Tax Increment Financing: Public Use or Private Abuse?

In January 2000, Best Buy Co. (Best Buy) announced it was locating its headquarters in Richfield, Minnesota, a move that would consolidate the company's various offices into one 1.5-million-square-foot complex and result in employment for 5,500 people. 1 Best Buy selected Richfield after the city enticed the company with a financing strategy called tax increment financing (TIF). 2 Richfield had been losing its property tax base due to recent funding cuts and a freeway expansion. Wooing Best Buy generated approximately $ 7 million in annual property taxes, a stark increase from the $ 700,000 produced in the area at that the time. 3 Under the deal between Best Buy and Richfield, the city was responsible for condemning all private property in the forty-three acre redevelopment 4 area using its power of eminent domain. 5 To qualify for TIF, the current buildings in the proposed redevelopment area first had to be found structurally substandard; 6 the city concluded that 91 percent of the buildings could be so defined based on insulation not in conformance with new construction standards set forth in the Minnesota Energy Code, and thereafter condemned several homes and businesses. 7 One affected business owner, Paul Walser, objected to the condemnations. 8 According to the city, his automobile dealership qualified for condemnation because it raised traffic noise and safety concerns and was incompatible with nearby residences. 9 He filed suit alleging that the TIF district did not serve a public use when the city was taking ...