Communities lose more than they gain from TIFs
“Tax increment financing is sold by supporters as the closest thing to a free lunch mankind ever invented. We differ.
Tax increment financing districts are downright dangerous. Anytime someone promises a free lunch, you should silently mutter an economic truism: TANSTAAFL—There ain’t no such thing as a free lunch.
Tax increment financing is a widely used economic development tool in Indiana. It allows a board to issue bonds backed by future tax revenue from new property in the district. The board can spend the funds raised from the bonds on almost anything that suits its fancy.
The theory is that this will generate private development—and tax revenue—that would not have taken place “but for” the new project. But the “but for” is impossible to prove. Any growth in the TIF district might have taken place anyway, if not in the actual TIF district then somewhere nearby.
One thing is certain: Any benefit a TIF confers could be directed to other parties in other locations.
Members of TIF bodies are typically neither bankers nor elected officials, and they are not playing with their own money. Members may be well-intentioned, but they have little background in assessing risk, and voters have difficulty holding them accountable”
Bohanon, Cecil and Bill Styring. Indianapolis Business Journal 28 February 2015.
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