A New Podcast
If a major development project is sprouting up near you, there’s a good chance the local government is using tax increment financing—an increasingly popular method of earmarking future property tax revenue to jump-start construction. Cities have used TIF more than 10,000 times from coast to coast in recent decades, and the number grows each year.
Like much in public finance, TIF can seem obscure, but it has become so widely used, it is attracting attention. Among the concerns: the use of tax dollars for private development, which siphons away money for schools or other services; the danger of TIF projects exacerbating gentrification and displacement; and a general worry about transparency.
“The appeal of it is that it seems to many people like free money—you don’t have to raise taxes, but get to spend money on a particular kind of development,” says economist David Merriman of the University of Illinois, Chicago, a leading expert on TIF who advises public officials on the subject.
I interviewed Merriman for the first episode of the Lincoln Institute’s new podcast Land Matters, a behind-the-scenes look at what makes cities tick. The podcast explores how many of the biggest challenges that cities face, whether financing infrastructure, adapting to climate change, or building more affordable housing, can be traced back to land.
Our conversation covers just this kind of territory—the intersection of land use and public finance, in the form of the property tax. We discuss what the research tells us about the effectiveness of TIF, why community pressure is prompting significant modifications to the tool, and how Merriman’s home city of Chicago has gone all-in on TIF, locking up a third of its property taxes.
Photo by Michelle Charles/ Stillwater News Press