Improving TIF Transparency and Accountability: Towards a Consolidated View of TIF Activities in Michigan

Abstract

Tax increment financing (TIF) is one of the most popular funding mechanisms for downtown and other local economic development projects across municipalities in the United States. While California pioneered TIF to leverage federal funds for urban renewal projects during the early 1950s, the State’s recent dissolution of redevelopment agencies has wiped out TIF from the toolkit of local public finance. The specter of legal challenges to TIF elsewhere in the country has unsettled the community of economic development practitioners. The Michigan Legislature is currently in the process of developing a series of reform proposals that potentially imply significant statutory changes in structure of TIF, possibly limiting the scope and application of this economic development option in Michigan. The opportunity costs of such modifications to TIF practice are not easily quantifiable for public policy makers or local economic development specialists because statewide data that could help analysts evaluate the extent and effectiveness of these tax capture tools simply does not exist. This paper seeks to contribute to the current policy discussion on TIF reform by proposing the blueprint for a comprehensive, state-level database on the scale, scope and structure of TIF activities in Michigan (Michigan Repository for TIF “MiRTIF”). Categorizing, classifying and standardizing the reporting on all TIF activities in the state, the MiRTIF is intended to provide a consolidated view for making meaningful fiscal comparisons at different levels.