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EDITORIALS
TIF would be useful tool for Sch’dy

    With Metroplex, Empire Zone status, federal Renewal Community tax credits et al., Schenectady now has a lot of economic development tools at its disposal and is using them well. If state lawmakers act on a bill before them by the end of session (June 23), it would have another excellent tool widely used in 48 other states. The tool is called TIF, which stands for Tax Increment Financing.
    Here’s how it works. A municipality has plans for some project — commercial, industrial, residential, it doesn’t matter — but some catalyst is needed to get a developer to actually do it. It may be land acquisition, site preparation, roads, sidewalks, streetlights, water lines, or something else.
    Under TIF, the municipality finances its contribution through bonding. Once the project is complete, the municipality is guaranteed at least as much property tax revenue as before. But for a specific period of time, some of the increase in tax revenue, due to higher assessed value, goes to paying off the bonds, or otherwise into the project. That is the “tax increment,” and it’s money the municipality would not have been getting anyway — since the taxes paid on nothing are nothing. The municipality would also benefit from increased property values in the area around the project, as well as other new development it might stimulate.
    TIFs have been allowed in New York state since the mid-1980s, but they are rarely used because they exclude school districts, which account for the largest share of the property tax. The bill in Albany would allow school districts to opt in to the program.
    The city of Schenectady and Metroplex have a keen interest in seeing this legislation pass. They want to use TIF for the waterfront housing project at East Front Street, and think it could be very helpful in encouraging other projects in the blighted neighborhoods, including Hamilton Hill and Vale. In fact, last year they got the school district to agree to participate, and got Sen. Hugh Farley and then-Assemblyman Paul Tonko to introduce a bill that would have specifically allowed it to. Unfortunately, the bill went nowhere.
    The proper way to use TIFs is to limit them to depressed areas, and the bill in Albany would do that. It would cost the state nothing, while allowing municipalities to help themselves.
    Prospects for passage this session looked bright, but then dimmed in the middle of last week when the bill stalled in an Assembly committee. It needs to get moving again — and approved.