What are the challenges of a TID, or sometimes of planning generally?
Retail cannibalization. It’s a big problem in many communities, with or without a TID. There’s no retail gain, under this scenario, just businesses – the same or new – locating in newer areas while others fold or move. Oshkosh, for example, is a city with this sort of retail problem, wholly apart from a TID.
Market-Like Deals with Only Half a Market. TIF is a municipal development mechanism that takes the form – superficially – of the market. In a private market, buyers and sellers freely engage in transactions for profit. A buyer might have dozens of prospective sellers, each different on any given day. After he buys, be becomes a prospective seller himself. Look back a few months later, and the people who are buyer and seller may be wholly different from those you knew before.
That’s not true at all in the TIF scenario. The city, the CDA, or some entity representing the municipality is one half of the exchange. There are huge risks in this situation. First, it places municipal officials or their delegates into the role of buyers, sellers, or dealmakers. No matter how experienced they imagine themselves to be, they will typically lack the skill of a successful private broker of goods and services. The private broker will engage in more deals, under greater pressure, and often for greater amounts, than even a small municipality. (I am not, buy the way, such a broker, so I am not describing my own work.)
It’s not a private market transaction, both by definition and by experience and skill. I will have far less confidence in development deals negotiated under a TID than those between two private parties. The private parties bear the risk more keenly, than any number of municipal negotiators who distribute the city’s risk – debt — to the general population rather than themselves.
When a Common Council member, at least night’s meeting, tried to be reassuring by declaring that the city could dictate which businesses might go in a given TID, one has to steady oneself. There’s nothing at all reassuring about the idea of the city or CDA members trying to ‘dictate’ market development. It’s a case of not knowing what they don’t know. A little more humility would be in order – it’s easy to push this matter forward, but the skill and insight to pick wisely will tax even the best our city has to offer. The brusque declaration that it will all be determined or dictated is hardly reassuring. (It’s difficult to tell if this attitude stems from a lack of self-awareness or an excess of self-importance.)
A TID is a matter of last resort, and should be used when ordinary private transactions are too few to sustain a healthy economy. There should be no rush to use public debt as a last ditch effort to preserve an economy. We are here as a consequence of challenges unmet, unresolved.
All of this is potential only; no TID will make new factories sprout from the ground like clover.
This is quite a ‘Hail Mary,’ pass, however. More TIDs than previously, with two decades of life, and when we have one TID now that does not pay for itself. It’s a long-range idea, with no clear certainties, that has one public-relations advantage: officials can claim that they did all they could. Many involved in this effort, including our current city manager, will be long-gone and retired before those remaining in the city will know if this five-TID plan was sound.
We should know, however — now and forever — that public solutions with the look of private ones are less advantageous than wholly private arrangements.