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What is a TIF?
A TIF is a special tax district that can be used as an economic
development financing tool when market conditions will not allow
private investment alone to address physical impediments that limit
or prevent otherwise desirable commercial or industrial development.
What does a TIF do?
A TIF provides financing for public improvements (sewer, water,
roads, sidewalks, landscaping etc.) that are required to initiate
viable economic development by capturing the new property tax revenue
created by the proposed development and using it to offset the cost
of the public improvements. A TIF district can include undeveloped
land, a Main Street district, the whole downtown, or just a few
parcels. The size and configuration of the District is determined
by the type and nature of the economic development activity that
the Town wants to stimulate.
How does a TIF work?
After defining the TIF district, the current assessed values and
property tax revenues are “frozen” and continue to flow
to the Town’s general fund. However, any future “incremental”
increases in property tax revenues within the district (through
new construction, expansion, or renovations) can be “captured”
and all or a portion of this new revenue can be used to pay for
the infrastructure improvements (sewer, water, roads, etc.) that
enabled the development within the district. Once the improvements
are paid for 100% of the property taxes generated in the District
go to the Town’s general fund.
A TIF can be a “win-win” for residents and
businesses:
For residents: A TIF can encourage desired commercial development
in specific areas of the community where it is wanted and needed
and would not otherwise occur on a timely basis. Once the public
improvements in the district have been paid for, the increased
tax revenue generated by the new development becomes part of the
Town’s general revenue. With a TIF, the improvements needed
to stimulate tax base expansion are offset by that expansion at
basically no cost to the other tax payers.
For Businesses: A TIF can provide an attractive and viable mechanism
to pay for the public improvements necessary to support desired
business development, expansion, or renovation in specific areas
desirable to the Town. Without access to these public improvements,
an otherwise desirable business may choose to locate or expand
in another community resulting in lost tax base, jobs and economic
vitality. Businesses want to locate in a “town with a plan”.
There are rules and standards that control establishment
of TIF districts. These are spelled out in detail in the State Statues,
RSA Chapter 162-K. Some of the key provisions are listed below.
* Any money raised within a TIF district must
be spent to benefit the same TIF District.
* The Town Council is in control of how TIF money
is administered and it must be spent consistent with the official
plan for the district.
* There is no limit to the number of TIF districts
a community can have, however, the total acreage in any one district
shall not exceed 5% of the total acreage in a municipality or
more than 8% of a community’s assessed value. Furthermore,
all TIF districts combined shall not exceed 10% of the total acreage
of the community or more than 16% of a community’s assessed
value.
* Each TIF District must have an Advisory Committee
established from within the District to oversee activity and make
suggestions and recommendations to the Council to ensure fulfillment
of the District purpose.
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