Center for Real Estate to study tax-increment funding, public-private partnerships for schools

Monday, April 17, 2006

The Center for Real Estate at The University of North Carolina at Charlotte has received grants to fund two research projects focusing on issues related to growth in the Charlotte region.

The Crosland Foundation is funding a project entitled “Applying Tax Increment Financing (TIF) in the Charlotte Region,” which the Center for Real Estate will conduct jointly with the UNC Charlotte Urban Institute.

“In 2004, North Carolina voters approved an amendment to the state constitution giving local government the ability to issue TIF (termed “self-financing bonds” in North Carolina), for economic development purposes,” explained Steven Ott, the John Crosland Sr. distinguished professor of real estate in UNC Charlotte’s Belk College of Business and director of the Center for Real Estate.

“However, most local governments are still in the early stages of developing their specific legislation and guidelines for implementing the TIF zones,” Ott continued. “We want to help the region’s planners, economic development commissions, and real estate developers best use TIF by providing them with practical guidelines for implementation. We are also developing an economic model that can be used for assessment of two critical factors: the degree of initial support a project needs from the application of TIF, and the time it will take for the increased tax revenues to pay back that initial investment.”

The second project, which will be funded by the Piedmont Public Policy Institute, will study a very timely issue: alternative strategies for financing and developing public school construction.

“The idea of teaming up with the private sector to facilitate school construction has grown in popularity because these partnerships can reduce a community’s reliance on bond financing, create efficiencies in the construction process, and deliver new facilities in a timely manner,” Ott said. “Cities such as Houston, Greenville, S.C., New York, Portland, Ore., and Sacramento have utilized public-private partnerships to achieve various objectives. This suggests that Charlotte-Mecklenburg Schools could potentially benefit by partnering with the private sector in the development of educational facilities.

“Unfortunately, the body of existing research has not provided enough information about how best to structure these partnerships, especially from a legal or financial perspective,” Ott continued. “Our research will work to fill this void by analyzing current partnership structures to determine the potential costs and benefits of the various models. Using this data, we can identify the optimal method for Charlotte-Mecklenburg Schools, should they wish to consider an alternative arrangement for financing and constructing school facilities.”
The Center for Real Estate was established in February 2005 to focus on research topics of concern to the industry and to expand the real estate curriculum at UNC Charlotte. Information on the real estate program is available at real estate .