The TIF from hell

By , May 25, 2012 9:30 am

Our neighbor to the south – Rhode Island – pulled out all the stops to lure a flashy looking business away from Massachusetts. Now it appears that Curt Schillings 38 Studios is going belly up. It has gone from shiny and promising to the economic equivalent of a slowing rolling baseball slipping between Rhode Island’s shaky legs:

Schilling had relocated 38 Studios from Massachusetts to Providence, R.I., in order to take advantage of a $75-million publicly backed loan from Rhode Island. The company received $50 million of that loan. Schilling’s company, however, was unable to make a $1.1-million payment that came due earlier this month, placing the loan in default, according to a New York Times report.

The situation has become a public crisis for the financially strapped state, which is now on the hook for the loan. Two top officials in the state’s economic development agency, which guaranteed the loan in an effort to stimulate job growth, have resigned. Rhode Island suffers from an unemployment rate of 11.2%, the second-highest in the country after Nevada.

Which brings me to my rant-du-jour. Towns, states, and even countries are in a race to the bottom to see who can give away the most in corporate welfare to lure business. Middleboro routinely gives TIFs – Tax Increment Financing to any decent-sized business that sets up shop here.

I’m on the fence with these things. Unfortunately you are almost forced to give a TIF to get a business. The TIF often includes local hiring preferences to make it more palatable but I’m not convinced that Middleboro typically follows through to see that the terms of the TIF are being met. They might be – I just don’t know.

Congratulations Rhode Island on luring 38 Studios away from MA. And ….. thank you.

5 Responses to “The TIF from hell”

  1. Rich P says:

    Mark, I agree with your premise that we should be very careful in giving away TIF’s. I must say that (lately anyway) we are on top of our TIF agreements and believe we have recently recanted a few who did not follow through with the agreement.

    We should and MUST keep on top of every TIF to make sure the company adheres to the agreement. We also should ONLY OFFER TIF’s (of course in my opinion) to companies that we feel may locate or expand elsewhere if the TIF is not provided, A TIF should be used to offset leverage the company may have. They should not be given out to companies who NEED to be in Middleboro either because of location or convenience and providing such would only put a drain on our tax base and also possibly hurt the firm because of the requirements. A TIF should be our bargaining or marketing tool when needed, to entice a good company and business into our town that has other potential locations that we must fight for financially. A TIF agreement typically helps the company much more from the State savings than the town tax revenue which is why most companies want them.

    Our Town Manager and Assessor is pretty active in monitoring current agreements BUT there is always room for citizens to request this information and give oversight to the agreements as well. We all stay on our toes better when there are more watchful eyes on the pot.

  2. Judy B-C says:

    Recently, I got quite an education on TIF’s and what they actually mean to a town.
    Sometime, perhaps, next fall, I will do an article on the negative and positive sides of TIF’S.
    One thing that I can tell you, right now, though,is that the state does the monitoring and pulling of the TIF’s, not OECD or the town manager. A number of years ago, the state wised up and began to realize that they needed to monitor the TIF’s in each town in Massachusetts. Consequently, OECD has to have a report to go in July of every year. Sometimes, the state goes so far, as to follow up on these reports to see if in fact they have been adhered to. For a few years, I helped Anna with these reports to get them ready to be sent in to the agency.It was interesting to see what these companies have to report and how they report them.
    One TIF that was recently, pulled, was because, the company had been merged and the new corporate individuals had no idea that a TIF had been taken out and thus, did not file any paper work. The state stepped in and pulled it.
    A TIF can be like a contract and thus, the wording is the key in a sucessful TIF. It would behove us concerned citizens to follow through in new TIFs and call for transparency in these “contracts” drawn up by town counsel.
    As we all know, a contract is only as good as how someone interprets it. Thus, no words should be left out that can destroy the true understanding of the meaning of the facts of the TIF.
    I use to be a firm believer in TIF’s and went to bat for a few companies in this town for their acceptance into a TIF program with our town.I would not be so quick to do that now, as I have learned some very valuable key facts that has opened my eyes on who exactly, is the winner here.Unfortunately, the individual residential taxpayers are not the winners if the company leaves or sells before their TIF is up.

  3. bumpkin says:

    Very interesting. I’d love to know more about TIF’s. It’s good the hear that we are doing a decent job of looking after them.

  4. bogofree says:

    IMO this had nothing to do with the viability of his business but his politics. Shilling is a noted conservative and quite critical of anything left of center. Payback?

    Shilling has also been critical of government bailouts but seems to be willing to accept one himself. Hypocrite.

  5. Dave says:

    Yes, Schillng is conservative – i guess that explains his willingness to accept corporate wellfare. TIFFs pit town against town & state against state – the madness has to be stopped.

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