District Improvement Financing DIF Tax Increment Financing TIF - - PowerPoint PPT Presentation

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District Improvement Financing DIF Tax Increment Financing TIF - - PowerPoint PPT Presentation

Feb 02, 2023 542 likes •1.04k views

District Improvement Financing DIF Tax Increment Financing TIF Smart Growth / Smart Energy Toolkit Smart Growth / Smart Energy Toolkit DIF/TIF What is DIF/TIF? District Improvement Financing (DIF) and Tax Increment Financing (TIF) are

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Smart Growth / Smart Energy Toolkit DIF/TIF

District Improvement Financing DIF Tax Increment Financing TIF

Smart Growth / Smart Energy Toolkit

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Smart Growth / Smart Energy Toolkit DIF/TIF

What is DIF/TIF?

  • District Improvement Financing (DIF)

and Tax Increment Financing (TIF) are both economic tools that promote redevelopment by the use of tax increments.

  • TIF offers tax breaks to developers.
  • DIF channels tax dollars into targeted

redevelopment districts.

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Smart Growth / Smart Energy Toolkit DIF/TIF

The Problem

MANY municipalities in Massachusetts are faced with high unemployment rates and blighted, distressed, or simply underutilized areas. Many of these sites contain abandoned or contaminated facilities, while others are characterized by dilapidated infrastructure and commercial

  • perations that simply are not economically viable.
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Smart Growth / Smart Energy Toolkit DIF/TIF

Both DIF and TIF provide municipalities with innovative tools to target districts or specific projects for redevelopment.

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DIF

Authority: M.G.L., Chapter 40Q FIRST STEPS:

  • Designate a district
  • Certify district: State Economic

Assistance Coordinating Council ("EACC")

  • Term of District: 30 years

maximum

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DIF

The development program spells out the goals of the district and the means to achieve them. The program will identify the following:

  • Existing uses and current zoning,
  • Proposed uses and any needed zoning

changes,

  • Existing buildings Planned construction
  • r renovation,
  • Current and planned infrastructure,
  • A financial plan.
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Application Forms are available from:

MA Office of Business Development (MOBD) Boston Regional Office One Ashburton Place Suite 2101 Boston, MA 02108 Voice: (617) 788-3637 Fax: (617) 788-3695 www.mass.gov/mobd/

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Once a District & Program Have Been Certified:

TOOLS FOR IMPLEMENTATION:

  • Acquiring land
  • Constructing or reconstructing

improvements (such as buildings, roads, schools and parks)

  • Incurring indebtedness and pledging

tax increments and other project revenues for repayment of these debts

  • Posting of a bond by the City or Town

(for initial funding)

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TIF

Authority: M.G.L., Chapter 40d§59 FIRST STEPS:

  • Developer Agreement
  • Term of TIF: 20 years maximum
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TIF

A city or town must initiate a TIF by a vote of its governing body approving the TIF Plan which must include:

  • Designation of the area that will be the TIF

zone;

  • Description in detail, including plans and

specifications where appropriate, of all construction and construction related activity;

  • Projection of public and private costs and a

betterment schedule for the defrayal of public costs;

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TIF

AND

  • Authorization of tax increment exemption from

property taxes;

  • Establishment of a maximum percentage of

costs of public construction that can be recovered through betterments or special assessments against any parcel in the TIF zone eligible for exemptions;

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TIF

AND

  • Identification of property owners in the TIF

Zone;

  • Executed Agreements between the city or

town and each owner of property within the TIF zone;

  • Delegation of authority to enter into

development agreements to one municipal agency, board or officer;

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TIF

A TIF Zone must be in an area approved by the EACC as an Economic Opportunity Area (EOA) or found to be an area "presenting exceptional opportunities for economic development" by the Director of Economic Development.

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SUCCESS

REDEVELOPMENT BRINGS:

  • Increased tax revenue;
  • Improved infrastructure;
  • Improved transportation

services;

  • Increased housing supply; and
  • New jobs
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SUCCESS

Is tied to careful planning which identifies the needs

  • f the district and combination of uses most likely to
  • succeed. While TIF focuses on job creation, DIF

allows significant flexibility in planning for the district's housing and commercial needs.

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SUCCESS

The role of private partners is crucial to achieving the desired effects. In both cases, public/ private agreements provide details and guidelines.

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SUCCESS

DIF and TIF programs will satisfy many of the Commonwealth's Sustainable Development Principles, including:

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REDEVELOPMENT FIRST

The use of DIF and TIF encourages redevelopment of existing dilapidated sites, urban infill and revitalization.

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CONCENTRATE DEVELOPMENT

Both DIF and TIF facilitate concentrated development in areas in or adjacent to existing

  • downtowns. They make use of existing

infrastructure and mass transit.

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ARE FAIR

DIF and TIF provide economic incentives to developers and encourage true economic partnerships between developers and municipalities.

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EXPAND HOUSING OPPORTUNITIES

DIF allows the use of tax increments to fund both affordable and market priced housing projects. TIF can be used as an incentive for housing development in urban centers.

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INCREASE JOB OPPORTUNITIES

By virtue of their economic objectives, TIF and DIF Agreements are directly tied to the creation of new jobs.

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PLAN REGIONALLY

DIF and TIF can satisfy regional needs for industry, consumer services, health care, and employment.

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FINANCIAL CONSIDERATIONS

Both DIF and TIF provide funding mechanisms for development in targeted districts:

  • COSTS:
  • Planning/administrative
  • BENEFITS: - Increased tax revenues
  • Improved standard of living
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FINANCIAL CONSIDERATIONS

TIF provides a direct upfront benefit to a Developer in the form of tax relief. The money saved on taxes can pay the project's construction costs. Developers utilizing TIF benefits can also often access other state financial incentives such as Investment Tax Credits, Abandoned Building Tax Deductions and Research and Development Tax Credits.

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FINANCIAL CONSIDERATIONS

DIF provides financial benefits to developers by providing infrastructure and surrounding amenities to support their projects. Early public funding takes the initial burden off the developer and minimizes risk.

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TIF CASE STUDY

Worcester, Massachusetts

  • St. Vincent's Hospital relocation

The City entered into a TIF Agreement with

  • St. Vincent's Hospital which enabled the

hospital to move to a downtown site and expand, creating the new Worcester Medical Center.

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TIF AGREEMENT:

  • Tax exemptions by declining formula;
  • Term of 18 years;
  • 55 full time jobs; and
  • 41 part time jobs.

TIF: ST. VINCENT’S HOSPITAL

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TIF: ST. VINCENT’S HOSPITAL

The expectations have been exceeded, with the creation of 117 full time jobs and 215 part time jobs to date.

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TIF: ST. VINCENT’S HOSPITAL

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The new Worcester Medical Center provides needed state of the art medical care to area residents in a beautifully designed setting, with the convenience of a downtown

  • location. It is surrounded by shops, restaurants and a 1900

space parking garage. It offers needed jobs to the community and has greatly increased the city's tax base. At the end of the TIF's term, the city will realize the benefit of the increased tax revenue.

TIF: ST. VINCENT’S HOSPITAL

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DIF CASE STUDY

Concord, New Hampshire Redevelopment of 40 acres abandoned lumberyard and adjacent mill building

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DIF: CONCORD, NH

Location was a highly visible location, at the intersection of I-93 and I-393,on the edge

  • f the Concord’s

downtown.

Travelers passing through Concord to mountain vacation spots, saw only the blight. Nothing invited them to explore the otherwise, vital and charming downtown district.

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DIF: CONCORD, NH

PLANNING BY THE CITY:

  • Identified area need for

hotel/conference center;

  • Acquired land;
  • Issued bonds; and
  • Partnered with private developer.
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DIF: CONCORD, NH

99 room Marriott Courtyard and Grappone Conference Center

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DIF: CONCORD, NH

The site now houses adjacent office

  • buildings. The abandoned mill has been

converted into elderly housing.

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DIF: CONCORD, NH

Medical Center at DIF Site

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DIF: CONCORD, NH

The owner of the hotel/conference center pay taxes to the city. The city uses the tax increment; the tax revenue due the to difference is the current assessed value the

  • riginal assessed value to pay off the bond

debt.

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DIF: CONCORD, NH

FINAL RESULT:

  • Increased $30 million dollars in tax base for

the city;

  • A flourishing project for the private developer;
  • Increased availability of elderly housing;
  • Creation of new jobs, and
  • Prevention of the spread of blight to an

attractive site that marks the entrance to Concord.

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TIF CASE STUDY

Leominster, Massachusetts The City of Leominster entered into a TIF Agreement with Star Container Corporation, to encourage Star Container’s expansion plans for its packaging facility.

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TIF: LEOMINSTER

Star Container had a long established, successful

manufacturing presence in Leominster. The expansion consisted of an additional 54,000 square feet of floor area and the purchase of additional corrugated box manufacturing equipment.

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TIF: LEOMINSTER

TIF AGREEMENT:

  • Eight year term;
  • Front loaded sliding scale of

property tax exemptions; and

  • No tax of increment as follows:
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TIF: LEOMINSTER

Year 1: 100 %

  • f the increment

Year 2: 90 %

  • f the increment

Year 3: 75 %

  • f the increment

Year 4: 60 %

  • f the increment

Year 5: 45 %

  • f the increment

Year 6: 30 %

  • f the increment

Year 7: 15 %

  • f the increment

Year 8: 0 %

  • f the increment.
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TIF: LEOMINSTER

Star Container invested approximately 6.2 million dollars into the facility and

  • equipment. The Agreement provided for

the creation of 25 new full time manufacturing and managerial jobs. 150 existing jobs were retained by ensuring the facility stayed at the existing site.

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TIF: LEOMINSTER

At the end of the TIF period, the City will gain approximately $23,000.00 annually in additional property taxes. Star Container is located in the state designated Economic Target Area of Northern Worcester County. Therefore, Star Container can seek other state economic incentives in addition to the TIF Agreement with the City.

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TIF: LEOMINSTER

USE TIF TO ENCOURAGE business compatible with city’s needs Leominster uses TIF for manufacturing businesses because:

  • Existing base in manufacturing plastics;
  • Creates jobs, which pay higher than the

minimum wage; and

  • Greater economic benefit.
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LINKS:

MOBD: www.mass.gov/mobd/ Worchester TIF: www.worcestermedcenter.com Concord DIF: www.ci.concord.nh.us/Businessdev/Devop ps/hotelctr Leominster TIF: www.leominster- ma.gov/planning_department_index.htm