Tax Increment Financing

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Tax Increment Financing Economic growth is the focus of every city. Through economies of scale cities such as Chicago and New York continue to experience great economic expansion. Continued growth, however, opens up the gateway for urban sprawl and the lack of a centralized economy. As cities expand their land use people disregard once thriving centers of industry and business and locate next to newly developed "Greenfield" type businesses. Often times the only thing left in the wake are rundown, abandoned business districts. In an effort to revitalize these deserted areas, councils in charge of economic development will use many different policies. An occasionally controversial policy is called a TIF or Tax Increment Financing. Tax Increment Financing is the use of tax revenue generated by a designated section of the city towards the development or redevelopment of the same section of that city. From a public policy perspective, TIF programs encourage cities, towns, and counties to initiate development projects that might not have been undertaken (Huddleston 1982). TIFs are gaining in acceptance and in use, yet they find opposition almost as much. As a basis for reference, a background on the perceived positive and negative aspects of Tax Increment Financing will be discussed; followed by examples of real instances involving the implementation of this policy. Positive Aspects The growing popularity of TIFs is not unjustified. They provide one of the easiest and quickest ways to derive economic funds within a financial setting. Money is derived through the collection of property taxes. Additional revenue is earned from these properties through the belief in economic expansion. If a TIF works properly, the a... ... middle of paper ... ...Sue, Tedra 2000. Inspired by Urban Success, Rural TIFs Gain Ground in Southeast. Bond Buyer 30913: 2. Higginbotham, Stacey 2000. Philadelphia to Borrow $62 Million in Largest-Ever TIF Deal. Bond Buyer 30970: 5. Hinz, Greg 1998. Bill would create TIFs without borders. Crain's Chicago Business 50: 4. Huddleston, J. R. 1982. Local financial dimensions of tax increment financing: A cost revenue analysis. Public Budgeting and Finance 2:40-49. Krueger 1999. Taxes, improvements remake retail. Orlando Business Journal 23: 25. Podmolik, Mary Ellen 2000. Back to the 'hood. Crain's Chicago Business 15: sb1. Shields, Yvette 2000. CHICAGO TO PULL $35 MILLION FROM TIF FOR SURGING MILLENNIUM PARK COSTS. Bond Buyer 30890: 3. Ward, Andrew 1999. Kellogg plant closure would weaken Michigan TIF bonds. Bond Buyer 30672: 1.
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