In The News › Special tax districts a bad idea, report says

Jul 23, 2008

Source: Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

Special tax districts a bad idea, report says

Parish told TIFs ‘poor tool for economic development’

Wednesday, July 23, 2008

By Richard Rainey

An independent watchdog group warned Tuesday that Jefferson Parish’s plans to use special tax districts to spur economic development could starve surrounding businesses and the government’s sales tax base.

The report reflects the Bureau of Governmental Research’s longstanding suspicion of tax increment financing districts, or TIFs, to funnel tax revenue into economically depressed neighborhoods. Parish officials are working out the details of four possible sites, three in West Jefferson and one in the Fat City area of Metairie.

Basically, a TIF caps the amount of sales tax revenue sent from businesses in a certain area to the parish’s general fund. Any tax revenue above the cap is spent only within the TIF district to urge redevelopment there.

BGR considers sales TIF a poor tool for economic development and recommends against its use,” the report states. “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.”

To that end, Jefferson Parish should tailor the excess revenue generated in the TIF to specific redevelopment plans to curb mismanagement and ensure that each TIF produces successful results, the report advised. Also, the report advocated that all other forms of economic development be exhausted before a TIF begins to harvest public money.

Parish officials began to define their four targeted tax districts last year to pump money into commercial areas still languishing since Hurricane Katrina. The ones approved so far are in Avondale and Terrytown, along Manhattan Boulevard and in Fat City.

The BGR report notes the political appeal of TIFs: elected officials can earmark money for specific projects without raising taxes. Other positives are that repairs financed with excess revenue in the district attract private investment, local taxes go to local needs and the financing means local government might not need to seek money from the state or federal government.

The downsides, according to the BGR:

— Shoppers from all over end up paying to fix small sections of the parish, diverting revenue from what could be more pressing needs.

— Success in the taxing district means more traffic, people and therefore infrastructure repair needs, further draining the parish general fund.

— Earmarked money helps businesses within a TIF district attract customers to the detriment of businesses outside the zone.

Parish Council Chairman John Young defended Jefferson’s plans. Improvements to spots such as Fat City would draw not only new customers to the area but also new residents to Metairie, which would help abolish blight in poorer sections of the parish, he said.

“That will be a win-win for not only other businesses in the area, but it will also improve the present lay of the land so that it will be a benefit to the surrounding neighborhoods,” Young said.

Councilwoman Jennifer Sneed, whose district includes Fat City, said the TIF plan has broad support.

“In addition, the Fat City committee, made up of civic and business leaders, wholeheartedly supports the TIF as one of many measures to enhance the appearance and sustain the area as a tax generator for the future,” she said.

. . . . . . .

Richard Rainey can be reached at rrainey@timespicayune.com or 504.883.7052.

Jul 23, 2008

Source: Times-Picayune

Filed under: Jefferson Parish, Taxation & Assessments

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