Tax increment financing (TIF) is a development tool that uses some part of the difference between the taxes on a property before a development occurs and after its completion to make the development possible in the first place.
There is an on-going debate in City Hall right now not about the use of TIF but rather about whether there should be an iron rule regarding the percentage of the new increment that should be used as an incentive.
Some people, including Comptroller Darlene Green, support a policy of limiting the use of a TIF on residential projects to 50 percent of the increment, regardless of whether or not that cap kills the project.
My own position in the debate is that each new project should be evaluated on its own merits. If it’s a good project that we want to happen and it requires TIF to happen at all, then it should be given the lowest increment possible. I believe the lack of project-to-project flexibility risks our economic progress. After all, a dead project generates no new revenue for the City. It also generates no new jobs, attracts no new residents, builds no new neighborhoods, and draws no new services to support new employers, residents and neighborhoods.
So far, our economic development policies have been successful. The City population is growing, more than $4 billion has been invested in projects over past several years, and many City neighborhoods are already doing great. Going forward, certainly, projects in great neighborhoods will require less or no subsidy. But, in some cases in some neighborhoods especially neighborhoods that are still struggling a bigger subsidy might be needed. And it would be wrong to close the door on those neighborhoods.