TIF - How does it work?

[mean]

I think this is the most minor and inconsequential bit of nonsense I've had the misfortune of being involved in a discussion about. Ultimately, we've been arguing about a phrase I made in passing, as a high-level analysis of how TIF works. You're not actually addressing any of the substance of my (omg) AGENDA. 

And you can really save it, I mean, once you start throwing words like agenda around, I think I'm done. I have to get to my anti-TIF cabal meeting anyway, so we can teach the handshake to the initiates.

[chrizow]

Judge makes some of the lamest political cartoons i've ever seen, but i like this one. 

[Maitre D]

[kard]

Judge makes some of the lamest political cartoons i've ever seen, but i like this one. 

I think about 2/3 of his are lame, but the other 1/3 are awesome and more then make up for it.

[chrizow]

I think about 2/3 of his are lame, but the other 1/3 are awesome and more then make up for it.

http://www.theonion.com/content/node/39320

[KCMax]

I think about 2/3 of his are lame, but the other 1/3 are awesome and more then make up for it.

Sorry. If it ain't Family Circus of Marmaduke, I am not going to read it.

[Paintfumes]

It should be clear, there is a difference between tax abatement and TIF.  I think people are confusing the two.  In a tax abatement, you are just not collecting tax.  In TIF, you are using the supposed tax money to pay for some part of the improvement.  And the use of tax abatements aren't necessarily based on whether an area is blighted or not.  Anyway, two different tools, used differently and in different cirucmstances.

I find this very interesting. Which taxes are you talking about,like the e-tax, the property tax?

Does the Bond money come from the citizens tax money we pay in like property tax, gas tax, food tax, anything that we are tax for? 

Blight has been re-defined over the years for TIF and tax abatement. For instance, it is now any land that can be re-developed including if a building, house, new or old is located on that land.

For example the Shook, Hardy and Bacon in Crown Center, 13 blocks of its current location in One Kansas City Place at 1200 Main St. The firms has never paid property taxes in its current space and will never pay for property taxes in its next space." What is the public benefit for this?
Or the Interstate Brands at Armour and Main St. A 15 tax abatement. Before they built, there was a house there and it was considered blighted. Would you consider this as a misuse of tax abatement?

[aknowledgeableperson]

I find this very interesting. Which taxes are you talking about,like the e-tax, the property tax?

Does the Bond money come from the citizens tax money we pay in like property tax, gas tax, food tax, anything that we are tax for? 

Tax abatement is just for the property taxes.  All other taxes generated by the project are collected and retained by the taxing authorities.

Bond money can be explained the long way or the short way.

The short way:
The taxpayers vote on a bond issue, for schools, roads, bridges, whatever.  The bonds are sold and the money used to construct the projects.  Funds are collected to retire the bonds and the interest.  Bonds are a debt.  Not all bonds have to be voted on.  With regards to the city sales tax for capital improvements - the city could issue bonds and they could be retired by the sales tax collected.  Drawback is that the interest paid cannot be used for improvements.  The advantage is that projects can be completed earlier. 

[Paintfumes]

I read the story about TIF and Barnes: www.pitch.com/2007-03-29/news/the-queen/
Is that story accurate?

[aknowledgeableperson]

Sounds pretty acurate.

[aknowledgeableperson]

Looks like the Star is up for an award for it's article on KCMO TIF's.  Gues that gives some validity to what was said in the article.

http://www.kansascity.com/115/story/620574.html

The series, which ran last August, found that Kansas City had used a tax break known as TIF far more than other big cities the newspaper checked. And although TIF played a big role in downtown’s revival, many TIF projects had overpromised and underproduced.

[Thaine]

Found this in an old brief:

Cities in Missouri generally accomplish their urban and other redevelopment under one of three statutory authorities:
1) Land Clearance for Redevelopment Authority (“LCRA”), created pursuant to MO. Rev. Stat. §99.330 (Supp. 2006).

2) Urban Redevelopment Corporations, created pursuant to MO. Rev. Stat. §353 (Supp. 2006).  Referred to below as “Chapter 353” redevelopment.

3) Tax Increment Financing Commission (“TIFC”), created pursuant to MO. Rev. Stat. §99.801 (Supp. 2006).

The instant case concerns one project in what is known as the 1200 Main/South Loop Tax Increment Financing (TIF”) Plan.  It is the same TIF Plan under which the Sprint Arena and the reconstruction of the President Hotel have occurred.  The Economic Development Corporation of Kansas City (“EDCKC”) is a Missouri non-profit corporation which is Kansas City’s primary economic development organization.  EDCKC’s activities are partially funded by Kansas City and integrated with the City’s development activities. Available at http://www.edckc.com/home/agenciesandprograms.htm © 2001-2205.  The staffing and administration of the TIFC and several other agencies or commissions is provided by EDCKC.  TIFC makes recommendations to the Kansas City City Council on redevelopment projects that would use TIF to eliminate blight and stabilize redevelopment areas.
TIF is a financing and development tool that allows future real property taxes and other taxes generated by new development to pay for costs of construction of public infrastructure and other improvements.  TIF encourages development of blighted, substandard and economically underutilized areas that would not be developed without public assistance.  The powers of TIF are exercised by Commissioners on the TIFC who are citizens of Kansas City, appointed by the mayor and representatives of the affected taxing districts.  Id at http://edckc.com/tif/index.htm.
In a TIFC project, generally speaking, the assessed values on which real estate taxes are received by taxing jurisdictions are frozen for up to 23 years (the maximum life of a TIF project) and the increases in some other taxes, such as sales and earnings taxes, are reduced by 50% for up to 23 years.  Increases in certain city and county taxes due to new construction, rehabilitation and infrastructure improvements from the project are still collected from the property owners as PILOTS (Payments in Lieu of Taxes), for the amount of the real estate tax increment, as well as 50% of all local Economic Activity Taxes (EATS) (e.g., sales, utility and earnings taxes) generated within the project.  These PILOTS and 50% of the EATS are paid to a special allocation fund.  These funds are used to reimburse the developer for City-approved project costs.  Any surplus of PILOTS and EATS are reallocated to the appropriate taxing districts.  TIF is used throughout the country as a development tool.