, Salem, MA


October 31, 2012

Letter: TIFs are ineffective

To the editor:

Before the Beverly City Council votes on the proposal for tax increment financing in the downtown area, perhaps it should take a glance at the evidence on the effectiveness of these subsidies for developers.

California, which pioneered use of the TIF as a redevelopment tool, no longer uses them because they found them to be both expensive and ineffective. Academic studies have found that the use of TIFs have little or no effect on surrounding property values.

In most cases, the rise in property values attributed to TIFs would have occurred in their absence. In other words, cities end up subsidizing developers for no reason at all.

In Beverly’s case, a TIF is unnecessary because residential developers are attracted to the downtown’s prime location down the street from the ocean with a commuter rail station for easy access to Boston. While a commercial developer may conceivably threaten to move to a more “business-friendly” location, these are amenities that residential developers cannot get elsewhere.

Furthermore, many of the developers own multiple properties in the area. This ensures that they will personally benefit from the positive externalities associated with neighborhood development.

My wife and I recently moved to this area because we saw its potential for growth and redevelopment. As a sociologist who studies taxation and urban redevelopment, I knew this could happen without taxpayers having to subsidize developers (just as nobody needed to subsidize us to get us here).

We do not need to bribe developers to build here. I urge the mayor and City Council to examine the empirical evidence on this issue and oppose TIF subsidies.

Josh McCabe


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