The Caddo Commission is currently considering the creation of a Tax Increment Financing (TIF) district in north Shreveport along North Market Street that would encompass the new Amazon facility.
The proposed TIF would be NOT impose an additional sales or ad valorem taxes. The TIF would set a baseline for ad valorem taxes, and, thereafter, any increase in property taxes would be devoted to the TIF for economic development.
The commission should consider many factors in its decision to create the so-called “Amazon TIF”:
1. Most importantly, the Payment in Lieu of Taxes (PILOT) provisions of the Lease Agreement and Agreement to Issue Bonds between the Caddo Industrial Board and Amazon Services, LLC provide for an exemption on payment of Caddo Parish and city of Shreveport ad valorem taxes for 10 years. Thus, any TIF that encompasses the Amazon facility should be structured to function effectively with all the provisions of the IDB/Amazon agreement, and especially those concerning payment of ad valorem taxes.
2. Historically, Amazon fulfillment centers bring in other businesses that want to locate near the centers. Thus, Amazon’s selection of Shreveport should in and of itself create economic development in the North Market corridor, which would increase substantially ad valorem taxes that will either benefit the parish directly or fund the TIF. The TIF may not really be needed to spur economic development in that area depending upon the guidelines established for expenditure of TIF funds.
3. The proposed geographic area is quite expansive, and the current uses of the properties in that area differ substantially. This area has single retail locations, fast foods, manufacturing, large retail areas and lodging. The diversity of businesses and land uses in the designated area could be challenging in the sense of developing an economic mission for that area and determination of TIF fund disbursements.
4. The TIF should have a well-defined economic development plan that does not harm the existing property uses in the area, does not adversely affect future economic development in the area, and has protections for those properties within the TIF district as well as those adjacent to its borders. In other words, there should be guidance on how the TIF moneys will be expended and if they will utilized to provide for basic economic development expenditures like infrastructure to stimulate economic growth.
5. A key decision that must be made is the entity to decide the disbursement of the TIF moneys. In other words, will the governing body(ies) that forgo the additional tax revenue be in control of how these funds are utilized, or will the TIF have a separate governing body for this purpose? If the latter, who selects the body, what are the terms of office, etc.?
6. What will be the impact of future lost tax revenues due to increase in property values and/or increased economic development have on the parish? The cost of providing basic governmental services provided to that geographic area by the commission and the city will continue and can be expected to increase with inflation. And will the TIF assume any financial responsibility during its duration to provide/assist in payment for basic services?
7. What will be the duration of the TIF? In other words, when will all the ad valorem revenue in the geographic area revert back to the governing bodies that establish the TIF? The IDB/Amazon agreement concerning ad valorem tax payments expires Dec. 31, 2032.
There are probably more factors that should be evaluated in the decision to establish this proposed TIF, its geographic area, its governing body, its economic plan, etc.
Bottom line: TIFs can be good, bad or indifferent. The TIFs established in Shreveport and in the rest of the state reflect just that in terms of success. And there is not one size that fits all with the creation of TIFS.