CONTENTS
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Although eligibility varies by State, some examples of common TIF-eligible expenses include the following:
Bridges
Lighting
Traffic signals and related equipment
Decorative pavers
Medians
Turn lanes
Property used for right-of-way
Compensable utility relocations that occur due to the placement or construction of a roadway
Beautification components and related hardware
Also,41
Sidewalks
Hiking and biking trails
Pathways that facilitate intermodal transportation
Bike lanes in street right-of-way
Pedestrian bridge systems that link commercial centers to transit systems
Sky bridges that link public buildings
Public tunnel systems for private buildings
TIF has frequently been used for transit, typically in combination with transit-oriented development. In at least four States―Georgia, Illinois, Oregon, and Pennsylvania―TIF has funded transit or transit-related projects.42 TIF is one of several funding and financing mechanisms being used to develop a new infill rail transit station in Alexandria, Virginia.43
Docks and piers
Roadways
Environmental remediation
Utility extensions or improvements (e.g., water, sewer, electric, gas, telecommunications)
Wastewater treatment facilities
Lift stations
Force mains
Transmission lines
Sewer pump stations and related equipment
Drainage facilities, including storm sewer systems, collection and detention facilities, pumps, inlets, canals and related channel equipment
Blighted and brownfield sites can be very difficult to redevelop. Redevelopment sites might be occupied by derelict and obsolete buildings, which might or might not contain lead paint, asbestos, underground storage tanks, and other potentially dangerous materials. Even if vacant, these sites might contain soil contaminated by toxic substances. Additionally, there are substantial legal and economic risks associated with attempting to remediate contaminated sites, which may be subject to Federal and State environmental laws.45 In such instances, the costs of demolition, soil remediation, and proper disposal of debris might exceed the economic value of these sites. As a result, the private sector will not undertake redevelopment because no profit can be made.
For this reason, TIFs have been used to demolish derelict or obsolete buildings and to remediate contaminated brownfield sites. Once the sites have been cleared and cleaned, developers acquire them for a price that will allow them to realize a profit. An analysis of individual TIF deals would be necessary to determine whether this publicly sponsored site preparation or remediation represents a subsidy to developers or to the prior landowners (who could otherwise remain liable for remediation under Federal or State environmental laws. However, in these instances, a compelling case can be made that no redevelopment activity would occur in the absence of publicly funded demolition and/or remediation.46 Although there are several criteria necessary to determine whether establishing a TIF district satisfies the legislative criteria for doing so, brownfield situations probably satisfy the "but for" criteria necessary to establish a TIF. (See section 5.1 below.)
In some instances, the tax increment is not used for infrastructure, but for direct subsidies to private developers. Examples include site acquisition, demolition of existing buildings, construction, and other development-related expenses such as the construction of parking garages.47 In a very different approach, Portland, Oregon's largest TIF district (which includes the Pearl District neighborhood) has generated $83 million, which has been used with other funds to produce 2,200 units of affordable housing.48
41 Ibid.
42 FHWA. 2019, August. Value Capture Implementation Manual, section 7.2. https://www.fhwa.dot.gov/ipd/value_capture/resources/value_capture_resources/value_capture_implementation_manual/ch_7.aspx.
43 City of Alexandria. Potomac Yard Metrorail Station Project FAQs. See General Information questions 2, 3, and 4, https://www.alexandriava.gov/potomacyard/default.aspx?id=101655. See also Potomac Yard Metrorail Station Cost/Revenue Summary, April 29, 2019, https://www.alexandriava.gov/uploadedFiles/City2ndVDEQAddlInfoReqAttGPYMSCostRevSum20190429.pdf.
44 See Tax Increment Financing Plan (TIF): Port of Port Royal Redevelopment (South Carolina) at http://properties.cbre.us/port-royal/assets/tax-increment-financing-presentation-(final).pdf. See also Board of Estimates Approves First Batch of TIF Bonds for Port Covington at https://www.wbaltv.com/article/baltimore-port-covington-tif-bonds-approved/32896767#.
45 U.S. EPA. Basic Information About Cleanups, https://www.epa.gov/cleanups/basic-information-about-cleanups, and Overview of EPA's Brownfields Program, https://www.epa.gov/brownfields/overview-epas-brownfields-program.
46 U.S. EPA. Smart Growth, Brownfields, and Infill Development. https://www.epa.gov/smartgrowth/smart-growth-brownfields-and-infill-development.
47 Scheider, Benjamin. 2019, October 24. City Lab University: Tax Increment Financing. https://www.bloomberg.com/news/articles/2019-10-24/the-lowdown-on-tif-the-developer-s-friend.
48 Ibid.
