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Grants and Funding Monthly Newsletter - August 2014 |
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Tax Increment Financing - A Forward Looking Funding Solution
Are dwindling resources, reductions in shared revenue, a declining tax base and strict levy limits impacting your community's ability to fund projects? Has staff and board turnover made tracking the financial status of your district difficult? Do you think tax increment financing (TIF) might be an option for funding an upcoming infrastructure or economic development project? Have you performed a TIF "check-up" lately?
Determining how, when and why to invest in your TIF District can be a daunting task. MSA's TIF experts can help your community:
- Uncover the financial status of your district.
- Forecast existing and future cashflow, including the district's capacity for funding additional projects.
- Understand how changes in mill rates and equalized assessed value (EAV) can impact your district.
- Recommend strategies and identify opportunities for district investment.
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In a Nutshell...
TIF is a public funding tool that uses future tax gains to finance current community improvement projects that are expected to increase surrounding real estate values, and consequently generate additional tax revenue. TIF allows communities to borrow against future increases in property tax revenues.
When a Tax Increment District (TID) is created, property values within that TID are frozen for all taxing bodies. As development occurs in the area and property values increase, the district captures the "tax increment", or the increased tax revenues, and uses it to finance the debt that's issued to pay for projects, such as new public infrastructure or development incentives.
Laws and regulations regarding TIF implementation and maintenance vary by state and are frequently amended. TIF regulations in Iowa and Illinois recently underwent significant changes. MSA's funding experts are ready to help you understand how TIF can help fund improvement projects in your community and what impacts recent legislative changes may have.
Contact one of our funding specialist at [email protected]! |
New TID Values Available in Wisconsin August 15, 2014
The Department of Revenue will release new equalized values for Wisconsin municipalities and TIF Districts on August 15, 2014. Have there been significant valuation changes in your TID since 2013? If so, have you reviewed your current project plan and updated your TID's financial projections? If the answer is "no", MSA can help.
Completing this exercise annually will uncover the financial capacity of the TID. Additionally, it may help build confidence to leverage TID revenues to support critical infrastructure projects as a foundation for improving your community's economy.
If values are at or below 2013 values, your TID may be eligible for "distressed" or "severely distressed" designation. This allows TID life extensions for an additional 10, and perhaps 20 years to offset previous TID investments. Contact Justin Sornsin, Municipal Funding Team Leader via email or (608) 355-8914 for more information or to schedule your TIF check-up today! |
Review of the "Big Changes" for Iowa's TIF Law
Iowa Governor Terry Branstad signed HF2460 on May 25, 2012, making significant changes to urban renewal laws in the state effective July 1, 2012. The changes included:
- Added significant tax increment financing (TIF) reporting requirements, which will generate information that appears in a statewide, searchable database through the Iowa Department of Management.
- Required TIF records to be included in municipal audits.
- Required an Alternative Financial Analysis to TIF Funding for tax-exempt public borrowing.
- Required amendment of the urban renewal plan each time a project not specifically listed in the plan is added.
The limitations also impact a community's ability to use TIF to support a project that is relocating from a neighboring city or county (the "Anti-piracy" provision) unless the local governing bodies of the current and proposed locations have 1) entered into a written agreement concerning the relocation, or 2) entered into a written agreement concerning the general use of economic incentives to attract commercial or industrial development within those municipalities.
For a more detailed summary of Iowa's TIF law changes, check out our funding updated. Contact MSA Client Service Manager Jim Holz at (563) 584-2884 or via email to request assistance in reviewing the impact these and other changes will have on your city or county's urban renewal program. |
Comprehensive Planning and TIFs in Illinois
Establishing a TIF District in Illinois requires that a project area redevelopment plan be prepared and approved. Two items that must be addressed in the redevelopment plan are:
- An explanation of how land in the TIF district will be used (a future land use plan).
- A statement of conformance with the municipality's comprehensive plan.
Any substantial future changes to the land use plan necessitate a major amendment to the redevelopment plan, which must comply with public notice and hearing requirements. These requirements can be costly, so it is critical to make certain that sufficient time and resources are allocated up-front developing both components of the project area redevelopment plan.
Illinois TIF Success!
The Village of Mount Morris, IL is scheduled to approve their second TIF district in September 2014. This TIF will encompass the community's downtown and major retail corridor. MSA has led the creation of the Campus Project Area Redevelopment Plan, and we previously led the development of the community's comprehensive plan, which was approved on July 12, 2007. Serving as the lead for both projects has allowed us to make certain that the redevelopment project area plan and comprehensive plan are in agreement and that the future land use plan is an accurate depiction of the direction the Village intends to head.
Contact MSA Client Service Manager Gregory Crowe at (217) 372-5278 or via email to discuss creating a project area redevelopment plan or any TIF related questions you may have! |
TIF in Minnesota
Wondering how TIF works in Minnesota? State statutes allow six different types of TIF districts. They include:
- Redevelopment - Used to foster the redevelopment of blighted areas (this type accounts for 49% of all districts and 83% of the tax increment revenue generated in 2011).
- Renewal and Renovation - Used when redevelopment area does not meet the blight test, but does have out-of-date facilities.
- Economic Development - Used for manufacturing industry development.
- Housing - Used to aid low and moderate income housing development.
- Soils - Used to clean up contaminated sites.
- Compact Development - Used for the redevelopment of commercial areas in highly populated areas.
The Office of the State Auditor recently reported that there were 1,784 active TIF districts in Minnesota in 2012. The seven-county metro area has 35% of the state's districts, but 83% of the total net tax capacity in the state.
Still have questions about TIF in Minnesota? Check out this website or email us at [email protected] to reach one of our funding specialists. |
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Upcoming Deadlines
September 30, 2014
Wisconsin
(Principal Forgiveness Deadline)
November 2014
Iowa
December 2014
Iowa
December 31, 2014
Wisconsin
EIF (CWFP and SDWLP): Notice of Intent to Apply Form (ITA and Priority Evaluation and Ranking Form (PERF) Due
Wisconsin
TBD-Spring, 2015
Wisconsin
Wisconsin
Applications Due
If you have questions about upcoming deadlines or newsletter content, or if you're interested in learning more about how funding programs can assist your community,
for more information.
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