pf_03405 - Laserfiche WebLink

Home

increase, state aid generally decreases (Michael, Hinze & Nester-Niederman, 1986). More development caused by tax increment financing thus gradually lowers state ~Iovernment costs. TIF opponents argue that the state pays for redevelopment through increases in intergovernmental aid programs. This argument assumes that the entire amount of captured assessed value would have occurred without TIF. However, the "but for" test required for creation of a TIF district effectively addresses this argument. Citizens. Citizens benefit from tax increment financing in a number of ways. The most obvious are the improvements made to blighted and deteriorating areas in their neighborhoods. The initial redevelopment financed with TIF generally encourages surrounding property owners to privately redevelop their property. The increased property tax base also rElduces their property taxes when the property value of the redeveloped parcel is unfrozen. In addition, citizens also benefit from increased job and retail opportunities in their neighborhoods as a result of TIF development. Uniqueness of Central Cities As cities age, structures deteriorate and certain land uses become obsolete. Without ongoing redevelopment, cities decline and the exodus begins, creating increased blight and lower property values. As the property values decline, so does the tax base. Thus, increased blight is costly to every taxpayer, whose property taxes must increase to OffSl:lt the decline in property tax revenues generated by blighted properties. 8t. Paul and Minneapolis are unique among cities in Minnesota, because they are the legislative, economic, and cultural centers of the state. Their vitality (or their lack of it) affects not only those cities, but the state and region as wholes. Without a thriving core metro area, the whole region starts to deteriorate economically and becomes less attractive to new residents and new businesses. The use of tax increment financing by central cities for redevelopment is an effort to keep the core areas thriving and vital. 10