By Jim Bruckbauer
Main Street USA and the downtowns all across North America are under a growing trend of revitalization and growth.
This trend has followed years of urban decay and mismanagement of city resources. During the 1960’s, many modern architects and city planning officials were influenced by a management style that stressed efficiency, and with that came a “renewal” of city functions. Buildings were created to stress function over design. Municipalities sometimes tore down vibrant civic centers, creating instead single–use buildings that lacked aesthetic value, along with highways that separated urban communities. This “progress” helped lead to the growth of suburban communities and the decay of our once-essential urban cores.
During the late 1970’s, some planners understood that these urban epicenters were in fact very vital to the synergistic, creative energy and economic growth of a region. But while our downtowns were recognized as important to maintain, aging infrastructure and the buildings that remained made that maintenance expensive. Private investment into downtowns rarely happened, since infrastructure and utilities added so much more expense to the equation. As business and residential areas moved to the suburbs, urban districts spiraled further into decay.
To address this issue, many states created a new legislative Act, allowing municipalities to create Downtown Development Authorities. The Authority would be a separate entity from the municipality and would use Tax Increment Financing to invest in the revitalization of downtowns.
Tax Increment Financing is a tax leveraging tool that “uses future gains in taxes to finance the current improvements that will create those gains.” To better understand this picture, imagine a piece of vacant land in an urban environment. The authority, or board, will agree to fund the necessary infrastructure improvements to the land if a private firm invests in the redevelopment of the land. The increase in value of the land (and surrounding lands) then generates increased tax revenues. This increase is called the “tax increment” and is “captured” by the Authority to be used to finance the debt issued, and also fund future investment and improvements to a predefined area. Often the investment is made to land where development would not otherwise occur.
Tax Increment Financing represents creative thinking and a powerful way to leverage the funds needed for proper reinvestment. I think future policy makers must be thinking about policies similar to ones used by Downtown Development Authorities and somehow tie them into future trends in land-use and even economic development. Are there ways we can leverage funding for projects that attract talent or just a solid return on investment? The people of a region need to get creative if they want to attract creative talent; otherwise, we’re left to watch our aging spaces, along with our old policies, lose their vibrancy.