Tax Increment Financing
WHAT IS TAX INCREMENT FINANCING?
Tax Increment Financing (TIF) is a financing tool for capturing future tax benefits of real estate improvement in order to pay for the present cost of those improvements. Local government establishes a TIF district by establishing the geographic boundaries of the TIF District and levying a sales tax rate and/or room occupancy tax rate usually a few percentage points over the existing tax base. Minden has established four TIF Districts; an extra 2% sales tax is in place within each TIF District. This extra sales tax or room occupancy tax rate is called the increment.
A business approved to use the increment can finance a myriad of eligible real estate and infrastructure improvements on or near its property. In return for utilizing the TIF Incentive, the property owner/developer/tenant will be required to create and maintain a specific number of net new jobs (Minden Residents) for as long as the TIF incentive is being paid.
BENEFITS OF TIF INCENTIVE
If a property for sale is within the TIF District, the programs can serve as an incentive to a perspective buyer to move forward with the real estate purchase.
If an existing building is within the TIF District and there are plans to make improvements either to the building and/or land, the program can reimburse the cost of the improvements directly to the owner of the property.
If an existing commercial rental property is within the TIF District, the program can offer funding to a landlord to help retain an existing tenant of a property. Over the years existing leased property may become outdated or does not provide the degree of productivity that it once did. To retain a sales tax-generating tenant, the property owner could negotiate with its tenant as to the necessary improvements of leased space. The TIF program can reimburse the landlord or tenant for the cost of leasehold improvements.
HOW DOES THE TIF INCENTIVE WORK?
The TIF program is not a citywide program. One’s property has to be within a TIF District or Economic Development District in order to benefit from or be impacted by the TIF program.
A property owner seeking to make real estate improvements will submit a TIF application to the City of Minden with all the necessary supporting documents. After an analysis of the projected financial statements has been conducted to determine how much revenue increment is most likely to be generated by the project on a monthly basis over a period of years, the owner/developer and the City agree on the full amount to be reimbursed to the property owner over a specific period of years. A portion of the revenue increment generated by the project will be paid directly to the property owner on a monthly basis up to a specific number of years for a specific amount against previously agreed upon costs.
Property Infrastructure Associated with New Investment
A. Street Construction and Expansion
B. Street Lighting
C. Parking Structures/Lots
D. Curbs and Sidewalks
E. Bridge Construction Repair
F. Transmission Lines
A. Structural Demolition
B. Internal and External Structural Renovations
C. Electrical and Plumbing Upgrades
D. Structural Environmental Mitigation
A. Drainage Facilities (Storm Water Systems, Collection and Detention, Pumps,
Sanitary Sewers and Lines)
B. Utility Access and Expansion (water, electricity, gas/sewer lines)
C. Environmental Remediation
D. Structural Demolition
A non-refundable application fee of $500.00 must accompany all TIF applications.
Annual Administrative Fee
An annual administrative fee of $500.00 will be charged to the project until the expiration of the incentive.
All recipients of a must pay a closing fee. Closing fees shall cover the cost of legal counsel and any consultative work, if any, to determine program eligibility and financial feasibility of the project in question. The cost of other incidentals in association with the Project’s application will be determined on a case-by basis.
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