Tax-increment financing (TIF) serves as a mechanism for cities to harness property tax increases to stimulate development in designated districts. This involves freezing property taxes at a specific level within the defined area. As property values rise annually, the resultant increases in property taxes are redirected into a TIF fund. The accumulated funds are then reinvested back into the same district, with the aim of enhancing infrastructure, fostering private development, and overall revitalizing the area. The underlying objective is to establish a self-perpetuating growth cycle. The continuous reinvestment of funds from property value increases contributes to the district's improvement, attracting further private development and increasing property values. Although TIF revenues may be modest in the initial years, the expectation is that they will grow significantly over time due to this cycle of reinvestment, leading to sustained and substantial revenue for continued development. 

Mayor Bibb’s Proposed “Shore-To-Core-To-Shore" TIF District in Cleveland stretches approximately 1-Mile from Lake Erie, the Downtown District, and into parts of Ohio City. Over the next 4 decades the increase in property value will bring back an estimated 3.3 to 7.5 billion for Cleveland to reinvest in new infrastructure projects, such as lakefront and riverfront development along with other public infrastructure. The TIF method of spurring development is common in Ohio and has been used by Columbus’ Areana District and parts of downtown Cincinnati with success. While City Council is on board with the idea, they are delaying passage of the legislation to come to an agreement on what percentage of generated funds will go to Cleveland's surrounding neighborhoods, and not directly back into the TIF District the funds are generated from. The success of this initiative could bolster Cleveland’s competitiveness in attracting commercial development, however there are concerns. A notable Implication would be that property taxes captured from this growth will no longer contribute to the city’s General Fund. As a result, specific public services like MetroParks, Cuyahoga Community College, and the Public Library’s budgets could stagnate until Cleveland sees meaningful success from the TIF district. Despite the negatives, the plan incorporates certain safeguards. This is a non-school TIF, assuring that the Cleveland Metropolitan School District will continue to receive an unaltered amount of property taxes annually, as if the TIF had not been implemented. Also, restrictions are in place to prevent the use of TIF-generated funds for the support of sports teams or arenas. The proposal has established transparency and accountability in the allocation of financial resources. 

Category: General News

Tags: economic development, Economic Impact, Downtown