Do Wichita TIF Districts Create Value?


A recent Wichita Eagle article City tax districts aren’t breaking even reports on some of the problems with tax increment financing, or TIF, districts in Wichita:

One promise of TIFs was that revitalizing certain areas — such as Old Town and the East Bank — would boost property values throughout downtown.

In the past four years, assessed valuation has risen 14.9 percent a year within the downtown TIF areas where millions of dollars of public money have been invested.

But take away those TIF districts and valuations have grown at 4.1 percent a year for the rest of the downtown area. Countywide, commercial property values have gone up about 10.7 percent a year.

One question I have, and one that might be difficult to answer, is if property values in TIF districts are being assessed accurately and fairly. For assessed valuations in TIF districts to grow at only 1.4 times the rate as all commercial property seems to indicate that perhaps TIF district property is undervalued by the assessor. After all, it is in TIF districts that we expect to see rapid growth — “exponential,” as Wichita city council member Jeff Longwell explained to me — in value as developers renovate old buildings or build new buildings.

The primary problem, however, is that these TIF districts represent the city government’s desire for more development in places or things that people don’t value it as much as they do in other places. It is government central planning, led by politicians and bureaucrats, making decisions rather than people expressing their preferences through voluntary transactions in a free market.

Since politicians and bureaucrats have different goals than entrepreneurs, it is not surprising that TIF districts may not live up to the expectations of the public. Of course, it depends on your expectations. If you desire simply to get something built — this would be the politicians’ goal — then TIF districts work. Buildings, indeed, are built.

If, on the other hand, your goal is to create wealth by building something that the public values enough that you can earn a profit — this being the goal of entrepreneurs — government central planning simply doesn’t work.


2 responses to “Do Wichita TIF Districts Create Value?”

  1. […] 29, 2008 · No Comments Bob Weeks looks at a recent article in the Eagle that declares the TIF (tax increment financing) districts such as Old Town and the East Bank are not […]

  2. Brian Costin

    In my opinion TIF’s do not create value they destroy them. What TIF’s do is give an excuse for politicians to further expand government and political meddling in the economy.

    For every taxpayer dollar spent on a project, enabled by TIF financing, it is one less dollar for the citizens to spend on thier own. The people are poorer from TIF projects and government/politicians get richer.

    You are exactly right that government central planning does not create wealth for the citizens.

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