Taxing Bodies in a TIF…or Two
We’ve said it before, we’ll say it again: subsidies beget subsidies. Instead of doing what proponents of publicly-funded development believe will happen-that a publicly-funded anchor or targeted area will stimulate private, non-subsidized development, it is the inverse that we see happening. More developers line up looking for their fare share and when prior subsidies don’t stimulate development then officials simply dole out more preferential tax treatment.
Just this week Pittsburgh and Allegheny County discussed participating in two new tax increment finance districts, one in the lower Strip District and one at the Summerset development at Frick Park. Bear in mind that the lower Strip is in close enough proximity to the economic engine that is the new convention center and Summerset has received a lot of state and local incentives to get it up and running including costs related to acquisition, site preparation, and infrastructure.
Are the subsidies worth it? It depends on the cost to benefit ratio. Realize that a tax increment finance package deprives taxing bodies of the full increase of real estate taxes attributable to the new development for a fixed period of time. That means the costs associated with providing municipal services to these areas will largely be covered by some other taxpayers for the duration of the districts.