Don't know? Do not feel bad. I thought I knew. We (Mayor and Council) have been discussing this giant elephant that walked into the middle of our City Hall and left one big ugly nasty footprint, and now, it is time to get educated and make this "TIF" work for us, or throw it the hello out of our City.
Question one: What is a TIF? These three letters stand for Tax Increment Financing.
Question two: Why Tax Increment Financing is needed or used? The original idea around TIFs was that it was a mechanism by which a city could float a bond and make the payment while at the same time cleaning up its blighted areas, and spurring its economic development and revitalization. It would attract developers and give them help if they would do business in their blighted areas where most did not want to go because they could not see it adding to their bottomline -- profit.
Question three: Why do TIFs still exist? Someone thought it was a good idea and a way to revitalize blighted areas. So Chicago, California, and a host of other places (believe it or not, years ago) came up with this plan, and in some places it has worked (at least that is what I am told). In others, TIFs are used in rich neighborhoods, and many places have encountered debts that will be around for years!
In the next few paragraphs, I will attemp to explain TIFs in layperson terms. If you get this , PLEASE PLEASE email me at mayormiles@gmail.com.
You and your family own the old Bass Liquor lot, the funeral home, and four other parcels of land with older
buildings, and a parking lots. Combined, you and your family pay a total property tax of $25,000 with $5000 going to City, $5000 going to Schools, $5000 going to MNCPPC, and $10000 going to the County.
Now there is a proposal to put before Mayor and Council for a 5-story building on your combined
sites that will generate $100,000 in property taxes. The City can use TIFs to help develop the site. That
means the City (Mount Rainier) pledges the increase that the new development would create,
or in this hypothetical -- $75,000. The
City, Schools, MNCPPC, and the County would continue to get their split of the $25,000 of the funds that you and your family originally generated. So no change there, and if they pull this deal off, you will have some NEW buildings down town.
The $75,000 increase generated over the life of the TIF
project (the time frame can be between 25 and 30 years) helps pay for the land assembly, utility work and/or
some other public purposes as defined by the City in its mou/lda agreement with the developer.
You could argue hat there is
no cost to the City, Schools, MNCPPC and/or the County because without the TIF assistance the
project would have never gotten off the ground and the blight would have continued. In addition, you and your family would have continued to
generate and pay the $25,000 in property taxes.
I would argue that maybe another project at the right time would have come in (when we purchased the property, we knew we would have to hold it five or more years) built there that didn't need or require a TIF assistance, thus creating a property
valuation increase that goes straight to the City, Schools, MNCPPC, and the County's
coffers without a 25 to 35 year loss.
Maybe instead of a TIF-financed
5-story building, a 4-story building would be built without TIF financing. With the new no TIF project in place, the new tax increase of about $60,000 generated by this new project in property
taxes will provide $10,000 going to the City, $10,000 to the Schools, $10,000 to MNCPPC, and $30,000
going to the County -- not in 25 to 35 years but within two to three years following the completion of the project.
This difference in these
two projects is really a lost opportunity for the community, the City, and the County. Neither can be proven on paper because they are hypotheticals. That is what a TIF is based on, a hypothetical that will result in City taxes staying the same OR a need for the City to raise taxes on those "benefiting" from the TIF to handle increase cost of services (more police calls, more trash pick up, more code enforcement, more more more).
Clearly TIF is an important economic development tool,
but it MUST be used wisely, and with the residents of the CITY in mind and NOT THE DEVELOPER or the County for that matter. A TIF can be an effective revitalization tool when used prudently and rarely!
The current offer on the table for our City, in my opinion is rare (we would probably be the first City in the County to use a TIF), BUT it may not be the most prudent decision your Mayor and Council could make.
Many of the things that was spoken at the August and October hearings have been taken off the table or modified to the point that should the City accept the current offer, our residents will be the losers. I am looking for a win-win for Mount Rainier, the developers, Prince George's County, and the State of Maryland as the GATEWAY to the Nation's Capital, and the Signature Entry to Prince George's County.
I need to hear from you on this one!