Possible Tax Increment Financing Abuse in Bismarck
Wednesday, March 10, 2010
NDPC Investigates by Brett Narloch
Issue: Budget & Spending

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Tax increment financing (TIF) is an "economic development" tool used by cities to guide redevelopment of the downtown areas of cities. Unfortunately, TIF can create an atmosphere of corruption, arrogance, and, sometimes, illegal activity. According to NDPC President Curly Haugland, the City of Bismarck may have been illegally passing ordinances and programs to redevelop Bismarck's downtown area.

Tax Increment Financing 101

"Tax Increment Financing 101" explains what TIF is and shows how it keeps property taxes unnecessarily high for most property taxpayers; NDPC Land Use Policy Fellow Randal O'Toole concluded that TIF does not get the results supports claim they will.

O'Toole has pointed out the ways that cities use TIF to consolidate power and increase the amount of tax revenue they can disperse to their friends:

TIF isn't even necessary to promote redevelopment of declining neighborhoods. Eventually, property values fall low enough that people start to buy and restore or replace buildings in those districts. Rather than use TIF and eminent domain to redevelop a warehouse district, Anaheim recently decided to merely get out of the way of developers of what became known as the Platinum Triangle. Since then, developers have invested billions of dollars in the district.

TIF is no longer about blight. Today, the inner-city slums that TIF was created to replace are long gone, yet TIF continues to grow. Bismarck wants to create a quiet rail zone. Fargo wants to revitalize its downtown. Whenever any kind of development "need" arises, city officials are happy to steal money from fire, police, schools and other services that rely on property taxes and use it to fund that need.

Some states require cities to find that a neighborhood is blighted before they can use TIF. San Jose planners once found that a third of their city was blighted, including one posh neighborhood that was supposedly a slum because the residents had failed to rake the leaves from the private tennis courts in their backyards. Some cities go so far as to declare prime farmland to be "blighted" so they can maximize their share of the revenues when that land is developed.

Bismarck is not immune to these problems. In fact, NDPC President Curly Haugland sent a notice to Mayor John Warford and every city commissioner detailing current activities that are suspect. Click HERE to read the letter.

Note: Apparently, in response to Haugland's letter, the Bismarck City Commission has scheduled a public hearing to discuss their urban renewal plan for Tuesday, March 9, 2010, at 5:15pm.