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Tax Increment Financing: Municipal Adoption and Effects On Property Value Growth

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  • Joyce Y. Man

    (Indiana University)

  • Mark S. Rosentraub

    (Indiana University)

Abstract

Tax increment financing (TIF) has been adopted widely by municipalities in the United States as an economic development tool. Despite the large number of state initiatives and TIF's increasing popularity, few statistical studies have been con ducted to examine the direct effect of the TIF program from an economic perspective. This article analyzes the effect of TIF plans on property value growth by comparing pre-TIF to post-TIF property value changes in a first-difference model. The empiri cal results from a panel of Indiana cities indicate that the TIF program has increased median owner-occupied housing values in a TIF-adopting city by 11% relative to what it would have been without TIF. This finding suggests that the TIF program effectively stimulates property value growth in an entire community.

Suggested Citation

  • Joyce Y. Man & Mark S. Rosentraub, 1998. "Tax Increment Financing: Municipal Adoption and Effects On Property Value Growth," Public Finance Review, , vol. 26(6), pages 523-547, November.
    • Handle: RePEc:sae:pubfin:v:26:y:1998:i:6:p:523-547
    DOI: 10.1177/109114219802600601
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    Cited by:

    1. Brent C. Smith, 2009. "If You Promise to Build It, Will They Come? The Interaction between Local Economic Development Policy and the Real Estate Market: Evidence from Tax Increment Finance Districts," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 209-234, June.
    2. Byrne, Paul F., 2005. "Strategic interaction and the adoption of tax increment financing," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 279-303, May.
    3. Jack Ochs, 2006. "Tax Increment Financing," Working Paper 237, Department of Economics, University of Pittsburgh, revised Jan 2006.
    4. Robert T. Greenbaum & Jim Landers, 2014. "The Tiff Over TIF: A Review of the Literature Examining the Effectiveness of the Tax Increment Financing," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 655-674, September.
    5. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    6. Anping Chen & Marlon Boarnet & Mark Partridge & Siqi Zheng & Weizeng Sun & Rui Wang, 2014. "Land Supply And Capitalization Of Public Goods In Housing Prices: Evidence From Beijing," Journal of Regional Science, Wiley Blackwell, vol. 54(4), pages 550-568, September.
    7. Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.
    8. Brasington, David M., 2002. "Edge versus center: finding common ground in the capitalization debate," Journal of Urban Economics, Elsevier, vol. 52(3), pages 524-541, November.

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