After several years of work, my colleague Susan G. Mason (Boise State University) and I have published a new article on TIF in Missouri, specifically in the St. Louis and Kansas City metropolitan areas. “Exploring Patterns of Tax Increment Financing Use and Structural Explanations in Missouri’s Major Metropolitan Regions” appeared in the July 2018 edition of the HUD journal Cityscape, downloadable for free here. We omitted the two cities from our earlier statistical analysis (in the paywalled Economic Development Quarterly, May 2010) because they are much larger than any other Missouri city and use TIF far more than any of them, making them statistical outliers.
In our earlier article, “Tax Increment Financing in Missouri: An Analysis of Determinants, Competitive Dynamics, Equity and Path Dependence,” we found that early adopters of TIF tended to be heavier users of TIF far past the first TIF adopted, that TIF as used in Missouri exacerbated inter-jurisdictional inequity (cities with higher poverty rates were less likely to use it than cities with lower poverty rates), and we found strong evidence for competitive dynamics in the use of TIF: Cities that were adjacent to a TIF-using city were two and a half times as likely as average to use TIF themselves, and implement more TIF projects.
The new article is an exploratory study, as it is impossible to generalize from two cases. But one thing we established clearly, based on complete data from 1988 to 2013 for St. Louis, and from 1988 to 2012 for Kansas City, is that Kansas City’s tax increment financing projects are marked by much higher aid intensity (the EU term that equals subsidy/investment) than those of St. Louis. Indeed, even excluding 2009 in St. Louis, which was marked by several multi-billion projects with low aid intensity (and at least in the case of Northside Regeneration, had substantial state funding not reflected in Exhibit 4 of the article), the overall average aid intensity, ex-2009, is 17%.
By contrast, in Kansas City, the average aid intensity of the city’s TIF projects comes to a whopping 36%,* more than twice as much. Everyone we interviewed on the question considered that there is much greater competition for investment with Kansas than with Illinois in the two metro regions. The difference in aid intensities is consistent with this thesis.