Dix 306 yard signs are sprouting across Raleigh announcing support for the Friends of Dix/Dix Visionaries proposal to preserve all 306 acres of the Dix campus to serve as Raleigh’s “Central Park.” Open space preservation and the idea of a central park for the Capital City are commendable ideas. However, before jumping on the Dix 306 bandwagon, citizens need to closely scrutinize the financing mechanism proposed and think critically about the foreseeable consequences of this plan.
Friends of Dix/Dix Visionaries propose to finance purchase of the Dix property and development of a “destination” park by using Tax Increment Financing. What’s this?
You may remember that in 2004, citizens of North Carolina voted to adopt a constitutional amendment to allow the General Assembly to let local governments sell what was termed “self-financing” bonds to pay for public improvements associated with private development projects within a defined territorial area. These bonds—more commonly called tax increment bonds--are not subject to taxpayer approval by referendum.
How do self-financing or tax-increment financing (TIF) bonds work? A local government defines a geographic area where it thinks private development would occur with some upgrading of public facilities (such as water/sewer infrastructure, sidewalks or parking). It designates that area a “development district.” The tax base in the district is frozen, with property owners agreeing to a minimum tax value for their property. The local government then sells bonds to finance the infrastructure improvements. A private developer—lured by the improved infrastructure—builds a commercial or residential structure in the district. Tax value in the district increases, and the difference between the property tax revenue before development and the increased property tax revenue is used to retire the bonds that funded the public improvements. When the bonds are paid off, the higher taxes go to the taxing authority.
Tax-increment financing was created as a way to bring economic development to blighted areas of cities, to bring new uses to idle factory buildings, or to clean up and use properties contaminated by industrial pollutants or leaking underground storage tanks, not for private development on high value property.
Friends of Dix/Dix Visionaries know from studying the development of large urban parks in other cities that land around such a park becomes highly desirable and that development or redevelopment opportunities soar. They propose to put retail areas and neighborhoods around Dix into a Tax Increment Financing District and begin to redevelop these areas with higher value residential and retail development. The proposed district is very large and includes a number of high-value areas that are already being redeveloped, including Glenwood South and Boylan Heights. It includes at least one neighborhood where there are few if any opportunities for redevelopment but where property values will increase anyway because of the area’s cachet—Cameron Park. Inclusion of such high-value areas in a TIF District is totally inappropriate.
Neither Raleigh nor Wake County has used TIF, and neither has established guidelines for its use. Until such guidelines have been developed—with plenty of public input—TIF should not even be considered, and any plan for its use related to the Dix property should be rejected.
Moreover, the proposal to preserve all of the Dix campus for a park raises another critical issue that has received no public attention. There are a number of low-income neighborhoods near the Dix campus that could--depending upon the definition adopted—be designated “blighted.” Such neighborhoods as Fuller Heights on Lake Wheeler Road which is low-income rental housing offer the possibility of huge profits if Dix becomes a “central park.” Indeed, it is rumored that speculators are already buying up property in Fuller Heights. Redevelopment of these low-income neighborhoods will significantly reduce the stock of affordable housing in Raleigh. Any plan to make Dix a park should include provisions for affordable housing.
Identifying the most publicly beneficial use of the Dix campus requires a great deal of critical thinking. Supporting a proposal simply because a park seems like a good idea is not good thinking.
TIF for DIX
Jerigray you raise several important points when it comes to TIFs, particularly the importance of public input and approval.
However, I think that you are not accurately describing the scope and purpose of TIFs. While TIFs were originally designed in the 1950's as a way to bring economic development to blighted areas of cities, they have since been used for a much wider variety of purposes.
The TIF that is proposed by the Friends of Dorothea Dix Park on the neighborhoods surrounding the DIX campus is NOT for private development as you seem to suggest, but rather to purchase land for PUBLIC USE. In fact the use of TIFs to purchase land for parks has been done in many cities across the nation.
You also state that the inclusion of Cameron Village into a TIF District is totally inappropriate because it is already a high-value area that will increase in value even without a destination park. However, if a destination park is created that would increase real estate values in Cameron Village more than they would otherwise increase without a park, than I believe that the inclusion of Cameron Village into a TIF district is not necessarily inappropriate.