Definition of TIF Common goals TIF Procedure Process of Establishing General advantages of TIF Disadvantages of TIF

1. TAX INCREMENT FINANCING (TIF)
Submitted by
D.Hari Hara kumar
M.A.Saleem
H.Sathish
T.Dileep kumar
C.Srikanth kumar

2.  What is Tax Increment Financing???
• It is a financing tool
• Used by local governments
• Finances qualifying costs of new
development or redevelopment in that
area.
• Uses the incremental increase in Taxes
common goals for a TIF project
to be
(1) attraction of new business,
(2) downtown redevelopment
(3) retention or expansion of existing
businesses.
How long are TIF districts in operation?
• TIF districts function for more than twenty years.
• A lengthy financing period reflects the useful life of the projects and the time
required for economic payback.

3.  Why do governments use tax increment financing?
• A way to combat blight or deterioration within city districts or neighbourhoods.
• To promote economic development and redevelopment in that local area.
• It helps local governments achieve a variety of economic development goals,
including job creation, growth in property values, and protection of the local tax base.
• suburban municipalities even use tax increment financing today to spur development
in “Greenfields”.
TIF process:
The TIF process splits tax revenue generated from properties within the TIF district
into two components:
• Base revenues – This is the amount available before the TIF district is established;
base revenues are shared among a mix of local governments that have the power to
assess property taxes: schools, cities, counties, and special districts.
• Incremental revenues – These new revenues in excess of the base revenues are
generated by development projects. Although some states permit counties to use tax
increment financing, in most cases the sponsoring government is a municipality.

4. What are the different types of TIF districts?
• Financing type -TIF districts using sales or utility taxes as the source of incremental revenues.
• Land use- Tax increment financing can be employed for virtually any land use. As an economic
development tool, commercial and industrial land uses have been common, but some jurisdictions
have established residential TIF districts as well
• Sponsoring government- Many states give statutory authority to either counties or
municipalities to establish a TIF district
What is the general process for establishing a TIF district?
Phase 1: Determine project feasibility
A feasibility study encompasses an assessment of “need” as judged by local
policymakers and external stakeholders, as well an assessment of economic benefits.
Phase 2: Create redevelopment plan
• Determining the legal boundaries of the TIF district;
• Estimating project timeline and costs;
• Establishing the base assessed value and base revenue
• Projecting incremental assessed value and incremental revenue.
Phase 3: Adopt
The government may be required to provide a disclosure to overlapping districts affected by the
TIF district

5. Phase 4: Implement
a government implements its plan. In many communities, this is the government’s undertaking of site
preparation activities
Phase 5: Evaluate and terminate
a government monitors the performance of the TIF district and reports financial results to
internal management and, if applicable, to state oversight bodies.
 What criteria are used to establish a TIF district?
If an area is blighted if it meets a minimum of five of thirteen qualitative factors.
•Dilapidation
• Deterioration
• Obsolescence
• Illegal use of individual structures
• Structures below minimum building code standards
• Excessive land coverage and overcrowding of structures and community facilities
• Lack of ventilation, light, or sanitary facilities
• Inadequate utilities
• Excessive building “footprint” (structure too big relative to property)
• Deleterious land use or layout that is considered noxious
• Environmental clean-up needed, Declining assessed value
• Lack of community planning.

6.  Where does the money go??

7.  What type of projects is tax increment financing used for?
• Governments may use TIF revenues to underwrite certain public structures, such
as parking garages. If permissible under state statute, the construction of
municipal facilities can be financed using TIF revenues.
• An ICMA survey finds that site preparation is the most common use of TIF
funds. Site preparation encompasses land acquisition, land condemnation,
demolition of old structures, and environmental remediation. Other common uses
of TIF funds are for infrastructure: sidewalk replacement, curb and gutter
installation, and related planning and engineering.
 What are the general advantages of tax increment financing?
• In many jurisdictions the technique has been used to finance successful
economic development projects.
• Many additional benefits flow from the economic development benefit, such as
increases in local revenues that diversify and strengthen the tax base.
• The decision to establish a TIF district is made at the local level with no
approvals usually required by federal and/or state governments.
• Tax increment financing attractive is that it does not require a direct increase in
property tax rates

8. What are the disadvantages of tax increment financing?
• Poorly designed or poorly implemented TIF plans may not always be financially
successful, and there is a substantial risk that they will fail. A clear measure of risk is
that investors will demand a risk premium when buying TIF revenue bonds that are
supported only by incremental revenues. Governments often are unable to obtain a
credit rating on such bonds.
• Governments providing TIF project subsidies to businesses located in a growth
corridor experiencing natural economic expansion may be wasting dollars if the
businesses would have located and prospered in that area anyway – with or without
subsidies.
• Schools and other units of governments sharing the same tax base with the TIF-
sponsoring governments will not share incremental revenues (unless provisions
require the TIF sponsor to revenue-share) until the TIF district is dissolved many
years later
REFERENCE:
 city of chicago tax increment financing
https://www.cityofchicago.org/city/en/depts/dcd/provdrs/tif.html
 Rachel Weber, Tax increment financing in theory and practice
http://isites.harvard.edu/fs/docs/icb.topic233886.files/February_26/Weber_Tax.pdf

9. Category Chicago Cook county Detroit Dallas
Legislation
passed on
1977 1977 1982 1989
Act name Tax Increment Allocation
Redevelopment Act
Tax Increment Allocation
Redevelopment Act
The tax increment finance
authority act (450 of 1980)
Tax Increment Allocation Redevelopment
Act
Reason Federal economic
development fails to give
funds for development
activities
Federal economic
development fails to give
funds for development
activities
ACT to prevent urban
deterioration and encourage
economic development
Federal economic development fails to give
funds for development activities
Planning
scenario
The City undertook a great
deal of market analysis and
incorporated community
input into the development
of the North loop and Near
South TIF districts
Here, districts addressing site
development problems
because, TIF was
implemented without any
community plan
(neighbourhood plan).
Statutes authorize creation by
“municipalities,”
The nine member board is
appointed by the Mayor and
confirmed by City Council.
Tax Increment Finance districts are created
by an act of City Council and governed by
an appointed Board of Directors
The Economic Development Department
(EDD) creates Preliminary Plans for the
formation of a TIF district
TIF Funding North Loop TIF district was
financed with general
restricted bonds.
3 districts are financing for
developments by restricted
bonds while other 2 are
funding through revenue
bonds.
TIFA funding comes from tax
increments captured as a result of
new growth and expended in
accordance with a plan approved
by City Council.
TIF districts in Dallas exclusively use Pay-As-
You-Go TIF Reimbursements; the sole
exception is the City Center TIF District,
which has issued a bond for downtown
development activities Revenue Bond
financing
Government
reviews
Overlying governments did
not monitor TIF
development or participate
in Joint review Boards to
any appreciable degree
There was an appreciable
level of at intergovernmental
review only in Homewood
and matteson
- -
Economic
developmen
t results
Four districts has
sustainable development
They are subsiding the tax
rates to increase the
investments in TIF districts.
The TIFA assisted the Central
Industrial Park Project (GM
Detroit/Hamtramck Assembly
Facility) that created over 4000
jobs and $750 million in new
private investment by issuing
bonds to pay for related project
Seven districts has sustainable development

10. Case studies
Category California
Objective
The objective of early redevelopment was to halt the middle class
exodus from central cities that had accelerated after World War II.
Funding the city
RDAs assembled underutilized sites, cleared them of older buildings,
and installed the infrastructure needed to support what real estate
appraisers would call “higher and better” uses at these urban locations
Magnitude
TIF has been used to finance a wide array of projects, including public
infrastructure, private development, and brownfield cleanup. Public
works projects are typically small-scale.
Success & Failures
This is a failure because, they are lot of corruption in this system

11. Submitted by
T.Dileep kumar
D.Hari Hara kumar
M.A.Saleem
H.Sathish
C.Srikanth kumar