The use of TIF Districts is out of control in Kansas City. This document describes some, but not all of the reasons and makes some suggestion to obtain better results.
I The TIF program is set up to maximize the giveaway of tax breaks since EDC/TIF receives a percentage of the money they give away- As a consequence, those charged with administering TIF activity are more interested in looking after their own economic welfare by giving away TIF money rather than looking out for the best interests of the citizens by maintaining a tight reign over TIF activity. With a the city providing only half their yearly budget of $3 million, Kansas City's'FIF commission must fund enough tax abatement projects to provide them with $1.5 million in commissions. Those administering TIF activity should be independently funded and specifically prohibited from having their operating budgets tied to the money they give away.
2. Most of the TIF money goes to futher enrich the wealthy, not to benefit the poor, or the average, taxpayer. The Crown Center TIF benefits a family whose business is expected to bring in $12 billion in sales in 2002 by freeing them of the burden of taxes for 25 years. On the other side of the coin, only a small amount of TIF money has been used to benefit poor inner city residents. Cities should be required to report the amount-of TIF money going to the wealthy vs other groups.
3. TIF districts are supposed to stimulate economic activity in the area where they exist. New TIFs are commonly granted adjacent to, or even inside, an existing TIF. This implies that the original TIF has failed to create the required economic benefit. It also has the effect of depriving some areas of TIF benefits, while concentrating the tax benefits in other areas. No TIF should be allowed Inside of or immediately adjacent to, or within the economic sphere of another TIF as long as that original TIF exists.
4. TIF districts have become merely starting points for a continuous stream of tax benefits linked to the original TIF by additions and alterations to that TIF. Prohibit any alteration of, addition to, or renewal of, an existing TIF.
5. T[Fs that fail to perform as planned, or conduct prohibited activities, are not held accountable by the city. Typically, the TIF will build the entity that generates the most economic benefit to itself and delay doing other parts of the project as long as possible. In some cases, the prohibited sale or transfer of land inside a TIF has been done anvway. Require regular performance audits for every TlF and immediate termination of any non performing TIF or any TIF envolved in prohibited activity. Terminated TIFs should be penalized financially.
6. TIFs are commonly granted for 25 years. No private investor will go into business expecting to wait 25 years before that business produces a profit. Limit TIFs to no more than 5 years and/ or reduce the tax benefit every year, reaching zero benefit at the end of the term. The tax benefit should be reduced more in,the beginning rather than proceed in a straight line over the life of the TIF.
7. TIF districts can include abatement for a variety of taxes, including the Kansas City earnings tax. This places an added burden on those who do pay taxes. Prohibit TIFs from obtaining tax abatement for earnings taxes.
8. Reporting on TIF district performances is not readily available. T'he people need to know how TIFs are performing and what the economic consequences are. Require cities to post the TIF information on a web site in a form showing all pertinent financial information that will allow accurate and timely evaluation of the performance of any individual TIF. The impact on the overall economy of the city must be evaluated..
9. TIF districts are created without a master plan for the project. No TIF project should be approved before a master plan is created with sufficient detail to evaluate the projected benefit and be able to evaluate the performance of the TIF district over the succeeding year.
10. TIF districts are created without involvement by the citizens. No TIF district should be created before at least 2 public hearing (60 days prior and 30 daysprior to creation), are held.