TIF - Here's how it works
Friday, June 14, 2002
All I know about TIF is what I read in the newspaper.
Based on what little I know, I'm pretty sure I ought to look into a TIF for my current big project: the World Famous Downtown Golf Course, Floodwall Condos and All-Weather Hockey Barn.
The fact that I don't know much of anything about TIF doesn't mean I can't explain it all to you in a simple, easy-to-understand way. Everyone else is taking a crack at it. I might as well join the pack.
As many of you already know, I've been working on the World Famous Downtown Golf Course for years. It has even been declared, by mayoral proclamation, the city's official downtown golf course. I know this for a fact, because the proclamation is hanging on my office wall, and I'm looking at it right now.
I am passionate about the golf course. The floodwall condos are a new twist, which I'll explain in a minute. Frankly, I don't give a darn about hockey, but I figure I need to grease the wheels with the new mayor, who is from a state so far north that they do all kinds of crazy stuff with ice, most of it legal. But that's another whole column.
TIF, as I gather from the newspaper, stands for "tax-increment financing." I'm not sure what any of that means, although a buddy suggests it really means "till it flops." I kind of think he was just joshing.
In any event, a TIF would mean selling bonds and using the money to build something big. Instead of paying taxes, the developer of something big would pay back the bonds. Eventually, the bonds would be paid off, and something big would start pouring all kinds of cash into the kitties of various taxing entities.
"Taxing entity," by the way, is just a fancy name for the government -- any government -- which takes your money and spends it on something big. So don't be put off by the gobbledygook.
As you probably know, I'm not the only one building a golf course right now. This other developer, who has already built his golf course, wants to use a TIF for a pretty nice housing development. This other developer, who seems to be a lot more organized than I am, says he would use the TIF only for the housing development, not for the golf course.
That's also what I thought about my downtown golf course-condo-hockey hut scheme. But now my financial plan looks like it has been invaded by a bunch of accountants from some outfit ... what was it called? Endrun? Something like that.
Anyway, I figured the downtown golf course will cost $25 million. The condos also will cost $25 million. I'm not worried about the hockey lean-to because (a) I don't think it will ever get built and (b) if it is, the Missouri Legislature will give me the money.
So let's say I raise $25 million for the golf course. But let's also say the golf course really costs $30 million. It happens, sometimes. If I can get a TIF package for $25 million and, thanks to those smart boys from Endrun, the condos only cost $20 million, it all comes out even. Right? The total project is still $50 million.
The condos, by the way, will be perched right on top of the floodwall, as long as the city building inspector says it's OK. I picked the floodwall for the condos on the basis that somebody besides the Knights of Columbus ought to have an unobstructed river view.
Just imagine: Folks who live in the floodwall condos will be able to step out onto the downtown golf course on one side and fish off the other side.
I haven't decided yet whether I want my project to be a blighted area, a conservation area or an economic development area. I can make a good arguments for all three.
But I'm leaning to conservation area, mainly because I intend to require everyone living in the floodwall condos to have window boxes full of flowers. That's sort of conservation, isn't it?
I think my plan will work. At least TIF -- till it flops.
R. Joe Sullivan is the editor of the Southeast Missourian.