All of the states except Arizona have TIF-enabling legislation.656 Most states require the finding of “blight” for TIF use, although some interpret the condition more liberally than others. Vermont has the most liberal legislation, allowing TIF to be used for development, job creation, or even simply to increase tax revenue.
However, the mere presence of state-enabling legislation is often not sufficient. Some legislation, like Oregon’s, specifies permissible uses for TIF funds. Therefore, the enabling legislation should be closely examined to ascertain whether such a list exists and, if so, whether transit is included.
Institutional Capacity
All the cases of TIF use examined here (CCC Transit Village, Wilson Yard, Portland Streetcar, and the Cedar Rapids GTC) demonstrate the existence of and need for significant institutional capacity to plan and create a TIF district. Institutional capacity may also be required to garner the support of the community and public agencies at the time of TIF-district formation.
Furthermore, institutional capacity is required to track TIF usage for legal-compliance purposes. For example, none of the four cases used TIF funds to purchase rolling stock, as it was unclear whether a capital expenditure for items that are mobile (and hence likely to cut across TIF district boundaries) would be permissible under the TIF-enabling regulations.
Ample institutional capacity exists in the case study cities and county. The Contra Costa County Redevelopment Agency is in charge of TIF in Contra Costa County, the PDC in Portland, the Housing and Economic Development Department in Chicago, and Economic Development Services in Cedar Rapids.
Stakeholder Support and Opposition
Of the four major stakeholder groups, residents and other public agencies are most likely to oppose TIF. The surrounding community opposed TIF use in the CCC Transit Village and the Portland Streetcar Project. None of the cases faced opposition from other public agencies or local governments.
In the case of CCC Transit Village, a civil Grand Jury recommended that the redevelopment agency not get involved with the project, citing agency indebtedness and opposition from neighborhood residents as the primary reasons. The Grand Jury noted that the redevelopment agency was interpreting its powers “liberally” by working with the transit agency (BART) to pay for construction of a garage.657
In Portland, residents living outside the underdeveloped North Macadam URA were initially concerned that their funds would be used to subsidize it. However, the city was able to address this concern by creating the North Macadam Overlay. The overlay helped specify the geography where the URA funds would be expended.
In summary, the local governments in the case studies were met with low to moderate stakeholder opposition to TIF.
Revenue Yield
In the best-case scenario, the Portland Streetcar Project, more than half of the TIF districts’
revenues were used. TIF funded approximately one-fifth of the total $103.5 million project cost.
In the case of the CCC Transit Village, TIF funds ($60 million) constituted the entire public contribution and one-sixth of the entire $366 million project cost. TIF revenues of $3 million are earmarked for Wilson Yard Station renovation. Finally, TIF funded approximately 15 percent of the $30.5 million Cedar Rapids GTC project cost.
In summary, TIF funded a moderate proportion of the case-study transit-project costs.
Revenue Stability
TIF revenues depend upon property taxes, which in turn are impacted by real estate market conditions, the intensity of redevelopment of the TIF district, and the effectiveness of the redevelopment projects in improving the quality of the TIF district.
Data were available to analyze TIF revenue stability for three cases (CCC Transit Village, Wilson Yard, and Portland Streetcar). While the TIF revenues are very stable in the CCC Transit Village and Wilson Yard, the TIF districts involved in funding the Portland Streetcar have been impacted by the housing market downturn. This downturn is pronounced in the North Macadam and River districts, where condominiums constitute a large portion of the new development.
In summary, TIF revenues can be expected to display a moderate to high degree of stability.
Potential for Horizontal Inequity
TIF can cause horizontal inequity in two ways. First, horizontal inequity can result if the TIF-funded improvements do not accrue benefits to property owners within the TIF district.
The potential for horizontal inequity for this reason is low in all four case-study projects.
All of the projects benefit the property owners within the districts, even the CCC Transit Village, where the benefits from the BART parking garage spill outside the district. In this case, creation of the parking garage was a prerequisite to the development of the village,
surrounding area, the CBD. Finally, the surrounding community benefits from the TIF-funded renovation of the Wilson Yard Station.
Second, to the extent that property taxes would have increased even without the use of TIF, the capture of the full property-tax increment by the TIF district results in less tax revenues for other taxing agencies, such as the school district, county, or city. Thus, TIF can negatively impact other essential services. Although we do not have pre-TIF-district empirical data for the case-study projects, anecdotal evidence suggests that at least two of the projects—the Cedar Rapids GTC and Portland Streetcar—were key to their districts’
revival. Therefore, it is highly unlikely that property taxes within these districts would have increased without the use of TIF.
Potential for Vertical Inequity
TIF use for transit enhances vertical equity to the extent that the transit projects benefit lower-income people more than higher-income people. However, TIF can cause vertical inequity if housing prices in the TIF district rise as a result of TIF investment, pricing out residents with low ATP. The TIF district for the CCC Transit Village addresses this potential vertical inequity be apportioning 20 percent of the TIF revenues for affordable housing.
The findings of the case analyses are summarized in Table 31.
IF Case-Analyses Findings Case Study Comparison Criteria Existence of Enabling Env.Existence of Inst. CapacityResident Opposition Business Community Opposition Developer Community Opposition Other Public Agency Opposition Revenue YieldRevenue Stability Potential for Horizontal Inequity
Potential for Vertical Inequity No Data
SPECIAL ASSESSMENT DISTRICTS