Advantages/ Disadvantages of TIFs

Does TIF work?

One problem with TIF programs has been the ability to commit a community to debt liability outside the normal structure of decision-making. Although not a big problem in most cases, the legal and financial uncertainties resulting from a default could create serious problems for a community.

Advantages and disadvantages of tax increment financing

• Tax increment financing may create new taxes, rather than simply redistribute existing tax revenues.

• TIF is a locally administered program that has relative autonomy from state and federal intervention.

• It provides a relatively painless way to raise money.

• It provides a shot-in-the-arm for blighted areas.

• It can lead to interjurisdictional conflict, with municipal government fighting with school boards for local property tax share.

• TIF financing removes local elected officials from making decisions about use of public funds, and may unnecessarily insulate them from decision-making.

• TIF financing needs a project to initially raise tax revenues in the TIF district and "prime the pump."

• The TIF district creates another level of local bureaucracy.

• Power through TIF funding may be given to the administering board, and, if successful, may create a financing monster not easily controlled by local government.

• Borrowing against projected TIF revenues may be overly optimistic, and may lead to financial chaos if growth doesn't match projections.

Elected officials: a way to raise money for redevelopment painlessly, without having to deplete general revenues

Developers: a way for the city to make a commitment to redevelopment through public improvements or through write-down of the cost of land

Residents and homeowners: a way of funding redevelopment from taxes collected in the redevelopment district itself, without raising their taxes.

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Revitalization Strategies	Functional Strategies