Tax increment financing, where governments borrow against future property tax revenue to front the cost of infrastructural improvement within designated areas or on designated properties, has dominated U.S. economic development and found footing in Canada. A brief survey of its prevalence in the latter revealed what seems to be a mix of enthusiasm and uncertainty, as expected with an instrument proven controversial for its risks/rewards.
I brought this up in my Introduction to Planning class in a discussion on decentralization and the city government's role in economic development as the global-local pivot. What the dilemma of TIFs really comes down to is uncertainty - about whether development would've occurred in their absence, whether projected growth would materialize into enough funds to pay off the money borrowed, whether the public benefits would be equitably distributed within the neighborhood and the whole city or even beyond, whether the foregone revenues from overlapping jurisdictions would have long-term repercussions, whether rent-seeking agenda would sneak into the complex design and lodge itself through their implementation... And whenever there is uncertainty, power dictates the narratives - the ones most cited by TIF supporters being 1) "there's no harm done" - brownfields that yield little revenue unless injected with a dose of investment and 2) "it's good for everyone" - that the investment, paid for by new revenues that would not have existed otherwise, results in better infrastructure for the city. These aren't exactly false, if assuming too much; what gets left out is how extreme TIF is and that there may be more balanced alternatives.
Perhaps it is this controversial U.S. legacy that explains the apparent hesitation in its adoption in Canada. Ontario passed its Tax Increment Financing Act in 2006, enabling municipalities to create TIF districts, apply for provincial grant that match the projected tax increments, and use the funds to support businesses within the designated districts that would otherwise be prohibited. How it works--as best as I can tell--is that a city identifies (presumably contiguous) parcels suitable for redevelopment, remediation, and/or public transit, submits a feasibility study--by itself, through a business subsidiary, or with neighboring cities if applicable, gets approved for a grant from the province, establishes the district, freezes property valuation in that district at a baseline, diverts all tax increments (increases above the baseline from the development in question) into a special fund, uses that fund and payouts from the province to foot the bills. It isn't clear how the grant is calculated--presumably in the amount equal to the projected tax increments given the maximum cap at that amount and lack of specification with regard to the recipient (province or city) of the educational property tax in question. Districts are limited in size and scope--the municipal tax increment in a given year cannot exeed 1% of all municipal property taxes. There is room for governor's discretion to approve ineligible projects that are deemed to have substantial public benefit that cannot occur but for the provincial TIF grant.
Manitoba soon followed suit in 2009 with its Community Revitalization and Tax Increment Financing Act that subsequently enabled the creation of the "Sports, Hospitality, and Entertainment District (SHED) in downtown Winnipeg through the 2002 City Charter section 222. The approach was top-down in that the province designates a property and meet with the affected municipal and school boards and very much growth-oriented in that only the probability of project success and public benefit is considered, not funding availability. There are assessment and levy provisions separately for the designated property and surrounding properties. Once a designation is made, assessed value is frozen; for any subsequent increases or "increments", in lieu of school taxes, property owners pay toward a "community revitalization levy," which is then remitted back to the province to go into a Community Revitalization Fund to be paid out to the property owner(s), occupant(s), the city, and/or entities making supported investments in the neighborhood--to offset any costs they bore for redevelopment, whether it's from increased valuation from making improvements--not unlike the "pay-as-you-go" arrangement in many U.S. TIFs--or decreased valuation from creating affordable housing units--not unlike Ontario's use of Tax Increment Equivalent Grant. (I got exhausted just typing that last sentence..)
In 2018, Manitoba introduced a new framework to make TIFs more transparent, accountable, and collaborative (see above) so they don't become a runaway public risk or burden. Reforms include more representative decision-making, delayed payouts, and more stringent evaluation criteria, including but-for tests, which seems to have gone into effect, according this policy adopted by the Winniopeg City Council in 2022. Within hours of the announcement, the Canadian Taxpayers Federation responded with its rejection and criticism against the new framework as part of its stance against TIFs in general, citing the failure of development projects that Manitoban taxpayers had to pay for. At this point in time, Winnipeg officials were already doubting whether their city was all set on TIFs, according this CBC News analysis, and "whether Winnipeg has already mortgaged too much of its future to pay for projects now" and possibly trading long-term sustainability and resilience for relatively short-term gains that make sense to pursue for election cycles.
Ontario wasn't Canada's TIF pioneer: Alberta first created the Community Revitalization Levy through the Municipal Government Act in 2005 that was later suspended in 2014 pending a thorough review of its impact on the redistribution of educational property taxes and resumed in 2022 with a number of transparency and accountability reforms. So far there are six TIF districts throughout the province--the earliest to begin (in 2008) and last to conclude (in 2047) being the redevelopment of Calgary Rivers District through its business subsidiary, the Calgary Municipal Land Corporation. The approval process, public involvement, and fiscal impact for this and the Edmonton districts were called into question in a 2019 paper by researchers with the School of Public Policy at the University of Calgary. These districts, along with Toronto's SmartTrack proposal and Winnepeg's SHED, are definitely worth keeping an eye, as Canadian governments continue the TIF experiment.
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