Unpacking Justin Bibb’s TIF idea, and the questions that still need answers
Posted February 19, 2024 in Op-Eds
This piece originally appeared on Cleveland.com.
What the heck is a TIF and why does it matter to me?
These are logical questions for Cleveland and county residents. You’ve probably heard something about a “tax increment financing” proposal of Mayor Justin Bibb’s and wondered what it was all about. It’s a big deal — and it should raise a lot of questions.
A TIF is a form of property tax abatement used to promote development. Under a TIF, existing taxes continue to be paid on a property even as property value increases due to development. However, taxes generated by that increased value are diverted from the public services they would normally support, going instead into a TIF fund. This can be used to pay for infrastructure to support the development, or in some cases, to help finance it.
Mayor Bibb’s TIF proposal, dubbed “Shore-to-Core-to-Shore,” goes beyond that. It would take all the growth in property tax revenue over the next 30 years from downtown Cleveland and part of the near West Side, and divert it to the TIF fund. The mayor says the revenue generated – between $3.3 billion and $7.5 billion over 42 years, including some existing smaller TIFs – would be used to update public infrastructure along with parks and recreation centers across the city.
This sounds simple enough, but when important county human services, as well as the Cleveland Public Library, Cuyahoga Community College, and the Metroparks are considered, the proposal suggests good reason for study and accountability. The TIF, as proposed, will cut into the revenues these institutions would otherwise receive.
City officials claim, without providing details, that the growth sparked by TIF-funded investment will more than make up for these losses.
Yet, the city will protect the Cleveland Metropolitan School District, carving it out of the TIF and allowing it to receive its property tax as usual. Are the children’s services paid for by the county, Tri-C, the library and the Metroparks less worthy of such protection? Why do the schools need it if all these entities are going to wind up better off?
Any deal like this needs guard rails. What happens if the growth the mayor envisions doesn’t happen as planned? A TIF covering the Flats East Bank was extended for 30 years because the owner couldn’t make the payments.
Conversely, if things work out as the mayor outlines, is he willing upfront to agree to share additional income tax and other revenue with the library and other entities?
The administration says the plan “does not raise taxes.” But certain levies for Tri-C and the county are set up to raise a fixed amount. Since the TIF payments will divert growth in revenue that would otherwise help pay for those levies, that means county residents will be paying more for them than they would otherwise. Isn’t that a tax increase?
None of the TIF money is to go for stadiums or private developers. But the major riverfront development outlined by Dan Gilbert’s Bedrock Management Services LLC will be covered by its own, separate TIF. Will funds from that TIF go right to Bedrock? Why does a billionaire need such assistance?
Much of the discussion of the TIF so far has centered around how much would be spent in the neighborhoods, an important question. But there are plenty of others for Cleveland City Council to take up when it evaluates the TIF ordinance.
For instance, why does the TIF area have a jagged outline? What immediate projects will the TIF be spent on, beyond the laundry list of possibilities in the ordinance (which include everything from scenic fencing to real estate purchases)? Will there be a specific accounting of how much revenue will be diverted from each taxing entity?
Answers are needed.
Original Article: http://https://www.cleveland.com/opinion/2024/02/u...