The ATX Core Bike TIF

If there were a bumper sticker that read “I ❤ TIF,” I would buy one. ‘TIF’ is an acronym for ‘Tax Increment Finance,’ also sometimes referred to as a Tax Increment Reinvestment Zone, or ‘TIRZ.’ You use an east-coast accent to pronounce TIF and a west-coast accent to pronounce TIRZ — that’s about the only difference between the two.

Enshrined in the annals of Texas Government Code Chapter 311, TIF is a tax-revenue tool arguably over-utilized by some Texas cities and underutilized by others. In Austin, which has been conservative in its usage of TIFs, I would argue that it is currently underutilized.

How does a TIF work? The concept is simple — a government, usually a city and sometimes a county, identifies an underserved area that warrants a large, strategic public investment in order to attract higher multitudes of private investment. Taken together, the public and private capital injections into the community ideally create a snowball effect of increasing returns that improve the quality, safety, and welfare of the populace. That snowball effect invariably increases the value of the real estate where the investments are being made, usually through the construction or rehabilitation of buildings, but also through the general appreciation of existing land and facilities.

That increase in real estate value within the boundaries of the specified area is key to how TIFs work. The increase relative to the baseline value before a TIF commences is bracketed from a local jurisdiction’s taxing authority. The baseline is still taxed at the jurisdiction’s tax rate, and that tax revenue is thrown into the general fund, along with tax revenue from all the other neighborhoods; however, the tax revenue that would have been realized from the increased real estate value in the TIF district is not thrown into the general fund. Instead, it is all reinvested back into the neighborhood area covered by the TIF. And, thus, the snowball gains more momentum, with taxes from the incremental increase in real estate value (not all the value, just the increase) being used to finance further reinvestment in the district (and there you have it, Tax Increment Finance District).

And, so, I’ve been thinking: why doesn’t Austin create a Bicycle TIF District within its 50 square mile urban core, with the TIF proceeds being dedicated solely to building out the city’s bicycle infrastructure along corridors and to and from activity centers?

I won’t go into detail on why Austin needs a real, thorough, extensive, and safe bicycle network of protected, dedicated lanes, as I think the reasons are 1) obvious and 2) already expertly explained by the 2014 Austin Bicycle Plan and the several great advocates we have here in ATX, not least among which is Bike Austin. I will add, though, that Austin’s bragging about being a “green city” because of the efforts of Austin Energy are completely negated by our collective commuting habits.

Front cover of Austin’s 2014 Bicycle Plan, which you can access here.

If you haven’t read our cities’ Bicycle Plan, I recommend you do so. It not only paints an exquisite vision of what Austin could be, but it also offers us a very practical, fine-tuned road map for getting there. Where the Plan falls short in providing us direction is only in the chapter on “Public Investment,” in which it writes,

Consistent public investment will continue to be a critical factor in the success of the implementation of the Plan. … Since the adoption of Imagine Austin, operations and capital funding for all departments is being evaluated on the alignment with the Imagine Austin Plan (Page 169).

These two statements actually contradict each other. In suggesting that the bulk of the financing must come from the various municipal operations of city departments, the Bicycle Plan has pitted its interests against the interests of the dozens, if not hundreds, of other advocacy groups also scouring the city budget for crumbs to fund their mission-driven agendas. It also must fight the inertia that comes with “doing things as they have always been done,” as municipal departments, on the whole, are prone to do. Public investment, then, will be anything but “consistent.”

This failure to identify and secure dedicated funding to make meaningful changes to the bicycle network is most obvious in two instances:

  1. The insignificant share of funds devoted solely to bicycling in the 2016 Mobility Bond. While the Mobility Bond is certainly doing a lot of good for the bicycle network (101 projects!), it only devoted 2.8% of the $720 million to bicycles.
  2. Austin commuters’ modal share patterns since the implementation of Imagine Austin. Since 2012, when Imagine Austin was adopted as our city’s comprehensive plan, the percentage of commuters getting to work by bicycle has been stubbornly low, according to American Community Survey statistics.

All of this brings us back to the idea of a Bike TIF for central Austin. What if, in 2018, Austin and Travis Country had decided to implement the 2014 Bike Plan by creating a TIF district in the urban core? What type of revenue would the TIF district get us? Well first, a few assumptions:

  1. I estimate Austin’s total real estate value to be $137,589,928,057. I assume that 15% of that can fall within the TIF’s boundaries, which will run along corridors and to and from activity centers in central Austin. Texas statute limits cities to tossing no more than 25% of the total appraised value of real estate in their jurisdictions into TIFs. So 15% accommodates existing TIFs in Austin and allows for future TIFs.
  2. I assume that the total appraised value of real estate within the TIF district will grow annually at 3.5%. Note that this includes the appreciation of not only existing land and improvements, but also new improvements. So, I take 3.5% to be conservative, given that we are talking about the core of ATX.
  3. I assume that both Austin and Travis County will devote 50% of the increment to the TIF. That means that, of the increased appraisal of real estate value relative to the baseline, only 50% is reinvested for bicycle infrastructure, and the other 50% (and all of the tax revenue from the baseline) are devoted to the general funds of the two taxing jurisdictions.
  4. I set aside a 3% admin fee for Austin (e.g., payments to the Transportation Department for coordinating the technical aspects of these efforts) and a 3% management fee for the TIF’s managers/Board.
Happy to send this excel sheet to anyone who wants to check my math or try out some new scenarios.

$749,704,699 (after personnel expenses and a management fee to the city of Austin) over a 20 year period. That’s a whole lot of bike lanes.

Is that too much? After all, the 2014 Bike Plan estimated that the total uncoordinated cost of its vision was $151,700,000, with $58,510,000 devoted to on-street infrastructure and $93,190,000 to urban trails. But in a city of nearly 1 million people, that’s peanuts. Copenhagen has a population slightly above 600,000, and between 2006 and 2016, it invested approximately $317,000,000 in its bicycle infrastructure.

The 2014 Bike Plan estimated a protected bike lane to be $100,000 per mile. Aside from projected costs rising since then, the $749 million could be used for more than just constructing protected bike lanes all throughout the Core. Money could also be devoted to:

· Weekly sweeps of all bicycle infrastructure

· Small grants to local businesses to build on-site showers and locker rooms for commuters

· A flat rebate from Austin Energy to anyone who purchases a bicycle and a larger rebate ($500?) to anyone who purchases an eBike.

· An adult-supervised bike-to-school program for AISD elementary schools in the Core.

· The construction of widely dispersed “pit stops” for shared eScooters and eBikes to be safely parked, out of the way of lanes and sidewalks.

· Small grants to businesses and institutions for increasing bicycle parking facilities.

What ideas do you have? How do you see Austin in 20 years? IF Austin and Travis county could create a TIF district for non-vehicular investments in the core, how would you recommend spending the proceeds? I am convinced that Austin, and especially central Austin, can become *the* ped-friendly (and now scoot-friendly) city of all of the United States. I think the ideas are already here, the culture is here, the advocates are here, and even the municipal and county staff and engineers are here. All we need is the money. Maybe the TIF is the way to get that done.