TIF districts are primary funding (01/11/06)

City officials are hoping a plan to implement a new avenue of funding will make Portland an even better place to live.

New sidewalks, better streets, new or improved parks and eye-catching businesses are just some of the projects which could be funded by tax increment financing (TIF) districts. “(TIF districts) can enhance property value,” said Portland Mayor Bruce Hosier.

The funds generated in such districts could “make (Portland) a more desirable place to live,” said Kristi Sturtz, owner and principal planner of Sturtz Public Management Group.

Areas as small as a few blocks — and as large as an entire city — can be declared TIF districts.

Sturtz, who has been hired by the city to help with the establishment of TIF districts, said at this time, city officials are not considering making the entire city a district.

“You look at areas that are growing and areas that are in need of economic development,” to determine where to establish the districts, Sturtz said.

Areas in the city that have industrial, commercial and retail businesses are being considered for the districts, she said.

Hosier said today a preliminary map outlining a TIF district or districts should be available by Thursday.

Typically, infrastructure improvements within a district are funded by capturing property taxes collected from rising assessed valuations on properties within the district. Without a TIF district, those taxes on rising assessed valuations would ordinarily pass on to other taxing units such as the county and the school system.

The tax revenues collected by the TIF district would be controlled by an appointed redevelopment commission.

Hospitals, schools, churches, libraries and private residences are exempt from TIF, Hosier said.

A Portland man presented an idea on Monday which he would like to see funded through TIF money.

Bryan Alexander told about 20 community leaders that he would like to begin a group called the Portland Quality of Life Initiative.

The group’s goal would be to see improvements made in downtown Portland to make the businesses located there look more inviting. The group also would push for zoning changes at the city’s entrances to allow for new developments.[[In-content Ad]]What is TIF?

TIF stands for “tax increment financing.”

What does that mean?

When a TIF district or redevelopment district is created, it’s presumed that improvements in the district will lead to higher assessed valuations for properties within the district.

The difference between the taxes on the current assessed valuation and the higher valuation is known as the “tax increment.” That’s the piece of the revenue pie which goes to the redevelopment commission to fund infrastructure work and improvements.

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Does this mean higher taxes on those properties?

No, but it does mean that the taxes on those higher assessed valuations go to the redevelopment district rather than to other taxing units such as the county, the school system, or the library. There are, however, provisions in Indiana law for a redevelopment district to have the option of passing through some of the revenues to the school system to reduce the financial impact.

What’s the “financing” in TIF all about?

Often bonds are issued to fund major infrastructure improvements within the district, those bonds are then paid off by the redevelopment district with the “tax increment” revenue. In other words, the tax increment finances the bond payment.

Who determines the district?

That’s up to the city council. Historically, TIF districts have been created to target “blighted” areas, brownfields, or areas with specific needs in terms of housing or high unemployment.