I believe TIF funding can be a potential problem for other reasons, but disagree with Dave’s overall assessment that declining residential property values necessarily spell trouble for the TIF. What would spell trouble would be if the Ravenna developer, the Lakewood Developer, and Sunrise all decided to cancel their projects, and no other developers decided to build or renovate anything in the TIF district. If none of the commercial properties in the district appreciate, we will indeed be in trouble. I see that as unlikely, given the genorisity we have shown with public funding, and the several high profile new developments that are now in the works.
We have funded some public improvement, activities, and developer incentives with TIF funds, and have more that we are targeting. We are planning to pay these off with the tax revenues from the expected rise in the value of the properties that fall within the TIF.
These will come both from renovation, and new development. Sunrise, for instance, will bring in a stream of tax revenue well in excess of what Riverbrook and Touhy provide. The Ravenna will increase the amount that was offered by the Gores house and the office building that was previously on the site. The Lakewood building will provide a larger stream of tax revenue once the planned renovation is complete. Other surrounding buildings will likely also appreciate, as the district as a whole grows and improves. These increases in tax revenue will be used to repay the bonds we have taken out for streetscaping and other TIF activities.
The problem would come if we spent millions on public infrastructure, and saw no rise in the total assessment of the properties within the TIF. In this case, we residential tax payers would indeed be responsible for funding the improvements we paid for with TIF supported bonds, as Dave suggested. Given the developer commitments and interest we have seen in the Oakland and Capitol areas, this seems unlikely to me.
I would argue that there are other dangers of heavy TIF usage, including impact on School Funding, and overpaying current owners for their properties, once the word gets out that the public wallet is open. But I do not believe that declining residential values necessarily spell trouble for the TIF district.
