Last week, I asked how we can make historic preservation a more lucrative option. Today, Aaron Kimberlin tells us about one way to do just that – Tax Increment Financing:
Nationally, Tax Increment Financing (“TIF”) is the foremost tool used to stimulate downtown redevelopment and economically jumpstart blighted areas. Arizona is the only state in the U.S. that does not promote this redevelopment tool. Let me repeat that… ARIZONA IS THE ONLY STATE IN THE U.S. THAT DOES NOT PROMOTE THIS REDEVELOPMENT TOOL.
That doesn’t necessarily mean that the City of Phoenix should follow in the State of Arizona’s footsteps. It’s about time Phoenix should consider TIF as a planning tool for the future in a down economy.
For those of you out there that don’t know what TIF is, it captures all new tax revenues from a designated area (“district”) that is in need of redevelopment and re-invests that revenue in various facets. When a TIF district is created, the city looks at the value of all of the property in the proposed TIF district. After that, the total Equalized Assesed Values (“EAV”) are calculated and become the base. As properties are improved within the TIF district, the EAV or values of the property increase. The difference between the base EAV and the new EAV (after the development has occurred) is the “increment” (or tax dollar to be reinvested in the district).
Local government can determine an area and designate redevelopment through an adopted plan. However, the numbers have to pencil out just like any other well planned development, hence it makes most economic sense to develop on a master plan scale than say a single parcel. These “increments” can then be applied to the district in a number of ways … oh the top of my head, why not reinvest in the following:
-Historic Preservation Subsidies
-Small Business Loans for local businesses (inside the district)
-Streetscape, infrastructure, bike and pedestrian upgrades
-Transportation oriented developments
You might have noticed in the news that TIF has been a buzzword for Mesa and Glendale. Mesa has hopes to attain funding for a new Spring Training Facility for the Chicago Cubs, and Glendale hopes to utilize TIF for their Entertainment Corridor. However, on a historical preservation note, Tucson has successfully redeveloped The Rialto and Fox Theaters using TIF as overall effort to redevelop its downtown district called Rio Nuevo. Voted through council in 1999, it started to produce a positive revenue stream in 2004 that garnered its redevelopment efforts. As a means to preserve historic structures and create a sense of place for residents, Rio Nuevo will be a vibrant area that will showcase new developments while maintaining the physical history of Tucson. Chalk that one up:
Tucson: 1 , Phoenix: 0
I’m sure that we’ve all come across areas around Phoenix that we’ve waited and waited to be preserved and developed, then all of a sudden a Circle K popped up over night, or building of historical significance was demolished. It’s instances like those where we must have a positon and be planners in our own right. Take in consideration the following projects that could benefit from TIF:
Overall, in order for positive redevelopment to occur, we need to be invested, we need to hold on to what we have left, we need to step away from our “wild west” mentality and really create a community. The City of Phoenix could really come to the rescue through forward thinking and utilize TIF as a tool to not only build our legacy but embrace our past.
Written by Aaron Kimberlin
Aaron Kimberlin is a young professional focusing on multifamily housing development, and is particularly interested in the crossroads of historic preservation, adaptive reuse and responsible development. He left a Non-Profit Real Estate Development firm in Chicago to concentrate his efforts on the revitalization of Downtown Phoenix. He graduated summa cum laude from Arizona State University, receiving his BSD in Housing and Community Development and his Master’s in Urban Planning and Policy from the University of Illinois at Chicago.Tags: aaron kimberlin, Glendale Entertainment Corridor, historic preservation subsidies, Mesa Spring Training Facility, small business loans, tax increment financing, transportation oriented developments, Tucson Rio Nuevo