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original: Optimal investment in a tax increment financing district

Author

Listed:
  • Gerrit J. Knaap

    (Department of Urban and Regional Planning, University of Illinois at Urban-Champaign, 611 E.Lorado Taft Drive, Champaign, IL 61820, USA)

  • Andrea Kelly Elson

    (Trkla, Pettigrew, Allen and Payne, Inc., 222 South Riverside Plaza, Suite 1616, Chicago, IL 60606, USA)

  • Kieran P. Donaghy

    (Department of Urban and Regional Planning, University of Illinois at Urban-Champaign, 611 E.Lorado Taft Drive, Champaign, IL 61820, USA)

Abstract

In this paper we introduce a general model of property tax increment financed redevelopment. The model illustrates how expenditures on public infrastructure and housing induce private capital investment and growth in property values. It can be used to frame the problem of how best to manage a tax increment financing (or TIF) fund to realize redevelopment objectives. The solution to this problem suggests when the use of TIF is appropriate. We present estimates of the model`s parameters for a TIF district in Urbana, Illinois, a solution to the fund management problem, and an evaluation of TIF`s suitability in this case.

Suggested Citation

  • Gerrit J. Knaap & Andrea Kelly Elson & Kieran P. Donaghy, 1999. "original: Optimal investment in a tax increment financing district," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 33(3), pages 305-326.
  • Handle: RePEc:spr:anresc:v:33:y:1999:i:3:p:305-326
    Note: Received: November 1997/Accepted: March 1998
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    Cited by:

    1. Fernandez, Gonzalo E., 2004. "Tax increment financing: interaction between two overlapping jurisdictions," Journal of Urban Economics, Elsevier, vol. 55(1), pages 151-164, January.
    2. Brueckner, Jan K., 2001. "Tax increment financing: a theoretical inquiry," Journal of Public Economics, Elsevier, vol. 81(2), pages 321-343, August.

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