Agenda - 05-18-2010 - 8b - Laserfiche WebLink

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Levengood 2 1. Introduction: In 2004, North Carolina voters approved an amendment to their state constitution enabling the creation of tax increment financing (TIF) districts. Though new to North Carolina —the state was the forty-ninth to allow TIFs— across the country, tax increment financing is currently one of the most popular strategies in local government's economic development "toolkit" (Blocher 2). Originally intended for the redevelopment of blighted areas, TIFs have increasingly been used to spur development on greenfield sites in non - blighted communities. While anti - sprawl and social justice advocates alike have raised alarm, empirical research has not yet explored this controversial new use. A number of TIF developments around the country, however, provide insight into the implementation and impact of "greenfield TIFs." As the Economic Development Advisory Board (EDAB) of Orange County, North Carolina, seeks new strategies to grow the county's uneven tax base, TIF should be considered. Because few if any blighted areas exist in the county's jurisdiction, any TIF district world have to encompass greenfield land, and these rural sites would pose unique challenges for TIF implementation. Nevertheless, considering the qualitative success and popularity of TIFs nationwide and given Orange County's interest in exploring the financing mechanism, I have presented the Advisory Board with the following: a background and literature review on TIF; three brief case studies on "greenfield TIFs;" and a table of additional financing strategies to consider. These items provide a foundation on which to consider tax increment financing. Moving forward, it is my hope that Orange County's leaders, who are most knowledgeable of location- specific issues, will be able to use this information to create an economic development strategy most appropriate for the county. II. Background TIF was first developed in California in 1952, but the tool did not gain widespread popularity until the late 1970s (Man and Rosentraub 524). This sudden surge was in response to decreased funding for economic development, the result of "tax revolts" like California's Proposition 13, as well as a declining role of the federal government in local economic development. Not requiring upfront tax dollars, voter approval, or federal aid, TIF was a financing innovation. TIF functions in the following manner: in accordance with requirements set forth in state enabling legislation, counties or municipalities identify a geographically - delineated district and assess its property value, establishing a "base rate" of taxation. The locality then takes out bonds to finance public improvements. For a period of time, the appreciation in property value will be "captured" and maintained