Three main ingredients are essential to spur the economic development that each of our Great Lakes cities sorely needs: smart people, good ideas and financing. I will talk here about one possible piece to the financing puzzle.
Tax Increment Financing (TIF) is a tool at the disposal of municipal governments throughout the United States. In the seven-county Milwaukee region alone, over $8.5 billion of property wealth is flowing toward TIF districts. These districts fund industrial, retail, residential and office real estate development in both urban and rural settings. Some criticize TIF as “corporate welfare” and, indeed, in some cases the tool has been wielded improperly. Fortunately, TIF is being increasingly used by cities to fund ambitious and far-sighted community development projects.
The challenge is to move beyond thinking of TIF as merely a “project-based” tool and start thinking of it as a way to achieve regional and community development goals, as we build our niche in the global marketplace. Proactive regional leadership is vital to achieving such a paradigm shift. TIF can be an powerful tool for the evolution of our cities.
We can look outside our region for an illustration: Atlanta has long been known for its dynamic business environment and explosive growth. However, it is also known for sprawl, air pollution, lack of greenspace and traffic congestion. In an effort to address these “quality of life” issues and reassert the region’s competitive position, the City of Atlanta recently approved the creation of a TIF for its “BeltLine” project. The BeltLine is currently the largest redevelopment project in the United States. It will encompass 8% of the city’s total land area, and generate $1.7 billion dollars in revenue. The project will transform a ring of blighted and underutilized land encircling the city to multi-use trails, parks, transit improvements, affordable workforce housing and Atlanta Public Schools projects. In what promises to be the most ambitious use of TIF in the country, after 25 years the BeltLine Tax Allocation District (TAD) will contain over $20 billion of increment value—twice the size of the City of Buffalo. Atlanta’s BeltLine TAD is not only big, it’s also innovative and is continually cited as a model for transparency, accountability and public involvement.
At this point, it might be wise for all of us to dream a bit. What are the Upper Midwest’s most pressing issues? What are our development goals? How can TIF be used to make those dreams a reality? It seems to be working in Atlanta as a community development tool – so why not here?
TIF may be a dry topic, but we can talk all day about people and ideas, and still, very little economic development could happen without financing.