Economic Development

Question 1

Community Development Block Grant (CDBG)

Answer 1

Authorized in 1974 to replace the Model Cities program

Part of Nixon’s concept to get the feds out of local city-making

Simply gives eligible communities a set sum every year and allows them to invest as they see fit to benefit low- and moderate-income residents.

• can’t be used to construct new affordable housing (that’s what HOME funding is used for)

Significant HUD oversight role

Question 2

Tax Increment Financing (TIF)

Answer 2

Generally only used by municipalities.

All states at one point adopted some form of it

Essentially clips off the increase in property taxes in an area and designates then to improvements in the area.

Why not just use property tax to pay for those improvements?

Uses expected tax revenue to promote specific activities in an area through borrowing or spending

Two basic types: “credit enhancement” & “ infrastructure”

AKA District Increment Financing, Community Redevelopment Areas, etc.

Emerged as fed funding for urban development declined starting in 1970s

Sometimes overlap with Urban Renewal Districts

Question 3

How are TIF districts created?

Answer 3

Requires legislative vote (city council) and often state approval of plan

Developer may initiate or city may initiate based on strong vision or plan, or desire to build something big

District boundaries may be regulated by state law

Many states have “but for” requirement, hard to prove