TAX INCREMENTAL FINANCING
Public Financial Management
5 May 2014 – ae847c39cbd2+
James P. Howard, II
School of Public and International Affairs

Why Tax Incremental Financing?
◦ TIFs are a subsidy
◦ Used to fund infrastucture or redevelopment
◦ Used by public-private partnerships
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Bond Issuance
◦ Bonds are issued to pay for development
◦ Bonds are issued by the government
◦ Bonds are tax-exempt or tax-advantaged
◦ Bond proceeds are used for real estate development within TIF district
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Future Taxes
◦ Property taxes are leveled on the value of the property
◦ As property values increase, tax revenue increases
◦ Increased amount of taxes returned to government are dedicated to paying off
bonds
◦ Government still collects the baseline amount
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Administrivia
◦ Usually administered by local government
◦ TIF may have its own formal management and staff
◦ Taxes are usually collected and paid by creating authority
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Types of Projects
◦ Urban renewal proejcts
◦ Transit-oriented development
◦ Redevelopment of industrial sites
◦ Development of new parks or open space
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Sustainable Bonds in Maryland
◦ Since 2013, Maryland allows TIFs to be used to fund sustainable development
◦ TIFs can pay for environmental clean up
◦ Historic preservation
◦ Affordable housing
◦ Schools and stormwater management
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More on Maryland
◦ Maryland local governments can increase borrowing
◦ MEDCO can sponsor bond issuance
◦ Debt will not count on local government’s balance sheet
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Examples
◦ National Harbor
◦ Baltimore’s Harbor Point
◦ Metro Centre in Baltimore County?
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Criticisms of TIFs
◦ Can create unaccountable slush funds
◦ Projects may not be realized
◦ Benefits tend to flow to special interests
◦ TIFs often lack transparancy
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