When is a TIF not a TIF? When it’s “TIF-like”.
In the wake of all the fuss about Tax Increment Financing (TIFs) in Missouri the last couple of years, the legislature is now considering a compromise. It has passed HB 741, which instructs a special legislative committee (Joint Committee on Tax Policy) to study a TIF-like program.
The new version, like the old, gives Sam’s Club, Lowe’s, or shopping malls,for example, tax breaks on the infrastructure for the new development–on the cost of the parking lot, say, or water systems, sewers, and new off ramps from a nearby highway. The difference between TIF-like and the real thing is that TIF-like programs require the approval of all concerned institutions–fire departments, school districts, whoever stands to lose money if the tax give back ends up cutting into their revenue.
That’s the upside of this program, but brace yourself for the downside because it’s steep.
Rep. Clint Zweifel (D-Florissant, pictured) warns that such TIF-like developments will be in their own special legal category and as such will be “exempt from any changes in TIF laws.” For example, he says, last year the legislature passed a law forbidding TIFs to be awarded for developments in green field spaces. It makes sense to insist that an open field dotted with cattle is hardly a blighted area in need of redevelopment. But that law would not apply to a Tif-like proposal. Missouri doesn’t need an additional TIF program that would require its own set of laws. This arrangement would not be “double your pleasure, double your fun” but “double your headaches”–and triple your chances that developers will find ways to rake in tax money they don’t deserve.
“Well,” you might say, “who cares if a TIF-like area is not really blighted as long as all the concerned parties think that granting the tax incentive is a good idea?”
The reason is that, as it now stands, communities vie with each other to draw the big boxes and malls–and the tax revenue they generate–to themselves. They bid against each other, and the winner sometimes comes out ahead and sometimes not, when the tax incentives are figured against the potential tax revenues. That system allows Wal-Mart and Target to play us off against each other. It would make so much more sense to reserve TIFs for really blighted areas that wouldn’t get development without those incentives. But St. Louis municipalities like Florissant and Ferguson or Wildwood and Ellisville would come out ahead if a St. Louis County board made those decisions about where the big guys can locate. That way, no tax incentives would need be given. As long as the distribution of such stores was fairly even, every municipality would come out ahead.
And if the day ever comes when such a sensible county or regional perspective is considered, we won’t want to have to jump the hurdle twice to get it enacted–once for TIFs and another time for TIF-likes.