In the years to come, it will be important for all citizens, not just those of Franklin, to understand what a TIF and a TID are, and how they will affect their lives and their taxes.
TIF = Tax Incremental Financing TID = Tax Incremental District
These acronyms often appear together, as a TIF refers to the money, and a TID refers to the land the money is supposed to improve. This concept was originally introduced, so cities could raise money, make improvements, and attract business to areas considered blighted.
Those that love to divide our city, will insist this is an all or nothing proposition. You either support TIF/TIDs or you do not -period, end stop-. Nothing could be further from the truth. Some TIF/TIDs are fantastic, while some are actually deplorable. Oddly, in our suburb alone, we have see both. But let's quickly cover what they are, and how they work.
Summary: To Qualify for a TIF, you MUST meet these 3 criteria
area is blighted or will become blighted
area where a City must provide help so Developers will find development profitable
must benefit the entire community, not just a developer
2 Examples from Franklin
TIF/TID 5 - The Roc (Ballpark Commons)
yes -former quarry/landfill
yes -limited options based on substrate
yes -provides entertainment district for the entire community
TIF/TID 6 - Loomis Business Park
no -land was already purchased by Bear Development 2 yrs prior to the TIF
no -subdivision was already approved for adjacent land owned by same developer
no -a slaughterhouse is a detriment to the local area and the entire community
Summary: How does the Financing Work?
The city takes on debt (via loan- usually issuing bonds)
Total debt is determined by the loan amount, plus interest paid
The money is paid back, usually over 20 yrs, by the property tax generated from the new development
The reason a TIF/TID must be so carefully considered, is that for generally 20 yrs, the great majority of tax revenue goes to paying off the TIF. To be 100 % clear, there are not millions of tax dollars going toward offsetting high property taxes, once the development is complete. In fact, there is a 20 year period where money will not be going to the school system, the police or fire depts. Further compounding the issue is the fact that the future may not play out as anticipated. A TID can under-perform, and not be able to generate enough tax revenue to actually cover its' TIF, in a given year, or over the course of many. In this case, tax payer dollars will be required to offset the difference.
So not only are you committing future tax dollars up front, you may not actually get them back. This does not necessarily disqualify the use of TIFs, however, this is why, since it’s your dollars at stake, taxpayers and their input must be considered carefully. Again, this goes back to the key consideration, whether something is of great enough value to the community that it may be worth the risk, and frontloading of all these future tax payer dollars, which will then have to be paid back. Anyone suggesting developments within a TID, will add millions to the tax pool once built, are either misinformed, or simply parroting a false narrative.
TIF/TID 5 - The Roc (Ballpark Commons) our good example, for TIF viability
The Roc is also a great example of the unknown happening. A large entertainment district is something appealing to most citizens, and being built over a landfill, seems like an ideal TID candidate. But even something appealing can run into problems. No one remotely anticipated COVID, or the resulting toll it would take on our economy.
An issue such as this could lead a TID to under-perform, and temporarily not be able to pay off their TIF. In this case, you need to be certain the majority of residents would benefit from, and support this type of development, as their current tax dollars will need to cover the debt. Certainly, on the surface, a large, entertainment district, appears to satisfy this need, (where a giant slaughterhouse, with abusive, low paying jobs seems absurd.)
TIF/TID 6 - Loomis Business Park our bad example
The Loomis Business Park is 155 acres of land, with none currently zoned Business.
2/3 of the area is zoned for Industry, and in an odd combination, 1/3 is zoned Residential. If Franklin wants to promote industrial development, they have a new park, with plenty of space, adjacent to the freeway.
In addition, as this area was turned into a TID, the tax base goes to offsetting the TIF (the loan.) So although many large dollar figures are being thrown around - tax revenue offsets the loan. If this TIF should under-perform, now the residents who adamantly opposed this (great majority), could have their tax dollars subsidizing the infrastructure that made the slaughterhouse possible in the first place.
Also, in terms of required community benefit, this TID fails miserably! These are not good jobs being provided. The great majority pay between $14-$17/hr, and require workers, desperate enough for work, they will slaughter large animals all day long. Fortunately, Franklin residents are not so disadvantaged that they have to take these awful jobs. Unfortunately, others within our larger community are not that blessed and will have to be shuttled to this more rural part of the county, to fill these abusive jobs. And in terms of adding something of benefit and desirable to the whole community, whether you love eating beef or not, have you ever heard anyone, anywhere, say, "that absolutely beautiful slaughterhouse - that's why we moved here!"?
PLEASE HELP US STOP THE STUPID WASTE OF YOUR TAX DOLLARS!