Transparency, equity should underlie multimillion-dollar Cleveland bid to use extended TIF financing downtown: editorial

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Mention the acronym TIF, and some might think you’re talking about a “tiff” or disagreement. And in truth, some critics do disagree with cities’ use of “tax increment financing,” or TIFs, to get developers to upgrade blighted properties through the promise of 30 years of abated property taxes on improvements. (There’s generally an exception for taxes paid to the schools, which still go up as the property value increases.)

The idea of TIFs is to allow what developers would have paid in taxes on the improvements to stay in their own hands, effectively helping them pay for their construction costs over the expected duration of the project. Yes, that makes them money, and it makes other public entities, from libraries and parks to those providing human services, wait before seeing the revenue benefits of this new development. The counter argument is that, without the upgrades, taxes would not have gone up at all, and the blight would still be there.

Now we have seen (briefly) a new financing animal arrive in Ohio — extended TIFs.

In a largely under-the-radar legislative move intended to benefit communities where TIFs were expiring, Ohio offered a narrow window — now apparently closed — allowing cities to double the length of existing TIFs for up to 30 more years. Those tax revenues would then flow into city coffers to be used for specific downtown infrastructure and related projects.

Cleveland is among the cities that took advantage of the provision.

Cleveland has already extended five TIFs worth an estimated $6 million a year in property taxes for another 30 years. The TIFs — for the East Fourth Street upgrades, the downtown Hilton and Westin hotels, Steelyard Commons and nearby neighborhoods, and the Louis Stokes Cleveland VA Medical Center — would otherwise have expired between 2033 and 2045, cleveland.com’s Courtney Astolfi reports. Now they’ll run to 2063 and beyond.

Note the past tense. This is a done deal. The legislative window has closed, and Cleveland has already moved to secure revenues that could amount to well over $150 million over the term of the expanded TIFs. It did so, it says, after consultations with affected parties that included Cuyahoga County, regarding its health and human services levy; the Cleveland Public Library and the Cleveland Metroparks.

But note who’s absent from the list of consulted parties. You. The public wasn’t consulted, but it should have been.

A key mandate for Cleveland — and the other local communities where this financing could or is being used, such as Beachwood, Shaker Heights and Orange Village — has to be full transparency, and equity, in how the extended TIF financing will be used in coming decades.

In Cleveland, there are encouraging signs that the “TIF overlay district” for downtown and waterfront revitalization that Mayor Justin Bibb has been working on — and where the extended TIF financing is expected to be a major financing component — is going to be hammered out in a public, transparent way.

It needs to be.

An open process is critical to gaining public confidence and support for big spends that are likely to include sports stadium upgrades as well as Terminal Tower improvements. Astolfi reports this overlay district could extend to the Near West Side, too.

The legislative authority for this appears to trace to a provision slipped into the last state budget and that was later expanded through legislation — an example of the unhelpful opaqueness of our state legislative process.

That’s especially true of the goodies slipped into Ohio’s budget, which runs into the thousands of pages and is finalized by select legislators in closed-door negotiations, well out of the public’s eye. The budget can — and is — used for all manner of special-interest favors that citizens sometimes never know about, or are shocked to learn of when they do find out.

Transparency is the needed element, the anti-special-interest disinfectant, that not only lends legitimacy to government spending decisions, but also helps guard against mistakes, overreach, corruption and venality.

And transparency, fairness, and deliberations in full view of, and in consultation with, the public, are now what Cleveland needs to deliver as it moves forward with designing uses for its expanded TIF financing windfall and TIF overlay district.

About our editorials: Editorials express the view of the editorial board of cleveland.com and The Plain Dealer — the senior leadership and editorial-writing staff. As is traditional, editorials are unsigned and intended to be seen as the voice of the news organization.

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