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I <br /> I <br /> I <br />'1 <br /> I <br /> I <br /> I <br /> i <br /> I <br /> I <br /> I <br /> I <br /> I <br /> i <br /> i <br /> I <br /> <br />Fx~eti~s the term ':creative finarcing': is used to refer to a variety of <br />~%an/ems that ~re ue~ to provide assist~r~e to real estate projects. ~ <br />t~ese ':c~eative': ~p~ac~es are t~ose that ~ak~ t~ mo~ey a~ailable outsi~e the <br />conventional budget process, thereby avoidir~ the l~olitically difficult process <br />of ~makin~ choices amorg cc~petin~ services, such as ~olice, parks and <br />libraries. <br /> <br />Existir~ financial mechanisms are enormously productive as revenue sources, <br />which 9ives cities eor~iderable flexibility.--Cities often can make cc~ni~ts <br />of assistance without havir~ to pick and choose anorg applicants. The result <br />is that city governments are able to ~per~ dollars on real estate assistance <br />with greater freedom than with almost any other function. This freedcm er~_ hles <br />them to respon~ to specific requests or to take initiati~ on develc~nents with <br />much greater ease and flexibility than if they were limited to specific <br />appropriatica~s. O~nsequently, they are able to respor~ to developers', requests <br />at any time durir~ a calendar y~r, even though they already may have provided <br />packages of asssistanoe to others. <br /> <br />Several problems are present wi. th the.~sms: <br /> <br />Beav~ use, lack of selectivity.--Because the benefits can be granted by <br />every city--rural ~r urban, irner city, first-ring suburb, or any other <br />suburb--fc~ any real estate de~lcim~nt puri~se, scme city goverrments <br />may be over-using the meohanisms by not limitir~ them to clearly <br />identified problems that should be c(~rrected for the best interests of <br />the public. If city goverrm~=nts provided real estate assistamce to all <br />applicants, ~ the only result of that assistanoe would be the <br />indiscriminate subsidy of private real estate development. <br /> <br />L~uenti~s for tou~ ne~otiatiors are lackir~.---Because tie direct <br />financial burden ~ local taxl~yers either is r~nexistent or so diffuse <br />as to defy identification, cities may be providing _m~r__e assistance than <br />is needed. <br /> <br />City goverr~m_nts can cc~mit revenue from other taxir~ <br />jurisdictior~.~ty ~er .r~s are able to divert taxes from other <br />taxir~ jurisdictior~, sud~ as schools ar~ counties, to help i~y for real <br />estate assistance. <br /> <br />City governments have their own revenues diverted in the s~me process, <br />alttDugh they don'.t really forego re%~_nue in t]~ same fashic~ as school <br />districts and ccunties. ~eir own city staffs are reimbursed from <br />de, leant dollars for the expense that t?~ city incurs. Moreover, a <br />city goverm~ent in all csses receives less than c~e-half of all property <br />tax re%~_nue and in som~ cases the'share is less than 15 percent. These <br />other units of government do receive the k~nefit, of course, from any <br />~itio~%l tax base that comes to that specific ~unity as the result <br />of city .-_~istance. <br /> <br />Property taxes can be higher than nee ded. --Too generous use may produce <br />property taxes that are higher than they need to be. Defenders of the <br />existing system oonter~ that the tax rate is not higher than it ~ould be <br />without the financial assistance, because '.~ut f~r': the assistance the <br />growth wculd not or--se haw occurred at that location. Ult~ma_tely, <br />the defenders argue, t~ tax rate will decline because of the new <br />growth. Critics say the ."but for': claim is too exaggerated and that <br /> <br /> <br />