I attended the meeting held this past Tuesday at Lafollette Park. What meeting you ask? The one concerning the new North Austin Commercial TIF (tax increment financing). What is a TIF?

Well, according to the handout I got at the meeting it is a tool-“a financing tool created by state law to help local governments restore neighborhoods that are suffering from decline and to encourage new private development without raising property taxes.”

In fact, two of my favorite TIF areas (LaSalle Central Business TIF, located in the middle of that declining area known as downtown Chicago and the Ohio-Wabash TIF which encompasses Michigan Avenue) show that when it comes to impoverished and declining areas, our city council sure knows how to find-and redefine-them.

Let me explain the TIF process so that even the youngest of my readers can understand it. Whenever I need to explain something complicated, I always try to relate it to something that each and every one of us knows about. So I’ll use your household budget as an example.

Let’s say you’re newly married and responsible for managing the household budget. Your spouse earns $1,200 a month and will always give you everything for the household budget except for $200 a month. You look at the $1,000 a month you’re getting. Out of that amount, you pay the mortgage, buy the food, and take care of gas and light bills and any other incidentals. In fact, that $1,000 covers everything. It’s a pretty good deal.

One day your spouse comes home and says that from now on, the household budget will be like a TIF plan. You spouse will still keep $200 a month. You will still get your $1000 a month. But any increase in salary, will go into a special savings account that only your spouse controls. That extra money will be used to do all the special things around the house or go on that vacation to Hawaii. You say OK because it sounds like a good deal. This is the base amount, just like in a real TIF district.

Fast forward five years. Your spouse is now bringing home $2,200 a month. You have three kids and the roof leaks. You are still trying to run your household off that original $1,000 a month. Where once you only had to feed two people, you now have to feed five. Where once the only bills were gas and light, you now have doctor bills, dental bills and clothing bills for children who keep growing overnight. Your spouse is still keeping $200. The extra $1,000 a month is going into the special account (this is the increment in the tax increment financing).

So you go to your spouse and say that you need more money for food and money to fix the roof. Your spouse says they’ll look into it. In the meantime, whenever your spouse wants a new car or new shoes, there is always money for it.

Well, TIFs work (or don’t) the same way. The property tax rate will be “frozen” (kinda like your household budget) at the level of whatever they were when the TIF goes into effect. The schools, parks and other entities will have to operate at the tax rate they were at when the TIF came into being. This doesn’t mean that the property taxes themselves are frozen (kinda like your spouse’s income). The increase is put into the TIF fund and that amount is used by the mayor and aldermen as they see fit (yeah, kinda like your spouse who always found money for a new car while the roof leaks). If the TIF fund is well managed, it can be used for good. If it’s not well managed, well, you get the idea.

I am going to withhold judgment on being for or against this proposed new TIF. I have worked with the Austin Revitalization Committee and know that we as a community can have anything if we want it. But I will continue to let you know so that you are informed.

CONTACT: www.arlenejones.blogspot.com