From the NMMS eNewsletter October 2011
When a program isn’t taken seriously unless it has its own acronym, we are adding to the alphabet soup and creating a new one for our NMMS communities: DRIFT. The three DRIFTs that are the subject of this article include:
• BIDs (Business Improvement District)
• TIFs (Tax Increment Financing) District
• TIDDs (Tax Increment Development District)
Some common elements of these tools include:
• All are enabled by State Statute with the authority to create a geographical “district”.
• Funds that are generated in the district are spent in the district.
• The funds are deposited in a special account set up by the city and can only be used for eligible public purposes such as streetscapes, affordable housing, arts and cultural centers, etc.
• All use a form of tax as the revenue stream (using either a new tax or the existing tax base).
BIDs are a new tax in the form of a special assessment levy. TIFs and TIDDs are based on the existing tax “increment,” which uses the incremental increase in the existing tax base resulting from the increase in property values and/or gross receipt taxes in the district.
BIDs are established by a majority of property owners within the district signing a petition accepting the new levy, and receiving approval from the City Council to establish the district. BIDs finance enhanced services such as increased security, maintenance, amenities, and marketing. Only two communities in NM have an approved BID; Downtown Albuquerque and Gallup.
A TIF district can be established after a Metropolitan Redevelopment Area (MRA) has designated the area as blighted, and a MRA Plan is approved by the City Council, which identifies redevelopment projects to alleviate the blight. TIFs use only the property “tax increment” generated from the district.
TIDDs, on the other hand, can be created on greenfield sites or on downtown areas, as the designation of blight and a MRA plan is not necessary. But TIDDs require either a ballot election approval by a majority of property owners in the district, or from 100% of the property owners in the district signing a petition to create the district and submitted to the City council for their approval. TIDDs can use property and/or gross receipt tax increment for financing public projects. Las Cruces is the only NM city that has created a TIDD in a downtown area.
One of the reasons the NMMS program has been promoting TIF districts in our rural downtowns is its generally simpler to implement than the other tools: the MS Downtown Master Plans can be used to meet the MRA Plan requirement; it’s not a new tax or tax increase on downtown property owners; and, it only requires City council approval at a public hearing, as opposed to property owners approval on a petition or general election.
There are additional financing tools for downtown improvements and revitalization such as the Local Economic Development Act (LEDA) and its associated LOGRT (local option gross receipts tax), Quality of Life tax, and Lodger’s Tax, but that’s another story for a future article.