made up nearly 17 per cent of redevelopment agency revenues in 1992-93 (California State Controller, 1995; Beatty et al., 1994).
7.
According to Forgey ( 1994), only 10 per cent of the districts have revenues that fall short of covering project costs by more than 5 per cent.
8.
Positive externalities also occur in the case of successful redevelopment. Their existence can be used to explain partially why additional sources of revenue are used in these redevelopment projects.
9.
For example, in California, the Community Redevelopment Act specifically only authorizes the establishment of redevelopment agencies to address the effects of blight.
10.
It might also be that some redevelopment is designed to chase low income service demanders out of the area and therefore ease fiscal stress from the demand side.
11.
California State Senate Committee on Local Government ( 1989). Remember that the overlapping jurisdictions have no control over the size of the project or the amount of debt that is issued. The debt service determines the necessary increment.
12.
Other popular incentives include streamlining building permits, waiving some regulations and allowing the formation of development agreements.
14.
These are separate and in addition to the interjurisdictional consequences.
15.
Since most urbanized land in California is in the incorporated cities, TIF is used less often by counties — 24 out of the 58 counties have their own redevelopment agency. Sacramento and San Francisco have joint city-county agencies.
16.
The 'new and rehabilitated construction' and 'job creation' numbers are self-reported by the agencies.

-196-

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Local Government Tax and Land Use Policies in the United States: Understanding the Links
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Figures vii
  • Tables viii
  • List of Contributors x
  • Acknowledgements xiii
  • Lincoln Institute of Land Policy xiv
  • 1. Introduction 1
  • Notes 21
  • References 21
  • Part I - Interactions Between Tax and Land Policies 23
  • 2. Theoretical Controversies: Land and Property Taxation 25
  • Notes 38
  • References 39
  • Notes 48
  • References 48
  • References 53
  • 3. Land Use Regulation as a Fiscal Tool 55
  • Notes 72
  • References 72
  • Notes 80
  • References 81
  • 4. Effects of Taxes on Economic Activity 82
  • Notes 99
  • References 99
  • Notes 107
  • Notes 115
  • 5. Tax Policies to Promote Economic Development 116
  • Notes 128
  • References 129
  • Part II - Tax Policy as a Land Use Tool 131
  • 6. the Pittsburgh Experience with Land- Value Taxation 133
  • Notes 141
  • References 142
  • 7. Property Tax Treatment of Farmland: Does Tax Relief Delay Land Development? 144
  • Notes 157
  • References 159
  • 8. Incentives, Firm Location Decisions and Regional Economic Performance 168
  • Notes 180
  • References 180
  • 9. Tax Increment Financing as a Tool of Redevelopment 182
  • Notes 196
  • References 197
  • Part III - Fiscal and Distributional Impacts 199
  • 10. Fiscal Impacts of Business Development in the Chicago Suburbs 201
  • Notes 212
  • References 214
  • Appendix 215
  • 11. Who Pays Development Fees? 218
  • Notes 231
  • References 233
  • 12. Regional Tax Base Sharing: the Twin Cities Experience 234
  • Notes 251
  • References 253
  • Index 255
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