TAX INCREMENT FINANCING (TIF) EXERCISE
In development "deal'' the Community Development Director of the City of Bloomington was working on, a gas station was being remodeled into a retail store for the sale of oriental rugs. The current property taxes for the land and building was $50,000. When the new retail store was completed by the end of the year, the property taxes would be $100,000. by Bloomington city policy, !;he maximum length of the tax incremenfd1strict is 10 years. The City Bloomington would like to see this deal get done, because it would be more aesthetically pleasing than an abandoned gas station, plus bring a needed retail business to town.
Given this information, please answer the following questions:
A. What is the amount of tax increment revenue that is available to the Community Development Director to make a deal with the developer?
B. The developer has found that there are gasoline leaks from the tanks the service station owner left on the property and will cost $600,000 to cleanup the pollution. As a result, the developer is asking for the City of Bloomington to contribute $600,000 to pay for the cleanup, as it-is an unanticipated expense that will prevent the project from being done. Should the Community Development Director do this deal? Why or why not?
C. What ideas do you have to make this deal work financially for both the City and the developer?
D. In Economic Development I, you learned about theory and principles. In Economic Development II, you learned about real deals and real problems... what are your thoughts on the ideals and theory of economic development vs. the hard reality of getting deals done?