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The Way I See It!

I am an Ultra-Conservative, Alpha-Male, True Authentic Leader, Type "C" Personality, who is very active in my community; whether it is donating time, clothes or money for Project Concern or going to Common Council meetings and voicing my opinions. As a blogger, I intend to provide a different viewpoint "The way I see it!" on various world, national and local issues with a few helpful tips & tidbits sprinkled in.

TIF's & TID's

Cudahy, retail, TIF, Wal-Mart

Tax Increment Financing, “TIF’s” are not new to Cudahy.  Some people think that the proposed Wal-Mart and Cudahy Station are the only projects in a TIF/TID and that is not correct.  Cudahy Station has 13 years remaining.  TIF’s are a good tool to bring in development. 

 

Even Lee R. Barczak's Cudahy Market is in a TIF / TID.

The project seeks public financial assistance in the form of a $600,000 special tax district.

  

This is the information from the city’s website:

 TAX INCREMENTAL DISTRICT (TID): A contiguous geographic area within a city defined and created by resolution of the local legislative body. Procedures described in s. 66.46, Stats., must be followed in creating a tax incremental district. The procedures include holding public hearings, adopting a project plan, getting approval, and gathering any information necessary to establish the TID.  TAX INCREMENTAL FINANCING: A method of splitting the cost of public works in certain areas (tax increment districts) with the other taxing bodies that will benefit from an increase in the tax base. Basically, it works as follows: Any increase in value in the TID above the base value (the value at the time the TID is formed) is not included in determining the tax rate; however, the tax rate is applied to all taxable property in the TID. The additional revenue generated (the tax increment) is used by the municipality to help pay for the public works that stimulated the increase in the value in the TID. This process continues until either the public works are paid for, the legislative body terminates the TID, or 23 years has elapsed.   

Tax Increment Financing, or TIF, is a tool that has been used for redevelopment and community improvement projects throughout the United States for more than half a century.  With federal and state sources for redevelopment generally less available, TIF has become an often-used financing mechanism for municipalities.

 

TIF is a tool to use future gains in taxes to finance the current improvements that will create those gains.  When a public project such as a road, school, or hazardous waste cleanup is carried out, there is an increase in the value of surrounding real estate, and often new investment (new or rehabilitated buildings, for example).  This increased site value and investment creates more taxable property, which increases tax revenues.  The increased tax revenues are the "tax increment.”  Tax Increment Financing dedicates that increased revenue to finance debt issued to pay for the project.  TIF is designed to channel funding toward improvements in distressed or underdeveloped areas where development would not otherwise occur.  TIF creates funding for public projects that may otherwise be unaffordable to localities.

 

Tax increment financing can be a complex thing, and even some public officials seem to be confused about where the money in a TIF district comes from.

 

While TIF is not a magic wand, it is a valuable tool that a city can use to bootstrap a strategic new development, overcoming the obstacles that might prevent it from going forward.

 

Does a TIF district reduce the amount of property tax paid by property owners or the amount of sales tax paid by consumers in the district?

 

No.  The county/city assessor appraises the property and the county/city treasurer collects taxes using the same rates as if the TIF district didn't exist.  The usual sales tax rate applies as well.  The difference in a TIF district is in what happens to the money once it's collected.

 

Does a TIF district reduce the amount of property taxes and sales taxes that go to the schools, the city, the libraries, and other government entities dependent on those funds?

 

No.  The taxes generated by the property value and retail activity already present in the district when the district is established will continue to go the same government entities.  It's only the new, incremental revenues generated by increased retail activity and property values that can be captured for use within a TIF district.

 

What generates the money in a TIF district?

 

The key is the "I" in TIF, which stands for "increment.”  TIF districts can capture incremental revenues from property tax, local sales tax, and other local government fees.

 

When a TIF district is established, the county/city assessor determines the base assessed value for taxable property in the district, and city government determines the base level of taxable sales already occurring in the district.  The sales taxes and property taxes generated by this baseline will continue to go to the government entities that are receiving them now.

 

But some or all of the tax revenues over and above the baseline--the incremental revenue--can be "captured" for use within the TIF district.

 

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