Tax incentives will be a key tool to solve local housing crunch, officials say
If Grand Marais and Cook County plan to address the local housing crunch, they’ll need to use incentives in the form of tax abatements and other similar models to encourage developers to build homes here, according to Cook County Housing Redevelopment Authority Director Jason Hale.
One such tool the city of Grand Marais will need to deploy if it intends to get serious about the local housing crisis is Tax increment financing (TIF), according to Hale. This is a method of financing real estate development to encourage developers to construct buildings.
During a meeting of the Grand Marais City Council in late October, Hale shared a report on why TIF will be a key tool as the community looks to address the local housing crunch.
Though it is complex in both what it is and how it can be used, the easiest way to describe TIF is that it uses the additional property taxes paid as a result of development in the district to pay for part of the development costs.
For example, when a new building is constructed in Grand Marais, the market value of the property and its property taxes typically rise. Classic examples would be building a new hotel on an undeveloped parcel or replacing one or more old buildings with a new, larger building, Hale explained during an interview on WTIP Nov. 3. In both of these instances, Hale said, the market value of the property will rise because the improvements add value to the parcel. In a TIF District, the taxes paid to the taxing jurisdictions remain the same, but the owner of the new development pays the increase in taxes.
Hale said the continued raising for interest rates by the federal government, along with high costs for supplies needed to build, are impacting building in Cook County at this time. Meanwhile, Hale said he remains optimistic 2023 will be a pivotal year for Cook County to making progress as it strives to solve the local housing crisis.
WTIP’s Joe Friedrichs spoke with Hale Nov. 3 during the Daybreak program. Audio below.