Tuesday, July 31, 2012

TIF Study Commission Recommendation # 2 : Protect Taxpayer Investment With Clawback Provisions

My second choice for common sense recommendation of the TIF Study Commission is providing claw backs in the agreement with the chosen developer who is benefiting directly from the TIF dollars.  Goals and claw backs are used constantly for abatements.  But, with abatements you also have the aspect that the 'forgiven' taxes are on increased assessed value that will come with private investment.  So, lower investment, lower assessed value, lower amount of forgiven taxes.

A TIF financed deal is different.  With bond proceeds flowing straight to the project, either for mere infrastructure or directly to the developer to suit their own needs, and future TIF dollars set as collateral to pay back those bonds, there is no protection to the taxpayers that the goals will be met.  So, currently when the developer and, frankly, city officials make promises of private dollars invested or jobs created at such-and-such average salary - they are made in thin air with nothing to protect taxpayers from statement inflation or simple error in judgement.

By enumerating and specifying the investment and jobs goals for the TIF money, and by crafting a way to determine how much money the developer owes back to the City if they don't reach the goals, the taxpayers gain some protection.

Its well past time that the taxpayers stop being left holding the bag when TIF funded projects don't work out as well as City officials and developers say they will, in order to get their hands on the money in the first place.

Here is the wording of this recommendation (click here - page 19 of the pdf):
j. Include claw back provisions in project agreements that are subject to effective oversight and ensure that non-performing projects are quickly remediated through the return of TIF funding when performance goals are not achieved.

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