Understanding TIF districts

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Commentary by Candace Ulmer

In February, the Indiana Association of Cities and Towns presented a webinar, Exploring the Ins and Outs of TIF, Tax Abatements, and other Incentives. Zionsville hosted a viewing at Zionsville Fire Station 93 for local officials. So many questions were asked that I don’t believe we even got off the subject of TIF’s.

TIF stands for Tax Increment Finance. There is the base assessed value of the land before any development and it is shared among the area taxing entities. The increment is the increased assessed value from development and belongs to the TIF authority. The current Zionsville TIF area roughly is the downtown business district, east on 106th Street including the Dow property and Bennett Parkway, then south to 96th Street.

According to the webinar presenters, some of the benefits of a TIF are that it provides funding for infrastructure in the area being developed, provides new economic growth to the area, provides job opportunities and opportunities for private investment in public works projects. The most recent project completed with TIF funds is the pathway from Raintree subdivision crossing Eagle Creek and ending in Lions Park. The new sewers on 106th Street also will be paid for with TIF funds.

One of the webinar’s tips for success is to avoid the temptation to use TIF for routine operating expenses. I view TIFs like a savings account. You are setting money outside of your budget to invest in infrastructure, thus adding to your future tax base through development. TIF allows you to do this without raising taxes and helps a community diversify its tax base while operating under the tax caps which have limited available tax revenue to fund local services.

Whether we are using TIF funds or tax abatements, the economic development market is very competitive. Just having a “great community” is not the sole reason a company will move into your area.

TIFs help to entice them. Incentives are offered to encourage new business investment which increases local and state tax bases, reduces tax burdens, reduces property taxes lost due to tax caps, and encourages job creation or retention.

Today a municipality needs to be creative and make use of all opportunities available to diversify its tax base and insure a thriving community. Tax incentives of any kind are the tools that should be in any municipal tool box to build a strong and vibrant community.

 

Candace Ulmer is a guest columnist and former Union Township Trustee. She has served as a Zionsville Town Council member since 2010. She can be reached at culmer@zionsville-in.gov.

 

 

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