Tony Gehrig: Fact Checking Claims About Economic Incentives
The east side of the 100 Block of Broadway is seen Friday, Jan. 22, 2016, Fargo. Much of the block is part of a purchase agreement by the Kilbourne Group. Michael Vosburg / Forum Photo Editor
There have been a lot of assertions being thrown around lately surrounding the use of incentives. I would like to take a moment to fact check some of these statements. The scale will be: True, Mostly True, Mostly False, and Pants on Fire.
Economic incentives helped bring downtown Fargo back
Mostly True!
I have always said that incentives can and should be used for a limited time and scope when there is an area under threat of failing. The difference here is that proponents take incentives too far. We see incentives continue to expand in time, scope, and intensity despite the fact that downtown Fargo is the most valuable land in ND and not at all blighted. Perhaps after 20 plus years of laser focus on downtown, we should let it stand on its own, and help other parts of our city.
Removing incentives would be catastrophic
Pants on Fire!
In Fargo the vast majority of economic development goes on without incentives. In downtown, 66% of companies have never received an incentive. It is complete and utter nonsense to claim that Fargo is booming simply because of incentives. Lowering property taxes across the board would be far more beneficial.
Indefinite incentives in one part of Fargo hurt the rest of Fargo
True!
If we see growth where we reduce property taxes, it must also be true that we see less growth where we increase property taxes. That is how incentives work. Government picks who will win and who will lose. For the vast majority of you reading this, you lose.
Incentives raise taxes on everyone else
True!
When the Fargo Commission grants an exemption, we as a government don’t lose a dime. How? We just charge everyone else in the city a little more to make up for what the recipient isn’t paying.
Economic incentives directly impact school funding
Mostly True!
Tax Increment Financing (TIF) was used for such large projects as Block 9 and the Roberts Street ramp. With a TIF, instead of paying property taxes, they pay back the loan that the government gave them as the incentive. Wouldn’t it be great if you could pay back a loan to expand your garage instead of paying property taxes? Dream on peasants…these aren’t for you.
The free market can’t sustain infill
Pants on Fire!
If infill is the most economic and demanded type of growth, as we have been told it is for many years, then the consumer will seek it out and buy it. That is how the market works whether buying real-estate or scrolling through Amazon.
Without incentives Block 9 would never have happened
Mostly False!
Perhaps Block 9 wouldn’t exist in its current form but to claim the project would never get off the ground without incentives ignores so many other factors. The reality is Block 9 could have absolutely happened without the $22 million that the tax payers kicked in. The project will be profitable from day one. But if I am wrong and Block 9 or other projects are not able to survive without tax dollars, why are we still propping them up?
We should seek out and promote market based growth that is viable over the long term. We do that through low, sustainable, and predictable taxes, not incentives.
