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
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.
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.
This discussion will follow the California redevelopment process ( California Debt Advisory Commission, 1995). Other states typically follow this same process.
This debt can be issued by the local agency without a vote of the populace.
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.
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
For example, in California, the Community Redevelopment Act specifically only authorizes the establishment of redevelopment agencies to address the effects of blight.
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.
Other popular incentives include streamlining building permits, waiving some regulations
and allowing the formation of development agreements.
These are separate and in addition to the interjurisdictional consequences.
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.
The 'new and rehabilitated construction' and 'job creation' numbers are self-reported by
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Local Government Tax and Land Use Policies in the United States:Understanding the Links.
Contributors: Helen F. Ladd - Author, Lincoln Institute of Land Policy - OrganizationName.
Publisher: Edward Elgar.
Place of publication: Cheltenham,UK.
Publication year: 1998.
Page number: 196.
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