The impact of tax increment financing on property value
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 19 September 2019
Issue publication date: 18 October 2020
Abstract
Purpose
Tax increment financing (TIF) has been adopted widely by municipalities to promote local economic development. This study aims to examine the effect of TIF adoption on property values at the parcel level in Indiana from 2009 to 2016.
Design/methodology/approach
Concerns of TIF adoption endogeneity are addressed by a two-stage estimation process using urban population ratio and unemployment rates as instruments.
Findings
In addition to finding influential socioeconomic and demographic factors, the results suggest that parcels located within TIF districts were sold more than parcels outside of TIF districts by approximately $5,000. Such premium is mainly picked up by the positive effect on commercial and agricultural parcels, which outweighs the negative TIF impact on residential types.
Originality/value
Arm’s length transaction data on property value are used to eliminate the subjective assessment bias, potential calculation errors during the evaluation process and econometric issues caused by using the assessed value.
Keywords
Citation
He, C. and Azizi, S. (2020), "The impact of tax increment financing on property value", International Journal of Housing Markets and Analysis, Vol. 13 No. 5, pp. 689-711. https://doi.org/10.1108/IJHMA-05-2019-0049
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited