What makes TIF so attractive is the impression that a municipality is getting something for nothing, since the extra taxes involved wouldn't have been there absent the new development. However, according to the article:
"Originally used to help revive blighted or depressed areas, TIFs now appear in affluent neighborhoods subsidizing high-end housing developments, big-box retailers, and shopping malls."Hence, this is development that is likely to have occurred anyway and, if it did, the enhanced land values would have been taxed. These revenues are effectively lost and the extra services required by the new development – sewers, road infrastructure, and schools – are paid for by other taxpayers.
Making matters worse is that these burdened taxpayers may actually be:
"small businesses facing competition from well-connected chains that enjoy TIF-related tax breaks. In effect, a TIF subsidizes big businesses at the expense of less politically influential competitors..." [Emphasis added].In the case study looked at in Reason, the beneficiary is a store called Cabela's, a hunting and fishing mega-store to be built in an affluent area of Fort Worth, Texas. There are already quite a few small outdoors specialty stores in Fort Worth and their predicament is well-summarized:
“If you own a mom-and-pop store that sells fishing rods and hunting gear in Fort Worth, you're still paying all your taxes, and the city is giving tax breaks to Cabela's that could put you out of business."This is of course, exactly the kind of situation we have been talking about in our discussion of accountable development. It really doesn't matter if the tax breaks come in the form of TIFs or abatements or a sweetheart deal on the purchase of public property. We are in essence (when it comes to commercial development) subsidizing the well-connected and their multi-billion dollar tenants at the expense of existing retailers (who are then asked to pay the taxes for their competitors who undoubtedly have deeper pockets then they do).
This is precisely what happened in the East Harlem Pathmark deal that we have already commented on. The building of a Pathmark store in and of itself was never the issue. In that particular controversy what did concern project opponents was the fact that the developer, Abyssinian Development Corporation, was glomming millions of dollars of public and private subsidies to enable the retailer to pay a rent it deemed affordable. As a result, independent supermarkets were placed at a competitive disadvantage and a store was built at an exhorbitant cost.
All of which brings us to our continuing concern for the inadequacy of the city's land use review procedures. ULURP is inadequate precisely because it doesn't require the necessary cost-benefit analysis that is needed for elected officials to judge the merits (and often grandiose claims from developers) of a project. We continue to hear the refrain: "That has nothing to do with ULURP," when we bring up these accountable development issues. And they're right, which of course is the point of this entire discussion.
