Time for everyone’s favorite topic: tax-increment financing. Cut this column out, and keep it beside the bed, available in case of insomnia. Or use it to induce paralysis and stupor in case of zombie attack.
I should explain how tax-increment financing works. First, you carve out an area and declare it a problem. Back in 1985, the problem was Downtown DeLand. We called the carve-out the Downtown Community Redevelopment Area or the CRA.
Then, you pick a start year, such as 1985. Total the property values in the CRA, and call that the base. Property values in 1985 were pretty modest, so the base is small.
Then, the fun begins.
Each year, as property values increase, you subtract the base from the total property value. Call that difference the increment. There has been a whole lot of improvement Downtown since 1985, so the increment is huge.
The governing body gets credit for all the increased value. We assume that there is no inflation. Even without action by the CRA, inflation and the real estate market increase that tax increment.
As the increment grows, the City takes off all the taxes on that increment for their CRA budget. Better, as everyone else raises taxes, the City gets those incremental taxes, too.
It was supposed to be temporary. However, in 2019, the CRA is more than 30 years old. By 2025, it will be 40 years with no end in sight.
Well, there was an end, but the City voted to extend it over another decade. Eventually, we will have a 50-year-old CRA, lurching around like a drunk zombie eating tax money instead of brains.
We do not know what the City intended when they extended the quasi-life of the CRA. There are no bonds requiring an additional decade to repay. There are no projects planned for seven years hence.
That will not be a problem. Govern-
ments love bonds, because the officials get tons of love from bond counsel, and bond sellers, and bond investors. And, issuing new bonds automatically justifies extending the CRA to repay them.
Even now, they cannot tell us why they felt the need to carry out the municipal equivalent of zombie reanimation. They have no idea what they will need to buy for a decade starting in 2025, but they are government, so we know what they are thinking — they will find a way to spend the money.
— Andrews is a DeLand-area attorney and a longtime government critic. For purposes of the column, he finds it convenient that there is so much government to criticize.