Tax Increment Financing (TIF) is a public funding mechanism to assist private development of an area within the City.
TIF may only be used:
When there is evidence the development would not occur without public assistance.
When the project area qualifies as a blighted, conservation or economic development area.
TIF is a financial tool used to capture the increase in property taxes and sales taxes created from new construction. Up to 100% of the increase in property taxes and 50% of the increase in local sales taxes (the "increment") can be captured within the TIF project area. The property tax and sales tax increment may then be used to reimburse a private developer for eligible expenses or to repay principal and interest on bonds used to finance the eligible public improvement expenses for up to 23 years.
In addition to meeting the statutory requirements referenced above, the City has established several criteria that will be applied in the review and evaluation of applications for TIF financing. In general, applications that meet each of the evaluation criteria will be viewed most favorably. However, TIF applications that do not meet some of these criteria may be approved if the application clearly demonstrates that the project, as a whole, is of vital economic interest to the City. Criteria include (TIF Policy should be referred to):
Demonstrates that "but for" the use of TIF, the project is not feasible.
Demonstrates a substantial and significant public benefit by constructing public improvements.
Clearly shows what expenses are eligible for reimbursement and that they create significant public benefit.
TIF assistance for land acquisition and residential development will be discouraged unless creatively integrated into a large scale mixed-use development.
Applications requesting issuance of bonds shall be required to demonstrate that the revenue expected will be sufficient to provide debt service coverage of at least 1.25 times debt service.
Generally TIF assistance should not exceed 35% of total project costs. Certain circumstances allow this to be altered.