The Business Council supports this legislation that will greatly enhance the effectiveness of tax increment financing, an economic development tool that has been in place in New York since 1973.
Tax increment financing is a mechanism to fund public infrastructure improvements related to a broader redevelopment project. Under a TIF, infrastructure is financed with debt, with debt service coming from the incremental increase in real property tax revenues generated by the redevelopment project. The use of TIFs are limited to economically blighted areas, and incremental tax revenues are only derived from properties within a designated TIF project area.
TIFs are widely and successfully used in many states. The usefulness of New York's current statute is limited, however, by the exclusion of incremental increases in school property taxes, which statewide account for about 60 percent of property tax bills.
This bill allows school districts to opt into a TIF financing through resolution of their boards of education. By incorporating all real property taxes into the TIF debt service stream, this amendment will greatly enhance the usability of this economic development tool. At the same time, it allows a local school board discretion to support a proposed development project if it is found to have a significant, positive impact on community quality and overall property tax revenues.
This bill also expands the category of projects eligible for TIF financing to include environmental remediation and redevelopment of brownfields. Redevelopment of brownfields is a major component of the state's strategy for Upstate economic development, and TIFs can provide financial support for existing brownfield programs that have been implemented in a number of upstate cities.
In summary, this legislation would update the state's tax increment financing law to be more consistent with those implemented in other states, and greatly improve its effectiveness for supporting private sector investment and redevelopment.
For these reasons, The Business Council urges approval of S.371/A.2358.