Got it so far?
Tax increment financing is used in 49 states to fund development that otherwise might not happen. It has been in use since 1952. New Jersey’s version of TIF is called Revenue Allocation Districts. Legislation authorizing RADs was passed in 2002, but the rules on how to do it were only passed in February 2005, according to the New Jersey Conference of Mayors. Millville has an approved plan and Somerville is seeking approval from the state Local Finance Board, an arm of the Department of Community Affairs’ Local Government Services Division.
Applicants must demonstrate that “but for” a RAD, development would not take place. But Chicago’s proliferation of more than 100 TIFS has made Chicago Reader writer Ben Joravsky suspicious of its real intent, or the “what for.” See his articles at http://www.chicagoreader.com/tifarchive/
Why are we telling you all this?
The powers that be (or that have been since Jan. 1) apparently like the RAD idea. Attorney Thomas Hastie of the firm McManimon & Scotland discussed the RAD law at the City Council meeting Monday (Nov. 20, 2006). The city would have to designate a RAD district and make a plan. With state approval, the city could then incur debt for development in the district. The debt would be offset by future revenues from the development.
In terms of creating interest in the concept, Hastie said, “I’m kind of the Pied Piper.”
Each council member received Hastie’s entire presentation in his or her packet. You can see it online if you Google “Hastie RAD” – it’s titled “Understanding New Jersey’s RAD Statute.” It’s a 22-page PDF file. (Darn acronyms!)
So far it is just a concept for the council to consider, not attached to any project. Jacques Howard, assistant director of the Community Development Program, suggested the council members should visit Millville to see how it works.
Hastie said federal funding programs such as UDAGs (Urban Development Action Grants) have largely dried up, spurring the search for other ways to fund development.
“Fifty percent of a small loaf is better than 100 percent of nothing,” he said.
(FYI, a RAB is a Redevelopment Area Bond.)