Tax Increment Financing (TIF)
Tax increment financing, often called TIF, is a financial tool cities can use to encourage development that would otherwise not occur but for the use of tax increment assistance.
The purpose of TIF is to create jobs, provide affordable housing, redevelop declining areas, or clean up environmentally-contaminated sites.
What can TIF be used for?
TIF is generally used to offset the costs of things like:
- land or building acquisition;
- utility relocation;
- site improvements or preparation, such as demolition;
- and the installation of public infrastructure such as streets, sidewalks, parking, and storm sewers.
What types of TIF districts exist in Rochester?
The typical types of TIF districts that are found in the City of Rochester are:
- Redevelopment TIF districts: These TIF districts have an objective of removing blighted conditions, stabilizing a neighborhood, and increasing the local tax base.
- Housing TIF districts; and
- Economic Development TIF districts.
Redevelopment TIF districts have an objective of removal of blighting conditions, stabilizing a neighborhood, and increasing the tax base in the community.
Housing TIF districts are intended to facilitate the construction of affordable workforce housing in the community.
Economic Development TIF districts have an objective of the creation of new jobs and the retention of living wage jobs in the community.
How has TIF impacted the City of Rochester?
Over the past 20 years, the City’s use of TIF has helped create nearly 2,000 affordable housing units in the City with 400 of those being single-family homes and over 1,500 multi-family rental units in the City.
The City’s use of TIF has also helped to create and retain over 1,600 jobs in the City over the past 20 years. In the past 10 years, the City’s use of TIF for redevelopment purposes have created an estimated $456 million dollars in new, assessed market value, and nearly $7 million in new tax capacity for the City of Rochester.
The City has historically been pretty conservative with the use of TIF. Only 1.6% of the City’s tax capacity is located within TIF districts.
What are the benefits of utilizing TIF for economic development purposes?
- It does not draw funding away from existing tax base or other taxing entities.
- It utilizes the increased property valuation from the new development that would not otherwise have existed without the assistance being provided to the project.
Policy on Development Incentives for Tax Increment Financing and Tax Abatement