Volume 90 - No. 1 Minnesota Law Review

Note, Tax Increment Financing: Public Use or Private Abuse?

In cities across the country, tax increment financing has grown substantially as a tool to promote economic development. Also known as TIF, this public financing method designates an area as a TIF district and subsequently freezes the tax base at a given year’s level. Any tax revenue generated above that level then finances development projects within the district. While TIF was developed in conjunction with urban redevelopment and slum clearance statutes, today it is utilized for many development projects with economic benefits such as job creation and an increase in tax revenue.

TIF is often used in conjunction with eminent domain and results in a private entity developing the TIF project. When a city condemns private property for a TIF development only to turn it over to a private developer, the government action becomes suspect and raises constitutional and public policy issues. The United States Supreme Court, however, held in Kelo v. City of New London that a generalized economic benefit is a sufficient public use when government condemns private property and turns it over to a private developer. This holding effectively expands the traditional meaning of public use.

Because courts increasingly give deference to a city’s finding of public use and a legislature’s definition of blight in TIF enabling-statutes, the use of TIF has become lenient and strayed from its original intent. This Note maintains that courts have erred by equating public use with public purpose and that TIF is in need of reform in order to comply with eminent domain principles. It comments on the errors of the United States Supreme Court in Kelo and suggests tighter statutory standards for TIF development projects.

:: View PDF

De Novo

  • Dan’s Flaw

    DAN’S [F]LAW: STATUTORY FAILURE TO ENFORCE ETHICAL BEHAVIOR IN CLINICAL DRUG TRIALS Noah Lewellen* I. INTRODUCTION Paul, a sophomore at the University of Minnesota, bursts into a lecture hall, loudly claims to see monsters sitting in the seats, and offers his services in slaying them. The police are called, and Paul is restrained and delivered […]

  • Case Comment: Bhogaita v. Altamonte

    EVERY DOG CAN HAVE HIS DAY IN COURT: THE USE OF ANIMALS AS DEMONSTRATIVE EXHIBITS Kyle R. Kroll, Volume 100, Online Managing Editor In Bhogaita v. Altamonte, the Eleventh Circuit recently decided whether to allow a dog in the courtroom as a demonstrative exhibit.[1] Although the case presented many serious issues regarding the Fair Housing […]

  • Revisiting Water Bankruptcy

    REVISITING WATER BANKRUPTCY IN CALIFORNIA’S FOURTH YEAR OF DROUGHT Olivia Moe, Volume 100, Managing Editor This spring, as “extreme” to “exceptional” drought stretched across most of California—indicating that a four-year streak of drought was not about to resolve itself[1]—Governor Jerry Brown issued an unprecedented order to reduce potable urban water usage by twenty-five percent.[2] In […]