What is a TIF...

[doofus]

and how does it work?

(Thanks in advance.)

[TulsaSooner]

TIF = Tax Increment Financing

Of the city sales tax collected from the businesses in the TIF district, half goes back into the district for improvements (I'm not exactly sure what types of projects this money pays for) and the city retains the other half.  This goes on for some pre-determined period of time, usually a number of years.

I believe that's how it works.

[tim huntzinger]

A TIF is a risky tax scheme designed to facilitate the gubmint's selection of winners and losers in speculative development projects.  TIFs rob Peter to pay Paul.  They did not work for the retail development at Pine/Peoria, have not done anything for the 71st/HWY75 development.  Last but not least was some kind of TIF remediation used to pay for those stoopid spotlights used to draw folk downtown.

I am sick and tired of TIFs being spouted off like they are some panacea, when they are just more speculative hocus-pocus bs used to help the spouter-offer of their benefits to sound progressive.

[swake]

quote:Originally posted by TulsaSooner

TIF = Tax Increment Financing

Of the city sales tax collected from the businesses in the TIF district, half goes back into the district for improvements (I'm not exactly sure what types of projects this money pays for) and the city retains the other half.  This goes on for some pre-determined period of time, usually a number of years.

I believe that's how it works.

That is actually a "BID", a business improvement district, and some portion of the local tax revenue from a BID area is diverted for regular maintenance of the district.

A TIF, is Tax Increment Funding. A TIF is a diversion of the incremental increase in tax revenues from a new development to be spent on infrastructure in the TIF district.

An example is The River District in Jenks, that land is currently agricultural land and as such has a very low property tax collection rate and zero sales taxes collected. A TIF is being done there on a portion of the anticipated increase in property taxes and 1/3 of the new sales taxes collected from the River District Development to provide things like roads, sewer, riverbank improvements and a baseball stadium for the development.

A Tulsa Landing development may well request a TIF but the city of Tulsa has to be very careful with a TIF here. Tulsa Landing would be good for the Tulsa economy, but, a large percentage of the taxes that will be newly collected at Tulsa Landing will not actually be new taxes, they will be taxes that currently are collected at other locations IN Tulsa. If Tulsa diverts too much of the tax revenue from a Tulsa Hills it could actually be a drain on the city budget overall for needed items like streets and cops. Since nearly all the sales in stores and such at a River District development will be new to Jenks, Jenks has no such problem with giving a big portion of the new taxes back into the development, but Tulsa is NOT in that position, it's much safer for Tulsa to help fund Tulsa Hills directly with the river tax. Of course, the worst thing for Tulsa would be to do nothing, as then all the potential new taxes collected from river development will be collected outside of the city of Tulsa and since a large portion of those taxes would currently be in spending done in Tulsa that also would be a drain on the city budget.

[USRufnex]

Frankly, if a person invests tons of $$$ when nobody else will touch a particular area of Tulsa, why shouldn't a portion of the taxes generated by that development benefit the area?!?  IMO, TIF districts should be bolder and used more often-- it's certainly preferable to a straight government housing project or a sales-tax financed project...

Robbing Peter to pay Paul is a dishonest oversimplification of what can happen in a TIF.  Done correctly, it can take areas of Tulsa where nothing's been done for years, and spark development.  

http://findarticles.com/p/articles/mi_qn4182/is_20061019/ai_n16806447

Tax increment financing districts complete projects for portions of
Journal Record, The (Oklahoma City),  Oct 19, 2006  by Ginger Shepherd


The state of Oklahoma has allowed cities to create tax increment financing districts since the early 1990s, and for the city of Tulsa it has proved to be an important economic development tool, benefiting six districts in the city so far.

But city officials are working on developing a policy for when a TIF district should be created, said Don Himelfarb, the city's economic development director. It is a policy that would guide the city in determining when and how to grant TIF districts. The idea is to run the program like a bank.

"We are the stewards of the funds," he said.

The policy will serve as a guide as the city looks at TIF proposals, Himelfarb said, adding that it will be a flexible policy and will not take a "cookie-cutter" approach to TIFs.

In addition to creating a policy to guide the city and applicants, Himelfarb said a committee will be created to review TIFs. In addition to himself, the committee will also have a seat for Susan Neal of the mayor's office and the finance director.

Through a TIF, the taxes generated in those areas are used for improvements in those areas. When a TIF is granted, there is a plan that shows the public and private investment into an area or development, said Julie Miner, who is with the city's Urban Development Department. There are different approaches on how the investment is done. In some instances the money can be made available at the start of a development through bonds that are paid with the tax receipts or projects are done as money comes available through the taxes.

Tulsa has six TIF districts. The first one was Brady Village, and it was created in 1993, said Miner. It was a "pay-as-you-go" approach.

"It was a learning experience," she said, and was quick to point out that it took some time for projects to happen because of the growth in the area.

Right now, it has caught up, Miner said. The Brady Village TIF is set to expire in 2008.

The city's second TIF district is known as the Central Park TIF, she said. It was created with the Home Depot and auxiliary retail projects.

The Central Park TIF was established in 1994. Some of the projects completed with TIF funds included streetscapes near Home Depot, according to the Tulsa Development Authority's Web site, www.tulsadevelopmentauthority.org.

Miner said the Village at Central Park is another project that is benefiting from the TIF district. The Village at Central Park is a residential development that features residential and retail space as well as a park at Sixth and Peoria.

"It has been the most successful," she said. The Central Park TIF is set to expire in 2009.

The Technology TIF district was established in 1999 in downtown Tulsa. She said it is a TIF district that relies on property taxes, not sales taxes, to fund projects since it wouldn't be generating new sales tax activities.

It is a district that was set up to provide infrastructure improvements to "high-tech" corporate offices located downtown, according to the TDA. Some of the funds generated through the district were to be used for pedestrian amenities and improvements to parking facilities. It is set to expire in 2014.

The North Peoria TIF district, Miner said, was the first TIF district not to be in the downtown area. Through the district, a mixture of uses was creating including industrial, residential and retail uses.

Miner said the TIF has paid for a lot of public improvements in residential areas there. The North Peoria TIF district expires in 2017.

One of the newer TIF districts is the Blue Dome District, which was created in 2003, she said. Like the others it is a pay-as-you- go type project. Through the TIF, a number of pedestrian improvements have been made in the area, but it is still early.

This year the Tulsa City Council approved the TIF for the Tulsa Hills development on 71st and State Highway 75. Miner said the Tulsa Hills TIF is unlike the previous TIFs the city has done. Bonds were issued to finance infrastructure projects; the bonds will be paid with the taxes.

Like the first TIF, she said Tulsa Hills will also be a learning experience.