TIFs Neither the only way nor the best
by Carlos Guerra
San
Antonio Express News
San Antonio Express-News
May 21, 2000
TIFs neither the only
way nor the best
By Carlos Guerra
Section: Metro / South Texas
Edition:
Metro
Page: 1B
Estimated Printed Pages: 2
Index Terms:
Column
Article
Text:
Before agreeing to any new tax-funded development, it's wise to understand
all the options.
Since voters overwhelmingly rejected a tax increase to extend
the River Walk - which would have increased nearby land values - the notion of doing
it with tax increment financing is being discussed again.
One reason may be
that TIFs don't require voter approval.
But a TIF deal approved by Corpus
Christi's City Council in March highlights other things to consider.
The North
Padre Island Storm Damage Reduction and Environmental Restoration Project, officials
say, will be "a risk- and cost-free environmental improvement" that will
set off a tourism boom.
But a closer look reveals a taxpayer-funded scheme
to dig up Packery Channel and use the sand to rebuild the eroded beach that fronts
a waning development.
TIFs are really self-funded tax abatements. When a TIF
district is defined, property taxes within it are frozen at current rates. The TIF
district undertakes improvements intended to raise property values within TIF boundaries.
The
increased tax revenues - or tax increment - that result from higher values repay
the cost of improvements plus interest.
Dredging a shortcut for boats to the
gulf from inland-side vacation lots and restoring the beach probably will increase
values for well-connected property owners.
It also will pay to create 3.5
miles of pricey new waterfront and two 1,300-foot jetties into the gulf.
But
to say improvements come without a price is plainly wrong.
Taxpayers whose
property is not in the TIF will be stuck with new costs, not the least of which will
be the perpetual maintenance of the jetties, canal and beach.
Increased economic
and human activity also increases the need - and cost - for public services. New
tax revenue will repay improvement costs, but non-TIF taxpayers will pay for the
services.
Still, Tom Udder, the assistant city manager that put the Packery
Channel package together, says it is a near-perfect TIF because the restored beaches
and new canal will set off a real estate boom.
But what if a development boom
does materialize, and hotels, vacation homes and retail areas explode with economic
activity?
Who will pay for the additional fire, police, health, water, sewage,
drainage and other public services costs the boom area will require?
What's
more, Utter says, some of the TIF's bond money will "be endowed in a maintenance
fund" whose earnings supposedly will pay maintenance costs for the canal, jetties
and beach.
This sounds great until you realize that redredging the shifting
sands was estimated to cost $400,000 annually in 1999 dollars. If the TIF's endowment
doesn't earn as least that much, other taxpayers will be stuck with that tab.
Any
River Walk TIF should raise similar concerns.
Of course, Padre Island and
River Walk property owners could increase the worth of their properties <I>without</I>
encumbering the rest of us with the bill.
Instead of creating a TIF, they
should create improvement districts. Instead of paying for improvements with tax
money diverted from taxing entities that need it to offset new expenses, an improvement
district would levy an<I> additional</I> tax on property whose owners
will benefit.
Like TIFs, improvement districts can sell bonds for big improvements,
but they don't stick other taxpayers with hidden costs.
Financed with an improvement
district, the Padre Island and River Walk projects really would be cost- and risk-free
to taxpayers.
And improvement districts only need approval of the beneficiaries!
<HR><I>To
leave a message for Carlos Guerra, call ExpressLine at 554-0500 and enter 4410, or
e-mail cguerra@express-news.net.
</I>
Copyright 2000 San Antonio
Express-News
Record Number: 490338