Tax Increment Financing

About

Tax Increment Financing (TIF) assumes that the property or sales taxes will increase in a specified district after strategic redevelopment. The difference between the current and future tax revenue is the increment. A portion of the increase, the increment, of taxes collected in the future (up to 23 years) may be allocated to fund district improvement projects.

TIFs are designed to fund improvements in distressed, underdeveloped or underutilized areas where development might not otherwise occur.

In Missouri, a TIF must contain property classified by Missouri Statues as “blighted,” “conservation,” or an “economic development” area.

The case can be made, in any TIF district, that open space projects, stormwater or flood reduction projects, green infrastructure, and other healthy watershed projects will increase property values and improve the district thus reducing blight and increasing conservation and economic development. Be sure to include healthy watershed projects in all TIF related improvement plans.

Municipalities can use TIF revenue to service bond payments on large-scale green infrastructure projects. Or, as TIF revenue is collected, small-scale green infrastructure projects can be implemented over time. TIF revenue can also be used as a stable funding source to pay for operations and maintenance of healthy watershed projects.

To establish a TIF, the local municipality (city, town, village or county) must create a TIF Commission made up of representatives of other local taxing authorities within the TIF district. A Redevelopment Plan, public hearings, economic impact reports and revenue projects, blight studies and other documents are required by state statues from the municipality and TIF Commission.

Consult your municipal attorney prior to moving forward with TIF opportunities.

Project Examples

Chicago, IL TIF and Green Roof Improvement Fund

Revenue from Chicago’s Central Loop TIF District is being used to fund the Green Roof Improvement Fund. This fund incentivizes businesses to install green roofs through 50% match grants (up to $100,000/project).

TIF and Green Roof Improvement Fund

Improvement Fund

More Info/Resources

MO Dept of Revenue - TIF

Consult your community’s attorney and financial advisors prior to moving forward with any of these funding options. Any reference in this website to any person, or organization, or activities, products, or services related to such person or organization, or any linkages from this website to the website of another party, do not constitute or imply the endorsement, recommendation, or favoring of companies or organizations.

Quick Facts

Eligible Improvements
Land acquisition, Demolition of structures, Rehab and repair of existing structures, Infrastructure (including stormwater), Relocation of residents or businesses, and more.

Benefits of Tax Increment Financing
Proceeds collected can be used for a broad range of public purposes – including stormwater infrastructure

Focus costs only on those benefiting from the services

Allows local residents to obtain expanded services they want at a price they are willing to pay

Increases revenue streams in formerly non-productive areas

Effective in large urban centers and in smaller communities

Drawbacks of Tax Increment Financing
Adds another layer of taxes and taxing districts

May deter new residents

Revenues for the TIF district can drop when the economy slows or if property values fail to appreciate

Revenues are dependent on the success of the TIF

Some criticism of TIFs that may divert tax revenue from municipal needs like school funding