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heraldsun,com: archive date search <br />i3 <br />Pamper Yourself Find A Spa Near You <br />home :archives calendar I classiFleds I shopping I movies <br />herald Reconsider Amendment One backing Ah' <br />sun °°' <br /> Col <br />Local News DAN COLEMAN Columnist pbi <br />Durham Chapel Hill Herald <br />Am <br />Orange Saturday, September 11, 2004 <br />Granville Final Edition Ads <br />Person Editorial5ection r <br />Chatham page Z <br />Sections <br />NalionNVorld <br />State <br />Last Tuesday, the Chapel HiII Town Council endorsed an ill-considered constitutional <br />sports amendment that is being foisted on the people of North Carolina. There is an all-out <br />Business push this year to gain approval for "Amendment One," which would allow cities and --® <br />weather counties to issue what are being called "self-financing bonds." <br />Opinion ~ <br />Technology <br />HeaithrMed <br />More commonly known as tax increment financing (TIF), this is a method that <br />Arts & Features authorizes local governments to issue bonds to subsidize development and to do so SH <br />Fun & Games without placing them on a ballot for voter approval. North Carolina voters rejected TIF <br />Gallery amendments in 1982 and 1993. <br />Religion <br />Resources <br />Hot Topics TIF bonds are a bet against the future value of a property. With TIFs, government <br />Archives spends that future value now on improvements that often amount to little more than a <br />My clipFile subsidy for private developers. The TIF is undertaken in the hope that future revenues <br />Traffic will be sufficient to pay off the bonds, a risky proposition. <br />Air Travel <br />Maps <br />vote8ook TIFslock in the current tax rate on a property to be developed. The value of x <br /> subsequent improvements is not subject to regular property tax. Instead, the F9 <br /> equivalent of that tax (the "tax increment") is diverted to repay the subsidy. <br />One of the risks associated with this kind of financing is the gamble that the <br />improvements will actually be made and that they will maintain value over a period of <br />many years sufficient to pay off the bond. <br />Town Councilman Mark Kleinschmidt was troubled by the resolution's claim that self- <br />financed bonds do not raise taxes, He pointed out that this is only true if everyone <br />fulfills their responsibilities and the project works out as planned, <br />But even when legal requirements are in place to force developers to stick to their TIF <br />commitments, they can often abandon those obligations with little more than a slap on <br />the wrist in return. There are too many instances where taxpayers have had to bail out <br />economic development projects. <br />TIFs are promoted with the loftiest of expectations. Originally formulated to help cities <br />improve "blighted" areas, the term blighted has been stretched to include just about <br />anything a developer might imagine. <br />Chicago has spent $62 million in TIF funds to subsidize national retailers such as Home <br />Depot, Borders and Starbucks, A study of a New Orleans TIF found that it would require <br />Wal-Mart to pay 38 percent less than it otherwise would in property taxes, <br />In addition, there is uncertainty as to whether TIFs are even needed. Proponents <br />presume that development will not occur without incentives, but there is no proof that <br />http://www.herald-sun.com/archives/tJRNDetail.cfm?URN=0462109956 10/13/2004 <br />