In last Thursday, Feb.16, Columbus Park Refectory was filled with Austin residents there to get information about City Hall’s idea (or is it City Hall’s plan?) to implement “a way to pay for improvements” in Austin.
City Hall’s plan to finance improvements is called tax increment financing, or TIF, for short. In brief, the characteristics of TIF are:
? The level of property taxes that go to various taxing bodies other than the City of Chicago (such as schools, water reclamation, the park district, Cook county, etc), is frozen for a period of 23 years;
? During that period the city finances, organizes, and arranges for new development to be built in the area;
? The new developments are intended, expected, said, to generate new and additional (hence, tax increment financing) property tax revenues;
? The incremental property tax revenue thus generated is used to pay for improvements in Austin over that 23-year period. Such improvements might include, for instance, “development of blighted areas, build and repair roads and infrastructure, clean up polluted land, and put vacant properties back to work for the people of Chicago”.
? Since all taxing bodies other than the city would have their share frozen, all the incremental property tax would go to City Hall during that 23-year period;
? City Hall would use the windfall of property tax that it receives to pay for the improvements mentioned-streets, infrastructure, vacant properties, etc.
I, and others, have a bushel of questions about this plan that we wish the alderman, the city, the Department of Planning, and its consultants (Ernst & Young) would answer. Perhaps, they might wish to offer an answer here in the pages of the Austin Weekly News.
? At the beginning of the TIF, how would new developments be financed?
? If a bond issue were used to finance the initial construction phase, how would payments on the bond issue be made? That is to say, from where would the money for early bond payments come, since there will be no incremental (TIF) tax to make the early bond payments until construction has been completed. Would the city’s share of property taxes be used for these payments? If so, wouldn’t that reduce money available to do street, alley, lighting, demolition work needed right then, during the early stage of TIF, resulting in the deterioration of infrastructure during the early period?
? Is incremental property tax the only revenue source that would be available to pay for local improvements? For instance, one possible type of development mentioned by the city was a shopping center, or plaza. Traditionally, a retail operation pays out a percentage of its sales revenue as rent. Would City Hall’s share of tax on retail revenue be available for Austin infrastructure?
? In the same vein, the city typically offers tax reductions to new businesses to locate in the city. If tax reductions are offered to new business as incentive, is Peter (Austin, let’s say) being robbed to pay Paul (City Hall, for instance)?
? WHY is a TIF needed at all? Why isn’t the city’s current share of property tax sufficient to pay for streets, alleys, lights, and demolition of empty, dangerous, dilapidated buildings? What percentage of Austin property taxes are used in this community for infrastructure improvements?
? Exactly WHY is a new plan needed to pay for such basic city services?
? Is it possible to use some of the “left-over” property tax revenue from well to do downtown and off-Loop areas to provide basic city services in underserved community like Austin?
? If the city offers incentives to new businesses to locate in the Austin TIF, can/will the city require that qualified Austin residents be given right of first refusal on jobs in the new businesses?
? If the city embarks on an Austin TIF construction plan, can/will City Hall require black contractors to get 25 percent (as per city contracting policy) of the contracts?
? If the TIF is implemented and residential property assessments go through the roof, will the city protect old folks and young families from harm? This does not mean that improving infrastructure is bad; it means that forcing out old folks, life-long residents and young families just getting started is not good government.