TAX INCREMENT FINANCING (TIF)

Tax Increment Financing is a common term and tax initiative that's implemented in new developments. The use of TIF is governed by state law. It enables URAs, like P3, to collect the new property and/or sales tax revenues generated within a designated urban renewal area to help finance further improvements. Essentially, TIF is the difference (or the increment) between the amount of property tax collected when a URA is established and the amount of property tax collected after property values have increased.

WHERE TIF COMES FROM

TIF is not a separate tax but rather the difference in property tax over time. When an urban renewal area is created, the property tax is locked at a specific rate for 25 years. As development activity increases, the property tax increases. That difference between the locked property tax rate and increased property tax revenue becomes TIF dollars.

This increase in property and sales tax revenues would not otherwise be available if it wasn’t for the redevelopment project. This incremental revenue difference is captured and used to fund TIF, which is reinvested in other Urban Renewal Area projects.

After 25 years, TIF collection stops and the original property tax collection model snaps back into place.

THE LIFE CYCLE AND USE OF TIF

This tax increment is collected by P3 and they reinvest that money into the URA to build more public improvements. This, in turn, inspires more private investment, and thus property values continue to increase. Once the lifespan of TIF is complete, all the public entities that receive property taxes (including the Town of Parker, Douglas County, the school district) - they will receive revenue based on the new, higher property valuations.

TIF dollars can be used to

• Finance the issuance of bonds

• Reimburse developers for a portion of their project costs

• Acquire property

• Make public improvements to support redevelopment efforts