1. What is TIF? TIF = Tax Increment Financing
A flexible economic development tool (one of few)
Urban renewal is a program of land redevelopment in a jurisdiction
TIF can only be used in an urban renewal area under an approved plan
TIF can only be used for the activities or items described in the urban renewal plan
Urban renewal area’s property tax base is frozen. All future property value increases go into a special fund that can only spent within that urban renewal area
Idea is that the improvements will generate new tax revenue and leave the jurisdiction better off than where it started
How many counties have cities that have active urban renewal plans or TIF districts?
How many counties have active urban renewal plans or TIF districts?
How many of the counties in the room included TIF (protection of) as a 2018 Legislative priority?

2. Process to adopt UR plan/TIF
Determination of purpose by jurisdiction
Draft plan, maps, legal description, and financial projections
Board/Council Meeting – Set Public Hearing
Meeting of taxing entities (school district, county, city, community colleges, etc.)
Board/Council Meeting – Hold Public Hearing/Approve Plan
Implement Plan over duration of timing of project(s)
What are we trying to accomplish or solve?
Blight, Neighborhood Revitalization, Commercial/Industrial investment, Housing

3. When does a Tif district end?
If the TIF district is:
Slum/blight: Unlimited
Economic Development for Housing: 10 Years
Economic Development for Non- Housing: Up to 20 years
When a TIF district ends, the full tax base including the increment, becomes available to all taxing bodies for their use

4. Access TIF for a project?
Project has to be located within an urban renewal area.
Project is real estate-based with an increase in taxable valuation. In addition, jurisdiction may determine other policy reasoning like job creation and/or extraordinary development costs.
Best practice is that the project would show why TIF is needed; what is the financial “gap”?
Also, best practices would propose to have bank/financing/investors on board and completed pro-forma before coming to jurisdiction with a request.
Describe “Financial Gap”
- Negotiated by jurisdiction and developer
- Has to be TIF revenue within the district; may be several years out if in a new TIF area (and not assured that money is there)
- Typically done over a several year time period; not a lump sum

5. TIF Example The “frozen” base assessment of a property is $100,000
After project is developed, the taxable value is $150,000
Yr. Taxable Value Prop. Tax Revenue
1 $100, $4,000
2 $150, $6,000
The tax increment valuation is $50,000 (new assessment minus the frozen assessment or $150k-$100k).
The new tax increment revenue of $1,800 is available for use within the designated urban renewal area ($200 is additional revenue for protected levies – see next slide for more detail)

6. Who Gets the Money? Frozen Valuation of $100,000:
The $4,000 property tax revenues from the “frozen” valuations continues to go to:
School District - $2,120 (53% of tax levy)
County - $1,320 (33% of tax levy)
Hospital - $280 (7% of tax levy)
Other (community college, township, etc.)- $280 (7% of tax levy)
The $200 of new revenue go for the protected levies (school PPEL, county debt service, city debt service, etc.)
By state law, the jurisdiction can use all of the new revenue - $1,800 - on projects in the specific urban renewal area
State Example is Un-incorp. County.

8. When does tif not work?
TIF can go “upside-down” if the tax base goes below the frozen level
This can happen if buildings are demolished, properties receive tax exemptions, or property tax assessments are successfully challenged, which then reduces the property tax assessment

9. Exercise

10. Questions ?