08/28/2000 Council Packet - Laserfiche WebLink

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Attachment B ECONOMIC DEVELOPMENT INCENTIVE TOOLS 1. Tax Increment Financing The goal of Tax Increment Financing is to provide the private sector with short-term incentives and long -term financing to stimulate needed development and redevelopment of a community. The basic concept behind tax increment financing is to use the new tax revenues generated by a completed development to pay for certain development costs, such as land acquisition and site improvements. The differences between the taxes before development and the increased taxes after development are referred to as the "tax increment." The Legislature created five major types of TIF districts: 1. Redevelopment - Consists of a project or portions of a project that contains blighted structures or conditions that require public activity for redevelopment to occur. Tax increments can be collected from redevelopment districts for 25 years from receipt of the first increment. 2. Renewal and Renovation - Similar to a redevelopment district except that the specific blighted conditions that must be present to establish it are less stringent. For this reason the duration of this district is shorter at 15 years. 3. Economic Development - Consists of a commercial or industrial development which will increase employment, enhance or preserve the city's tax base, and discourage industry from moving to another city or state. An economic development district can collect increment for the earlier of nine years after the receipt of the first increment or 10 years from approval of the TIF plan. 4. Housing - Consists of a project intended for occupancy, in part, by persons of low or moderate income. Increments can be collected for 25 years after the receipt of the first increment. 5. Soils Condition District - Requires that 80 percent of the acreage in the district require substantial physical preparation or environmental remediation for use. Tax increments can be collected for up to 12 years after approval of the plan. 2. Tax Abatement Cities, counties and school districts have been given authority to rebate the taxes imposed by that entity, but not taxes of any other jurisdiction. This incentive can be used for new commercial greenfield development, while TIF cannot. An abatement may last up to 10 years. The total abatements in any year may not exceed 5 percent of the current levy or $100,000, whichever is greater. Abatements cannot be from the tax attributable to the value of the land, only from the improvements. Proceeds may be used for: a. public improvements b. acquiring or conveying land