ADVERTISEMENT
TIFs + Accountability = Profitable Development for Madison, Wis.01-15-09 | News

TIFs + Accountability = Profitable Development for Madison, Wis.




img
 

The East Towne Mall in Madison, Wis.


No, were not talking about TIF, the stock symbol for Tiffany & Co (down 3.02 percent to $24.08 on this day, Jan 8), nor are we discussing tagged image files. We?EUR??,,????'???re talking taxes, but in a good way.

Cities strapped for cash are finding TIF (tax incremental financing) a sensible economic stimulus tool. TIF allows cities to lend money to developers to help build projects, knowing the city will recoup that money and more by collecting the increased property tax dollars.

How profitable can TIF be for a community? Madison, Wis. is one city making TIF a winning strategy. Carole Schaeffer, executive director of Smart Growth Greater Madison, reports the city gets about a $13 return on every $1 invested in TIF!

TIF is also about creating jobs in the community. Madison is not just handing over money without guarantees, including job creation guarantees. While it?EUR??,,????'???s optional for developers to sign a job guarantee clause, if the developer does agree to provide a certain number of jobs and fails to meet that quota, the TIF funds become a low-interest loan. Such guarantees are an excellent incentive for developers to succeed. The city also has developers guarantee a certain number of units built. If the developer falls short, the loan kicks in.

Guarantees are essential. Think of the original tactic of Sec. Henry Paulson and his handing over millions to banks without guarantees! The idea was for the banks to step up loans and begin easing the credit crunch, but the banks held onto the money. No one put it in writing that it was mandatory for the banks to lend the money!

Larger cities around the country are trying to replicate Madison?EUR??,,????'???s success. Some cities have learned expensive lessons with their TIF deals because they did not institute enough accountability. Madison, with frequent rewrites and edits to its TIF policy, has expanded their written document from three pages to 18! Now that?EUR??,,????'???s accountability.

img