OKPOLICY.ORG
Tax increment financing districts, often called TIF districts, might seem like something only city planners, developers, or accountants need to understand. But communities across the country use TIFs to fund capital projects, and these decisions can shape how public resources are used for many years. Simply put, a TIF district is a designated area where the increase in revenue from property taxes — and sometimes sales taxes — from new developments is used to fund improvements and redevelopment within that area. In Oklahoma, TIF districts can last up to 25 years, meaning decisions made today can influence how future tax growth is used for a generation.
Communities set up TIFs for different reasons. Some projects aim to improve a specific area, boost the local economy, or help the local government’s finances. These goals might sound alike, but they are not the same, and some are harder to reach than others. It is easy to see if TIF money built a road or added utilities. It is much harder to tell if the development actually brought new economic activity to the whole community or just shifted it from somewhere else. Also, just because there is new construction in a TIF does not mean the community’s finances have improved.
These differences are important as more Oklahoma communities look at new TIF proposals. For example, Norman’s Rock Creek Entertainment District proposes to use sales and property tax TIFs for a project that includes an arena, housing, shops, offices, and hotels. The plan allows up the TIF district to capture up to $600 million over 25 years. Broken Arrow used a TIF to help build infrastructure for the amphitheater. Tulsa has approved TIFs for housing, retail, better sidewalks, and neighborhood improvements. These examples show that it is not enough to ask if a TIF led to new buildings. The real question is whether the project met the public goals that justified the investment.
This is why it is important to carefully review TIF proposals before making a long-term decision. Two University of Oklahoma faculty members — Stephen Ellis and Cynthia Rogers — created a practical checklist to help officials and residents judge TIF projects. Their method starts by asking what the project is supposed to achieve and whether there is evidence to support that goal. This means looking at whether the project really needs public help, what it will cost the community, if it will create new economic activity, and if the public benefits are worth the costs. The checklist helps Oklahomans move past just asking if a TIF sounds good and instead ask if it is likely to meet the promised public goals.
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Goal-Focused Approach to Evaluating Tax Increment Financing Projects
Published by Reaching Regions (2006)
