CDZ TIFF / Tax Abatement Zones, should they be banned?

[Toronado3800]

My motivation follows:

In the local paper there was an article which revealed the city "accidentally" reported a low number for the amount of tax discounts they gave to developers under one kind of abatement. Apparently the audit was forced by the Feds.

Our metro area has over a hundred "cities". We just call them municipalities. All with mayors and/or councils. There is an over riding theme of poor subsidized development choices being made by these councils up to the county level. We build in the floodplain of the Nation's two largest rivers to the extent the Corps of Engineers was found at fault for increased flooding and may be facing legal problems. We subsidize new malls sometimes right across the highway from old malls and then watch when the old malls go out of business. We throw money at pro sports teams who leave before the building is paid for, its funny.

Its comical. Either our local representatives:

-are public officials, not business experts
-are overly impressed by getting their name on a big project and proving their worth
-are overly impressed by getting to go to lunches and fancy dinners with developers
-are idiots.
-are grasping any straw (even in the suburbs which are growing as fast as any in the country?)

So I think we'd be just as well if the Feds said, "No more individual discounts or aid for private development companies or projects. If your taxes are too high, lower them."

There would be a side benefit also, these big developments largely help large companies. I can't go to the council and woo a tax break to open a batting cage business. Some multi-million dollar business can hire the local pro-baseball coach (despite his legal and financial troubles) to help them ask for welfare for a sports complex in the flood plain though.

If taxes were lowered by a tenth of a percent across the board it would help everyone evenly.

End of rant lol.

What should I mention also or how should I modify my position when the VIP's come ask me for advice on this?

(Edit: oh, and I believe the discounts need banned on a national level so no one city or state can offer them while another can't thus creating an unfair playing field)

 

[oldsoul]

Interesting topic. I'll do some thinking over the next couple days and get back to you. I do seem to agree with your premise, on the surface at least, I just have given the topic so little thought, I need to formulate a better concept of where I stand on this.

 

[Toronado3800]

Interesting topic. I'll do some thinking over the next couple days and get back to you. I do seem to agree with your premise, on the surface at least, I just have given the topic so little thought, I need to formulate a better concept of where I stand on this.

Let me know what you think. We have soo many mini-cities locally it seems the term "municipality" was coined for St Louis County. For those of you nationally look at the string of small old suburbs 8 or 10 miles from the Arch, Ferguson may actually be one of the better run of them! Honestly, if you are north of I-64 along Chambers Road the heart of Ferguson, Florissant Road(Hereford, Airport, it changes names at every municipality line) and Chambers is a good place to be.

The "newer" racistville/white flight suburb county of St Charles only has several cities in it....if only they had a good address numbering plan...

 

[jwoodie]

1. Small cities more poorly run than big cities?
2. Do you favor inner-city tax breaks?
3. Do you equate lower crime rates with racism?

 

[Toronado3800]

1. Small cities more poorly run than big cities?
2. Do you favor inner-city tax breaks?
3. Do you equate lower crime rates with racism?

1. The small mini cities in St Louis county are a pretty miserable bunch. I'm not talking about a small town out in the middle of a small county. I'm talking about a ridiculous range of "cities" from a few hundred to 50,000 people all crammed against eachother trying to "out compete" eachother for the new taco bell. St Louis County alone has 90 of them. Some are more like subdivision with their own mayors and police.

2. inner city tax breaks... There are some programs which are available to all which seem fair. If I buy a $3,000 house in St Louis City and I pick right I qualify for some programs as an individual and don't have to wine and dine some Alderman to blight an area and create a TIFF district. Now the developer also qualifies for the same program if he buys us a block of $3,000 houses so we both benefit.

3. Do I equate lower crime rates with racism....there is a correlation but I don't equate the two. St Louis metro is the area of the Ferguson riots. We have a lot of white flight from areas where a black man bought a $200,000 house (that's a good 2,000 square footer with a full basement here). The new neighborhoods 50 miles from the arch where the white flighters moved sure don't have much crime. The old neighborhood will see falling demand for houses and falling prices so it is going to vindicate the decision of the white flighter. and sadly it makes prudent economic sense

 

[jwoodie]

1. Small cities more poorly run than big cities?
2. Do you favor inner-city tax breaks?
3. Do you equate lower crime rates with racism?

1. The small mini cities in St Louis county are a pretty miserable bunch. I'm not talking about a small town out in the middle of a small county. I'm talking about a ridiculous range of "cities" from a few hundred to 50,000 people all crammed against eachother trying to "out compete" eachother for the new taco bell. St Louis County alone has 90 of them. Some are more like subdivision with their own mayors and police.

2. inner city tax breaks... There are some programs which are available to all which seem fair. If I buy a $3,000 house in St Louis City and I pick right I qualify for some programs as an individual and don't have to wine and dine some Alderman to blight an area and create a TIFF district. Now the developer also qualifies for the same program if he buys us a block of $3,000 houses so we both benefit.

3. Do I equate lower crime rates with racism....there is a correlation but I don't equate the two. St Louis metro is the area of the Ferguson riots. We have a lot of white flight from areas where a black man bought a $200,000 house (that's a good 2,000 square footer with a full basement here). The new neighborhoods 50 miles from the arch where the white flighters moved sure don't have much crime. The old neighborhood will see falling demand for houses and falling prices so it is going to vindicate the decision of the white flighter. and sadly it makes prudent economic sense

1. So you admit that small cities are not, in general, more poorly run than big cities?

2. So you oppose tax breaks unless they benefit your particular causes?

3. So "racistville/white flight suburbs" have nothing to do with escaping high crime areas?

Note: These are YES/NO questions.

 

[oldsoul]

Ok, so here is my take on this:

First and foremost, I don't see how it would be of national interest to act, in any way, on the federal level on this. There does not seem to be any constitutional power that would allow for this. I know some would argue that the COTUS grants the power to regulate commerce between states, and therefore congress has the power to ban such practices. To that I would say that the "commerce clause" has more to do with a state regulating transactions that come across their border than the business itself, and therefore does not apply.

Secondly, if a state wishes, they can (in accordance with federal law) institute such a ban, in full, or in part (as far as I know). I think it would be ill advised, unless it's attached to, or in conjunction with, further tax reform, because...

I believe, as I think the OP does, that a state (or municipality) would be better served to lower ALL taxes to attract new businesses. The reason for this is that government has no place, IMHO, in deciding "winners and losers" in private business. Targeted tax incentives do just that, in part at least. When a government provides tax incentives to one, it should be providing to all, at least in the targeted business type. Let me illustrate with an example that is unlikely to ever happen:

A state decides, for whatever reason, that they want/need more tire shops in the state. So, they offer Bridgestone/Firestone (B/F) a five year tax break for new locations in their state. They do not offer this incentive to anyone else. So, now B/F has a competitive advantage over their rivals. Therefore, the aforementioned state has now, in effect, granted preferential treatment to B/F in the "open" market. Now, just for argument's sake, let's say that it comes out that the decision was made because of stock holdings of multiple lawmakers. Or better yet, it was because of WHO was running B/F at the time. Does this change anything? For me, no, it does not. It would be the wrong thing to do regardless of the reason. If the reason changes your opinion, then I ask you, "why?"

 

[Toronado3800]

1. Small cities more poorly run than big cities?
2. Do you favor inner-city tax breaks?
3. Do you equate lower crime rates with racism?

1. The small mini cities in St Louis county are a pretty miserable bunch. I'm not talking about a small town out in the middle of a small county. I'm talking about a ridiculous range of "cities" from a few hundred to 50,000 people all crammed against eachother trying to "out compete" eachother for the new taco bell. St Louis County alone has 90 of them. Some are more like subdivision with their own mayors and police.

2. inner city tax breaks... There are some programs which are available to all which seem fair. If I buy a $3,000 house in St Louis City and I pick right I qualify for some programs as an individual and don't have to wine and dine some Alderman to blight an area and create a TIFF district. Now the developer also qualifies for the same program if he buys us a block of $3,000 houses so we both benefit.

3. Do I equate lower crime rates with racism....there is a correlation but I don't equate the two. St Louis metro is the area of the Ferguson riots. We have a lot of white flight from areas where a black man bought a $200,000 house (that's a good 2,000 square footer with a full basement here). The new neighborhoods 50 miles from the arch where the white flighters moved sure don't have much crime. The old neighborhood will see falling demand for houses and falling prices so it is going to vindicate the decision of the white flighter. and sadly it makes prudent economic sense

1. So you admit that small cities are not, in general, more poorly run than big cities?

2. So you oppose tax breaks unless they benefit your particular causes?

3. So "racistville/white flight suburbs" have nothing to do with escaping high crime areas?

Note: These are YES/NO questions.

Sorry for being too complicated for a yes no world. The Empire in real life is not all good or bad. I'm going to re-post my answers and give more details. Lets leave the yes / no games to the lawyers or simplistic questions like "are your socks white"?

1. The small mini cities in St Louis county are a pretty miserable bunch. I'm not talking about a small town out in the middle of a small county. I'm talking about a ridiculous range of "cities" from a few hundred to 50,000 people all crammed against eachother trying to "out compete" eachother for the new taco bell. St Louis County alone has 90 of them. Some are more like subdivision with their own mayors and police. Ladue seems to work better than Kinloch. Then again Calverton Park works better than Riverview.

2. inner city tax breaks... There are some programs which are available to all which seem fair. If I buy a $3,000 house in St Louis City and I pick right I qualify for some programs as an individual and don't have to wine and dine some Alderman to blight an area and create a TIFF district. Now the developer also qualifies for the same program if he buys us a block of $3,000 houses so we both benefit. I suspect most of us are against tax breaks which are against our causes. My point was to equally apply tax breaks to the big players, me and you.

3. Do I equate lower crime rates with racism....there is a correlation but I don't equate the two. St Louis metro is the area of the Ferguson riots. We have a lot of white flight from areas where a black man bought a $200,000 house (that's a good 2,000 square footer with a full basement here). The new neighborhoods 50 miles from the arch where the white flighters moved sure don't have much crime. The old neighborhood will see falling demand for houses and falling prices so it is going to vindicate the decision of the white flighter. and sadly it makes prudent economic sense . To go further, you can probably graph the progress of white flight and crime as rather an "X" shape. The first flighters are probably the most guilty of being racist. The last, well, the minority members who live there are moving out by then also.

 

[Toronado3800]

Ok, so here is my take on this:

First and foremost, I don't see how it would be of national interest to act, in any way, on the federal level on this. There does not seem to be any constitutional power that would allow for this. I know some would argue that the COTUS grants the power to regulate commerce between states, and therefore congress has the power to ban such practices. To that I would say that the "commerce clause" has more to do with a state regulating transactions that come across their border than the business itself, and therefore does not apply.

Secondly, if a state wishes, they can (in accordance with federal law) institute such a ban, in full, or in part (as far as I know). I think it would be ill advised, unless it's attached to, or in conjunction with, further tax reform, because...

I believe, as I think the OP does, that a state (or municipality) would be better served to lower ALL taxes to attract new businesses. The reason for this is that government has no place, IMHO, in deciding "winners and losers" in private business. Targeted tax incentives do just that, in part at least. When a government provides tax incentives to one, it should be providing to all, at least in the targeted business type. Let me illustrate with an example that is unlikely to ever happen:

A state decides, for whatever reason, that they want/need more tire shops in the state. So, they offer Bridgestone/Firestone (B/F) a five year tax break for new locations in their state. They do not offer this incentive to anyone else. So, now B/F has a competitive advantage over their rivals. Therefore, the aforementioned state has now, in effect, granted preferential treatment to B/F in the "open" market. Now, just for argument's sake, let's say that it comes out that the decision was made because of stock holdings of multiple lawmakers. Or better yet, it was because of WHO was running B/F at the time. Does this change anything? For me, no, it does not. It would be the wrong thing to do regardless of the reason. If the reason changes your opinion, then I ask you, "why?"

That is a well thought out reply.

Unfortunately I see your point and I also believe it will be a stretch of the Constitution to outlaw local tax games. Perhaps and end run on an equal treatment for all not just the Firestone's of the world could be found someplace.

Here we go with a world in which this state bans it, that state doesn't and we have a patchwork of laws favoring some states bribing companies

 

[usmbguest5318]

We build in the floodplain of the Nation's two largest rivers

Mistake #1, bar none.

 

[saveliberty]

Our little city found itself giving the maximum 12 years of tax cuts. As a councilperson I created a system that rewarded companies that increased employment from the business investment, diversified our industrial base, increased the use of our municipally owned utilities and a host of other community benefits. It would then numerically assign the number of years the company would get. It lowered the average abatement.

We experienced a state wide exodus of companies that moved to other states offering bigger abatements. Once there, they often moved again in ten years or so to the next greener state pasture. Stipulating a return of the savings if they bail is a must.