has extensive experience and expertise in advising companies in analyzing and securing financing and other benefits utilizing Tax Increment Financing. We have successfully implemented TIF projects in states throughout the nation securing millions of dollars of TIF benefits for expanding companies.
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A Description of Tax Increment Financing
Tax Increment Financing (TIF) is an extremely effective tool used by municipalities and counties in many states to foster economic and business development. It is most commonly used to induce infrastructure development, business attraction, and business retention.
In short, TIF utilizes the incremental stream of taxes generated by new capital investment in a designated district/area to fund the cost of capital expenditures that support economic growth within that district. Such tax streams may incorporate taxes ranging from property and sales taxes (the most commonly used) to net profit and occupation taxes, varying from state to state.
The processes utilized to transfer incremental taxes to economic and business development funding also varies. The most common means is the issuance of TIF bonds, the proceeds of which are used to finance select capital expenditures that will economically impact the TIF District or specific private investment within the District. The bonds are retired using tax increment from new capital investment or other tax generation activities within the District. Alternatively, incremental taxes may be pledged to reimburse a public or private entity that invests in projects that will economically benefit the District or to fund future capital expenditures as funds become available (pay-as-you-go).
In general, the uses of funds generated by tax increment are restricted by state statutes. However, such uses vary widely from state to state. In some states eligible project costs are restricted to public purpose expenditures such as public infrastructure or facilities. In other states, eligible project costs include select private sector expenditures that induce greater private investment such as land acquisition, site preparation, and private on-site infrastructure development. Still other states enable TIF proceeds to be utilized with greater flexibility promoting private sector investment in such areas as building construction, equipment purchases, and employee training.
Tax Increment Financing is available in some means in 49 of the 50 states.