In The News › Report: Jefferson TIF districts need structure

Jul 28, 2008

Source: CityBusiness

Filed under: Jefferson Parish, Taxation & Assessments

Report: Jefferson TIF districts need structure

by Greg LaRose Managing Editor

NEW ORLEANS — A government watchdog group is urging Jefferson Parish to apply more structure to tax incentive districts it has created to pay for infrastructure repair and blight eradication before public money is steered to these areas.

The New Orleans-based Bureau of Governmental Research issued its “Look Before You Leap” report today on tax increment financing for areas where Jefferson officials hope to use sales tax revenues for property acquisition and capital projects. Instead of paying taxes to the parish, the proceeds are diverted to projects within the district that encourage additional development.

The Jefferson Parish Council has established three TIF districts: in Terrytown near Oakwood Shopping Center; west of Westwego, encompassing the Tournament Players Championship golf course and Churchill Technology and Business Park; and the Manhattan Boulevard corridor.

The Legislature has given Jefferson Parish clearance to create a fourth TIF district in Fat City, an area where the parish has prioritized street repairs and previously established tax incentives to encourage redevelopment.

BGR calls into question the wisdom of using sales taxes for TIF, as opposed to predominantly used property taxes. The parish has established the tax diversion formula for only the Terrytown TIF district. But with sales tax diversions planned for the other TIF districts, the report questions whether the parish has considered the cumulative effect on its general fund.

BGR considers sales TIF a poor tool for economic development and recommends against its use,” the report says. “However, if Jefferson Parish is determined to proceed with the use of sales TIF, it should put in place the framework needed to carefully evaluate TIF proposals and minimize their downsides.”

The TIF formula for the Terrytown district uses the $424,000 the parish collected in sales taxes from the area in 2006 as a baseline figure. The incremental revenues would come from taxes generated in excess of the baseline.

BGR notes Oakwood Shopping Center, having been looted after Hurricane Katrina, was not fully operational in 2006, and the baseline is roughly one-fourth of the sales tax total from 2004.

“On the positive side, the parish appears to be using TIF to invest in public infrastructure and blight remediation rather than to pay developers’ mortgages,” the BGR report says.

Among BGR’s recommendations to Jefferson Parish is that TIFs only be used in areas that would not be redeveloped without public investment and that it establish a cap, based on a dollar amount or a percentage of its general fund, on the amount of taxes that can be diverted to TIF districts.

Jul 28, 2008

Source: CityBusiness

Filed under: Jefferson Parish, Taxation & Assessments

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