This document discusses a study on the transfer of tax increment financing (TIF) policies from the United States to the United Kingdom and other places. It examines whether TIF would be dependent on institutional support and successful for affordable housing provision. It also provides background on TIF, including its origins in California in the 1950s and adoption in other US states, Canada, Australia and parts of Europe. The document outlines the methodology for case studies of TIF implementation in the UK and San Francisco.

1. Dr Graham Squires
Prof. Norman Hutchison

2.  Whether TIF policy transfer can be applied
from its conceptual origins in the US to being
introduced to UK and elsewhere
 Would this TIF policy transfer case study:
◦ (a) dependent on institutional support
 (e.g. local/central authorities, financiers, developers,
planners, community, agencies – redevelopment)
◦ (b) be successful or unsuccessful for affordable
housing provision

3.  The financial crisis of 2007–2008 led to the
subsequent collapse of some banking institutions
and a global restriction of credit
 Initial attempt by the Labour administration of
Brown to deal with this crisis was by neo-
Keynesian methods
 Conservative-Liberal Democrat coalition in May
2010 with a programme of austerity in public
spending

4.  Designed to either stimulate economic
growth in designated (potentially
disadvantaged) areas [e.g. EZ and Tax Breaks]
 Or Relax the burden of direct investment by
the state required using innovative Finance
[e.g. TIF and Grant/Bond on future
betterment]

5.  Within a designated TIF district, this anticipated
increased taxation (the ‘tax increment’) is captured
and used to payback the infrastructure that has been
provided for by the front-loaded finance in the form
of a bond to the Local Authority
 Local authority to trade anticipated future tax income
for a present benefit
 Supply of new or improved infrastructure usually
leads both to new development and to an increase in
the value of surrounding property (betterment)

7.  The initiative was first introduced in
California in the 1950s
 Of the US’s fifty states, almost all now have
enabling legislation that allows TIF
 TIFs in the US have grown dramatically since
the 1970s

8.  Pilots in Scotland (Scottish Futures Trust, 2011)
 England (Greenhalgh et al, 2012; Wilcox and
Larkin, 2011, RICS 2011)
 Elsewhere in Europe appropriation is taking place
(ULI, 2009).
 Use of TIF in Australia (PWC/PCA, 2008) and New
Zealand (Wellington City Council, 2010)
 Canada has adopted TIFs in states such as Ontario
and Alberta (City of Calgary Report, 2005)

9.  Literature Review
 UK Interviews
◦ Property Institutions (e.g. BPF), Politicians (APUDG),
Consultancies, Research Centres (e.g. Core Cities, ULI)
 US Interviews and Field Visits
◦ Universities (e.g. SFSU; Berkeley; Loyola; UofI; DePaul;
Northwestern; Consultancies (e.g. BAE) ; City Hall (Mayor’s
Office)
 Case Study: San Francisco
 TIF Key themes
◦ Approach and Context
◦ Geography / Spatial Targeting
◦ Characteristics and Mechanisms
◦ Implementation
◦ Outcomes

10.  2007-08 accounts, at State level, California
◦ 425 TIF districts
◦ 756 projects
◦ $515 billion of tax increment added value in
assessed valuation
 San Francisco (county), the 2007-08 accounts
◦ 2 redevelopment agencies
◦ 10 active TIF project areas
◦ $10.5 billion of tax increment added value in
assessed valuation (State of California, 2008)
 The City and County of San Francisco is now
the default successor to the former RDA
central resource on TIF

11.  Raising of TIFs was instrumental in gaining
match-funding grants from the federal
renewal program
 More recently as the primary means for
local government to finance their own
redevelopment
 Tax Increment Finance (TIF) funded
Redevelopment Agencies (RDAs) ended
January 2012, due to:
◦ ‘massive’ budget shortfall
◦ to protect funding for core public services at
the local level

12.  RDAs as a beacon of lesson learning
innovative financial approaches
 Has spawned a TIF industry –
deconstruction will take time and
create further legal unravelling
 Loss of legally supporting the
seizure of blighted private spaces
for new public-private
developments without the vote
(Eminent Domain, Proposition 13).

13.  TIF provided the principal supply
of funds for redevelopment such
as affordable housing
 Provided a wider strategic view of
real estate infrastructure - can
allocate funds across the city
based on functional connectivity
 20% could be ported to any other
TIF project where housing could
be seen as connected to the
project (e.g. labour force), even if
it is not within the TIF district

14.  TIFs could also produce affordable housing totaling at
least 15% of all new units within the redevelopment project
area
 No compulsory spend created more than 20% reserve for
affordable housing – enable powerful affordable housing
development funder ($38 Billion)

15.  Lost opportunity to deal with ‘blight’ that would not have been
dealt with without some form of external financial stimulus
 May lose a sophisticated instrument that can strategically deal
with small scale and large scale public-private projects
 UK Local Authorities taking up but slow and cautious - central
government approval needed
 In UK financing is more likely to come from the Public Works
Loan Board than the bond market (Public lending)
 Future possibility of affordable housing as essential
infrastructure in blighted zones – not currently prerequisite in UK

16.  Roll out into UK – See RICS Report (2012)
 Europe. RICS Research Trust – Innovative
Finance in European Real Estate Development
 US-UK Fulbright RICS Scholar Award - The
Future Financing of Real Estate Development
in Cities. University of California. Berkeley

17.  Squires, G. and Lord, A. (2012). 'The transfer of Tax Increment
Financing (TIF) as an urban policy for spatially targeted economic
development initiatives’ in Land Use Policy, Vol. 29, No. 4, pp. 817-
826
 Squires, G. (2012). ’Dear Prudence: An Overview of Tax Increment
Financing (TIF)' in Journal of Urban Regeneration and Renewal, Vol.
5, No. 4, pp. 356-366
 Squires, G. and Hutchison, N. (In Progress). ‘Redevelopment Agency
and Affordable Housing Lessons in Tax Increment Financing (TIF)
from San Francisco’
 RICS. (2012). Tax Increment Financing - An Opportunity for the UK?