This guest post was submitted by Fargo City Commissioner Tony Gehrig.
With the vote at Monday night’s meeting, the Fargo City Commission over turned a decision that we made over a year ago to keep a 38 year incentive in place indefinitely. We did this because we like that the property tax revenue comes back to the city instead of other subdivisions like the schools. At the same time, the members of the other boards are silent, and have offered no protest to these types of actions by the city. This is a striking example of the abuse of incentives and why we should end them today.
In June of 2017, the Fargo City Commission voted to end a TIF district in downtown Fargo that encompasses the Island Park ramp and the MATBUS Ground Transportation Center (GTC). It was a good decision to end a TIF that has been on the books since 1980, well beyond the original intent.
On December 17, 2018 the Fargo City Commission reversed course, in a 4-1 vote, and moved to extend the TIF indefinitely with no end certain date.
[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]…this is just one more example of how incentives are out of control, and have the potential to never end. The majority of your Commissioners wondered aloud, why would we give up a revenue stream that no one seems to know about?[/mks_pullquote]
This matters for a few important reasons. First, this is just one more example of how incentives are out of control, and have the potential to never end. The majority of your Commissioners wondered aloud, why would we give up a revenue stream that no one seems to know about?
The conversation from the Fargo Commission last night wasn’t how soon we can end the TIF, it was how long we are allowed to keep it open. This is a wrongheaded way of looking at incentives.
Second, when we use TIFs, we take money away from the school district, park board, the county, the airport, and vector control. As long as we keep this TIF open, these important subdivisions will see no benefit in the increased value of the area. They haven’t seen the return on “investment” for nearly 40 years, and they won’t see it any time soon. We sell incentives to the people and other subdivisions by saying that they are a short term “investment” by the schools, park board, and others in exchange for a large value/tax revenue increase in the future. They were never intended to last 40 years.
That is a bad “investment”.
Finally, the other subdivisions, like the school board, have no say when we extend these TIF districts. If I were an elected member of one of these boards, I would demand an explanation from the city as to how we feel our needs are more important than theirs. The other subdivisions often say they need more tax dollars, in some cases they raise taxes in order to get more tax revenue, and all the while the city is taking money directly out of their budgets and placing it in ours.
That is how TIFs work.