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I I I I I I I I I I I ! According to our proposal, for the next several years city governments ~ld use both a new redevelopment fun~ ar~ tax-increment financing. The new fund would give cities a~cess to revenus which they do not n~w possess, plus greater flexibility in the use of dollars f~r real estate assistance. City governments have beo0me highly protective of tax-increment financing, believing nothirg else will be m available. ~ we are recc-...~nding that the two tools exist side-b~-side for several years. fbwever city governments use redevelopment funds and tax-increment, we believe that renewal of obsolete ara/or blighted real estate should be the guiding motivation. Cbnsequently, we are reoommer~irg that exper,~itures only be made which are oonsistent with previously-adopted renewal plans. ~% are trying to discourage the use of dollars only for the purpose of enticirg develc~nent to locate in one city rather than another. We think intermunicipal o0mpetition is healthy but the use of subsidies to fuel this competition is ill-advised. To encourage city governments to select the redevelopment fund, we are proposing steps that would rake tax-increment less appealing. Those steps are: (a) requiring a city to reimburse the state psrtially for the state'.s loss of revenue f~_~anse of tax-inc _reme_ _nt financir~, (b) preventirg tt~ accumulation of surpluses in tax-increment projects, (c) di~inuing poolir~ of funds in tax-increment districts but allowing a slight diversion of tax-increment revenues to the assistance fur~ as a replacement for poolir~, (d) prohibiting use of tax-incr~nt financing in locatior~ where no redevelc~ment is occurring, (e) spellir~ out the real effect of tax-increment financing in direct levy and aid tezms, (f) prohibiting the use of tax-increment funds for employee salaries ar~ related city admnistrative expense, ar~ (g) repealing a provision which ~ll~'S City governments to keep valuation in tax-increment districts at initially-established levels, even if prevailing property values drop. City governments usirg tax-incre_ment option would oontinue to have access to resources of school and county governments because we propose to oontinue--not repeal--t~e provision of tax-increment financirg that allows school, oounty and city miL1 rates to be imposed on the captured value with the revenues used for redevelopment. Our purpose is to encourage movement from tax-imrement financi~3 to the redevelopment fund. We think the fund has several adwant~s: * It gives a city government much more flexibility in the use of dollars. A city government can provide assistamoe in other parts of the city, not just in tax-ir~rement areas. It won'.t be mecessary to worry about wP~ther a project which z~cei~es assistance generates higher property taxes. * It gives city governments real incentives to exercise great discretion in providing ~lp to private developers, becm,,~_~e ttmse dollars will oc~e out of the same fur~ %~%ich will be used to help finance other types of city assistar~e for renewal. * It increases the likelihood that only projects with real r~--~ will receive assistar£~ because dollar amounts are limited and would be apportioned directly. * Dollars of investment will be clearly visible to elected officials and the public.