3
I h e I IR k lc n T a \
All right. N ow that w e ’ve go t the
picture, w hat a re th e p ro s an d co n s o f
this practice?
PROS
1. T he city obtains reso u rces to
revitalize th e in n e r city.
2. The projects c reate jobs.
3. T he e co n o m ic effect o f u rb an
renew al is that everybody
gains. T he value o f th e property’
increases so, as th ese revitalized
p ro p e rtie s are re tu rn e d to th e
tax rolls, th e tax rate for
ev ery o n e d ecreases.
CONS
$220,000 (Total Value) x .0048
$96.40 per House
$1,060 for County
1. T he m o ney raised to p ro m o te
u rb an renew al constitutes a
(c o n tin u e d )
Drawing No.
in c o rp o ra te d city took a no tion into its
collective head an d called it “eco n o m ic
d e v elo p m en t.” T heir idea was to
“free ze ” Mrs. C alorie’s property' at its
original value, $20,000 WHEN THEY
CALCULATED THE TAX RATE, bu t to
collect taxes o n the e n tire assessed
value o f $40,000 an d to use th e incom e
g e n e ra te d by th e “excess” for “u rb an
renew al.” This m eant th e total assessed
value o f p ro p e rty o n th e rolls in the
county re m a in ed at $200,000 instead
o f $220,000. W hile Mrs. C alorie paid
h e r taxes o n th e full assessed value o f
$40,000, only half o f th o se dollars w ent
to relieve the g en eral tax bu rd en . The
o th e r half w ent into an urb an renew al
fund w hich th e City o f Limits u sed for
eco n o m ic d ev elo p m en t projects. In
sum , ev eryone paid at th e rate o f $106
in th e seco n d year o f county
op eratio n s, except Mrs. C alorie, w ho
paid $106 to th e g en eral tax p u rp o se
and $106 to th e “kitty” o f th e city. This
“kitty” was e arm ark ed for u rb an
ren ew ai/eco n o m ic developm ent.
(see d ra w in g No. 3D )
THIS PRACTICE OF FREEZING THE
VALUE O F PROPERTY IN AN URBAN
RENEWAL DISTRICT FOR A NUMBER
O F YEARS AND DIVERTING THE
EXCESS (INCREASED VALUE) INTO
URBAN RENEWAL IS THE HEART OF
TAX INCREMENT FINANCING. Just to
m ake su re w e have th e principle, le t’s
look at w hat h ap p en s to individual
p ro p e rty taxes in th e th ird year o f tax
increm ent financing. A picture is w orth a
thousand words. (N ote that the value of
Mrs. C alorie’s property has continued to
grow, though on the tax rolls the values
rem ain frozen at $20,000.)
(see d ra w in g N o 3 0
TAX BASE: $1,060
EYE-SPECK’’ COUNTY
$20,000 (Value I rban Renewal) x .0053
$106 for "Public D evelopm ent (ix n m is A K x f
DrawingNo^3^^^
$60,000 ((r b a n Renewal) x 0056
$3.36 for “FIX ’
D raw in gN (^ 3C ^