Tax Increment Financing Overview
Tax Increment Financing (TIF) Model Overview
Tax increment finance (TIF) is a method to promote urban renewal efforts in an area by directing the property tax revenues generated from property value increases within a designated TIF district to finance the costs of improvements made in the district. TIF addresses a lack of state and federal programs.
Iowa cities, counties and community colleges may establish TIF districts. Although the terms urban renewal areas and TIF are often used interchangeably, TIF districts are established within approved urban renewal areas (URA). URAs often contain a larger geographic area than the TIF district that is established, and URA can contain more than one TIF district.
When a TIF district is created, a “base” valuation of the property value is established. It accounts for assessed values prior to the TIF designation. The tax revenue from this base value remains with all taxing authorities. Increases in the assessed value over time over and above the base are called the “increment.” The TIF authority may access the tax revenue generated by the increment, or may choose to release some or all of this revenue back to the traditional taxing authorities.
TIF districts can be created to accomplish different goals, per Code Section 403.2. Success may look different depending upon whether a TIF was set up to address slum and blight, or economic development.
|Slum and Blight ||Economic Development |
|Address issues related to:|
• the safety, health and welfare of an area
• areas experiencing impaired growth
• housing challenges
• increasing criminal activity
• traffic problems or hazards
|Address the need for:|
• creating economic development partnerships
• strengthening and revitalizing the economy of the state and municipalities
• providing jobs and housing
Non-revenue Producing Projects
48 percent of projects are non-revenue producing, 80 percent of these are in the category of road and bridge infrastructure improvement. Public buildings can lead to economic growth or stabilization in a slum or blight area. An example of a public building that receives TIF funds is a building for public safety that will serve a TIF area.
The annual TIF process is a process created for the purpose of developing a ten-year Capital Improvement Plan. The TIF process is for projects occurring in calendar years 2023-2033. The TIF process is intended to provide a format for departments, developers and utilities to submit projects to the City Administrator and to the City Council, while weighing in capital projects.
The first year of the Capital Improvement Plan, which could include TIF projects, will be included as part of the budget submitted for Council approval each year before March 30th.
The TIF Plan represents a concerted effort to ensure that needed capital projects and infrastructure are in place in a timely manner to accommodate continued growth and development in the community.