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TIF & Property Taxes
 

TIF & Property Taxes

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    TIF & Property Taxes TIF & Property Taxes Presentation Transcript

    • A strategy to provide property tax relief in East St. Louis 200 N. Broadway  Suite 1000  St. Louis, MO 63102  (314) 231-7318 By Mike Weber, Director PGAV URBAN CONSULTING
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      • TIF is designed to induce private sector investment in redevelopment projects.
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    • How TIF Works
      • TIF district is established by City Ordinance (the City has 7 TIF districts covering almost the entire City)
      • Property taxes are then distributed in two ways:
        • Tax on base assessed value goes to taxing districts
        • Tax on gains on assessed value goes to special TIF fund
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    • How TIF Works (graphic illustration)
    • Streets, Sewers and Other Public Improvements
    • TIF & Public Works
      • TIF funding for new streets & other public works should be in support new private development.
    • TIF & Public Works
      • When possible TIF can fund street improvements in existing neighborhoods.
    • TIF & Public Works
      • TIF is NOT intended or designed to serve as funding source for normal maintenance and reconstruction of streets and utilities.
      • While the need for new streets and sewers is enormous, TIF can only cover a small portion of the costs (see next chart ) .
      • TIF dollars must be spent within the TIF district generating the TIF dollars.
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    • Why are property tax rates so high in East St. Louis?
    • Property Taxes
      • Property tax rates are determined by dividing the tax levy request by the rate setting “equalized assessed value” (EAV) within the taxing district.
      • The higher the rate setting EAV, the lower the tax rate.
      • If there is no growth in EAV over time, tax rates will tend to go up.
    • Tax Rate Computations
      • 1986 Tax base (assessed valuation): $50,000,000
        • 1986 levy request: $1,000,000
        • Tax rate to generate levy request: $2.00 /$100 AV
      • 2006 Tax base: $50,000,000
        • 2006 levy request: $1,800,000*
        • Tax rate to generate levy request: $3.60 /$100 AV
        • * The 2006 levy request reflects inflation between 1986 and 2006.
    • Property Taxes (a comparison)
      • A $75,000 home in East St. Louis would pay in the range of $3,100 to $3,500 in property taxes.
      • In Fairview Heights , the same home value would result in $1,700 in taxes. 1
      1 based on tax rate for tax code 08040
    • Contributing Factors to High Taxes
        • Population loss of 9,400 between 1990 & 2000.
        • Loss of 1,880 occupied housing units between 1990 & 2000.
        • ALL INCREASES IN PROPERTY VALUE BENEFITS PRIMARILY THE TIF FUNDS.
        • More than ½ of the City contains tax exempt or vacant lots .
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    • Contributing Factors to High Taxes
      • Exemptions & TIF Constrains Tax Base:
        • Total Assessed Value $170 million
          • Less exemptions 33 million
          • Less TIF Increment Value 89 million
        • Net Taxable Value $48 million
      • Only 28% of the City’s assessed value is available for normal taxation.
      • Between 2003 and 2006, the City’s net taxable value has dropped by nearly $900,000
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    • Dissolve & Reduce TIF Districts
      • Over 50% of the City’s tax base is dedicated to the various TIF funds.
      • By dissolving and reducing the size of the TIF districts more of the tax base will be available to generate revenue for all affected taxing districts.
      • With a larger rate setting EAV, tax rates should go down.
      • Expected property tax savings: 19% to 26%
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    • Effect on $75,000 Home
      • Current:
        • 2006 tax rate for tax code 01099 12.9186
        • Total property tax bill $3,230
      • Move $31 million EAV from TIF Districts:
        • Tax rate with added tax base 10.4677*
        • Total property tax bill $2,617
        • Savings of $613
        • *Assumes all taxing districts keep levy requests in line with recent trends. Also assumes loss of School District GSA is made up by increased levy.
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    • Effect on $75,000 Home
      • Current:
        • 2006 tax rate for tax code 01099 12.9186
        • Total property tax bill $3,230
      • Move $50 million EAV from TIF Districts:
        • Tax rate with added tax base 9.673*
        • Total property tax bill $2,418
        • Savings of $812
        • *Assumes all taxing districts keep levy requests in line with recent trends. Also assumes loss of School District GSA is made up by increased levy.
    • Actions Required & When Effective
      • City Council needs to pass ordinances dissolving and reducing size of TIF districts.
      • If accomplished in 2007, it will affect tax rates in 2008.
    • Other Considerations
      • The City will continue to use TIF to induce private development and redevelopment projects.
      • If needed, new project-based TIF districts will be created.
      • The effectiveness of property tax relief is predicated on all affected taxing districts cooperating with the City in this effort!