TIF-heavy Madison convinced the Lake County Commission last year to give up years of new property tax revenue to subsidize a sure-fire housing and commercial development on the south side of town. As the Legislature’s Executive Board discusses tax increment finance districts today, it will review a draft issue memorandum from the Legislative Research Council that cites Lake County’s latest TIF district as one of three questionable uses of tax increment financing in our fair state:
The Lake County TIF district #4 was classified and created as an economic development TIF district in April 2016. The TIF district was created to alleviate a housing shortage in the City of Madison by constructing two 14-unit multi-family townhome type apartment buildings, where the project costs were used for the acquisition of land and public infrastructure. The tax increment base for the TIF district was $75,600. The map, at right, shows highlighted in yellow the TIF district boundary.
Like the previous case study, Lake County TID #4 had only one property within the TIF district prior to creation of the TIF district; therefore, the TIF district may not adhere to the finding requirement in SDCL 11-9-8(2). The original intent of TIF was the redevelopment of an area that impaired growth, not for the new development of green space, which has no impairments or blight. The other difference is the classification as an economic development TIF instead of a Local TIF, even though the TIF district purpose was for housing. These TIF districts were created at a similar time yet both had different classifications, indicating there are no clear guidelines or codified law specifically indicating how a TIF district should be classified [link added; Legislative Research Council, draft issue memorandum on tax increment financing, Executive Board documents, 2017.11.08, p.5].
Nobody from Madison’s District 8 delegation is on the Executive Board to contribute local perspective to today’s discussion.
Related Reading: South DaCola shares a presentation from Iowa State University economist Dr. Dave Swenson on the market-skewing overuse of TIF districts.