The missing piece is the eternal question that echoes through City Halls all across America: "Where can we find taxpayer money to give to our friends without letting the taxpayers have a say in it, so we can make our friends happy while cutting basic services?"
Answer: urban renewal zones. The pot of gold that just keeps on giving -- if you're in the right circles -- while diverting money away from all the other taxing districts that depend on property taxes (schools, fire-fighters, county services, etc.). As Woody noted, some will rob you with a gun, others with a fountain pen.
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Urban Renewal isn't all bad, is it?
Tax-increment financing is a tool, and like most tools it can be badly used, dully used, or well used.
It contributed over a million dollars to the Union Street Railroad Bridge, and I believe that over time that investment will indeed raise total property values and tax receipts in the riverfront area.
Riverfront Park and the new Salem Cinema Building are also Urban Renewal projects.
So, maybe the problem isn't so much that the tool is bad, but that we need to press the city to reconsider the public/private balance when folks calculate the total benefit.
Few things are all good or all bad, but urban renewal schemes are an attempted free-lunch system that has more built-in, structural defects than most bad things.
Pointing to worthwhile projects accomplished with URA financing is confusing ends and means -- the Union St. bridge is a very worthwhile project and could have been done in any of a hundred ways.
As for Salem Cinema, the jury is definitely out on whether that new theater is a net plus or not. Did the availability of URA funding provide financing not available for a worthwhile project in any other way, or did it lead to an expansion beyond the capacity of the market? Salem will be much the worse off if Salem Cinema folds, and that happens the building will have had a lot to do with that.
The means themselves are seriously flawed. Among the most serious of the flaws is that overall appreciation due to inflation and regional population gains is, within the URA, all attributed to the chosen projects ... even when those projects might actually have HURT (reduced the appreciation over what it would have been otherwise without the project).
In other words, the schemers get to take credit for gains they had nothing to do with. If property values rise 3% generally all over the board, then why should the taxes on the first 3% of appreciation be dedicated to URA projects for what amounts to in perpetuity? The Rivers condo tower is a really good example -- it's such a stupid project that it is actually reducing values. If that was still buildable land, someone with a better project could acquire it and build that better project. Instead, they're looking at a giant overpriced, gold-plated white elephant; the better idea is boxed out by the ill-conceived one.
Essentially, URA TIF is a credit card issued on the chance of future capacity to repay the credit. What often happens is that the hoped-for gains don't materialize, or do so for reasons that have nothing to do with the funded project -- and thus you end up beggaring other important needs in order to pay back the TIF.
correction (added IF at the end):
As for Salem Cinema, the jury is definitely out on whether that new theater is a net plus or not. Did the availability of URA funding provide financing not available for a worthwhile project in any other way, or did it lead to an expansion beyond the capacity of the market? Salem will be much the worse off if Salem Cinema folds, and IF that happens the building will have had a lot to do with that.
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