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How TIF Works$2 m building built in 2011 on a $.5 m lot
0
1,000,000
2,000,000
3,000,000
Total Valu-ation
No TIF
FY12 FY13 FY14 FY15 FY16 FY170
1,000,000
2,000,000
3,000,000
TIF Increment
Base value
TIF Cre-ated in 2011 or 2012
How TIF Diverts Taxes
City Tax:
$40,000
County Tax:
$20,000
School Tax:
$45,0000
City General Fund
County Funds
School Funds
$10,000
$30,0000
$5,000
$15,000
$15,000
$30,000
CityTIF
Fund
$75,000
TAXES COLLECTED
WHERE TAXES END UP
The Original Rationale for TIF
• To be used in blighted urban neighborhoods.• Recognizes that cities, not schools or counties,
have the major responsibility for facilitating and regulating development.
• Cities assume some risk in financing or assisting the redevelopment of blighted areas.
• But if the redevelopment is a success, schools and counties benefit from higher tax base.
• So: TIF allows cities to be repaid for their investment first; then when the project is paid for, the TIF ends and the tax base is fully available to all local governments.
In Three Cities, Over Half of the Tax Base is tiffed
Iowa City
Solon
North Liberty
Lone Tree
Swisher
Coralville
Oxford
Shueyville
Tiffin
0% 10% 20% 30% 40% 50% 60%
0.9%
18.5%
18.6%
24.0%
27.4%
39.7%
50.7%
55.4%
56.7%
TIF as a Cash Cow: Share of Property Taxes from TIF
Hills
University Heights
Iowa City
North Liberty
Solon
Lone Tree
Coralville
Swisher
Oxford
Tiffin
Shueyville
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
0.0%
0.0%
1.7%
37.5%
39.9%
47.6%
58.5%
58.6%
75.4%
78.0%
83.8%
For Some Cities, the TIF Fund has become a Second General Fund or
a Substitute for the Debt Fund
ShueyvilleFiscal Year 2012
TIF fund is over 5 times as large as the general fund.
What TIF revenue is used for:• City hall/community
center• 12th street project
How TIF Shifts TaxesSchool Taxpayers$6 million
$6 Million
School District:$10 millionspendingauthority
Without TIF
State Aid $4 Million
School District:$10 millionspendingauthority
School Taxpayers:$7.1 million
State Aid
City TIF$2 Million
$5.1 Million
$4.9 Million
With TIF
Percent of Property Taxes from Outside the City
Iowa City
North Liberty
Solon
Lone Tree
Coralville
Swisher
Oxford
Tiffin
Shueyville
0% 10% 20% 30% 40% 50% 60% 70%
0.6%
23.2%
24.1%
30.7%
30.8%
42.0%
48.1%
48.8%
62.1%
Coralville TIF Areas
Coral Ridge Mall – Highway
6 Combined Area (blue)
Other Areas (cross-hatch)
TIF $
Mall/6 TIF: Where Taxes Go, With and Without TIF Diversion
Without TIF With TIF
4,963,320 2,289,052
6,660,283
14,839,644
7,407,516
2,418,891
Kirkwood & Other
School Districts
City of Coralville
Johnson County
Mall/6 TIF Forces County & School Property Taxes Higher
School District
Iowa CityClear Creek
AmanaIncrease in levy rate ($ per thousand)
School tax $0.34 $2.83County tax 0.45 0.45 Other countywide taxes 0.06 0.11 Total $0.85 $3.40
Additional Property Taxes on anaverage ($200,000) home $80 $319
Responsible TIF Use• Project Based: All diverted revenues are used
to repay the costs of the original project causing the development (e.g., infrastructure for Coral Ridge) or are rebated to developer (e.g., Plaza Towers in I.C.)
• When those project costs are paid, the TIF diversion ends.
• Rebates do not exceed what is justified• No continued use of TIF to finance projects
elsewhere that couldn’t stand on their own. • No use of TIF to pay general costs of city
government, tax exempt facilities, lobbyists, etc.
Questions to Ask• Will the project itself generate sufficient
revenue to pay the TIF project costs? (If it is a rebate, the answer is yes.)
• Is there a public benefit from this project, or are there features that the city is demanding that the developer would not otherwise incorporate?
• Does the project really need incentives, or does it need all of the incentives requested?
• If it does need incentives to be profitable, why should the city subsidize a project that the market cannot support?