Missouri Senate committee looks at TIF law
January 30, 2006
A hearing was held in the Missouri Senate this past Wednesday on several bills designed to reform the state's tax increment financing (TIF) law. Judging from the large number of people who traveled to the Capitol to testify on the bills, this may finally be the year that this often abused development subsidy is reined in, said Ted Heisel, spokesperson for the Missouri Coalition for the Environment.

According to Heisel, the coalition's intest in this issue is due to the fact that in recent years TIF has been used to subsidize development in floodplains and other greenfield areas and that these abuses show how far the use of TIF has strayed from the original intended purpose of fostering urban redevelopment projects.

"Particularly in the case of floodplain development, TIF is now contributing to unwise decisions that put communities and taxpayers at risk," Heisel said. "The state and federal government have collectively spent more than $100 million over the past decade to move people out of Missouri's floodplains. It is counterproductive at best to now divert revenue from schools, fire districts, and local governments to subsidize such development."

Heisel observed that several conservation organizations were united in their testimony at Wednesday's hearing in favor of TIF reform. Also in attendance were representatives of school districts that have seen needed revenue diverted to developers. As an example, one school district near Kansas City annually loses $16 million through TIF diversions of local taxes.

Two primary reform proposals are being sponsored by Senator John Griesheimer (SB 832), appointed chairman of the 5-member Senate Interim Committee on Tax Increment Financing in June 2005, and Senator Tim Green (SB 672).

“To get a TIF, developers must meet certain criteria, but sometimes those criteria aren’t well defined,such as what is to be considered ‘blighted’ land or property,” Griesheimer said shortly after his appointment. “Ambiguities such as that make the TIF process open to abuse, and it is up to Missouri lawmakers to clear up the cloudy areas.”

Besides Griesheimer, other members of the committee are: Victor Callahan (Independence), John Chuck Gross (St. Charles), Timothy Green (St. Louis), and Chris Koster (Harrisonville). As part of their investigation into the issue, the group toured areas with TIF projects, including those in the Kansas City area where local officials hoped to demonstrate how TIFs have had a positive impact.

Griesheimer's bill uses a targeted approach of eliminating TIF from most floodplain areas and some greenfield areas. Green's bill takes a more comprehensive approach by redefining the criteria for when TIF can be used. These criteria include a thorough investigation by the municipality and all parties concerned that the property involved "has not been developed through private enterprise over a period of time." However, it does not seem to address property in a prime area yet to be developed, as in the case of the TIF project that brought a Kohl's department store to Joplin.

Heisel hopes that these bills will be amended as the legislative process unfolds and encourages consituents to contact their representatives in Jefferson City with suggestions.

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