advantages and disadvantages of TIF

Tax Increment Financing (TIF) is a method of generating revenue to fund public improvement projects within municipalities. Instead of relying on federal or state funding (or taking directly from the city’s budget), TIFs allow communities to utilize future tax revenue to pay for the project. Although TIFs can be an attractive strategy for small communities and developers to make improvements, they also come with a few downsides. If your city, township, or municipality is considering using TIF for a project, you should weigh the pros and cons before making a decision. 

Advantages of TIF

Preserve Areas of Historical Value

Often, the older areas of a city often experience a decline as other areas grow. TIF projects can breathe new life into blighted areas, and that includes areas with significant historical value. It could be the original home of the community’s founder or rebuilding a longstanding business. Either way, TIFs can bring attention to forgotten areas that can bring new value to the area.

Revitalize Neighborhoods

A well-planned project will boost the economy of the district by bringing new business or completing public improvement projects. You might be more likely to move into a neighborhood with a new housing development or recently-improved infrastructure. Additionally, public improvement projects like pollution clean-up and newly-paved streets make these districts a better place to live and run a business. 

Economic Boost

The entire point of utilizing TIF is to see an increase in tax revenue without increasing community taxes. Another benefit that comes along with that is an increase in the local economy. Local businesses start to grow as more and more people move to the neighborhood, which attracts even more growth. One example of this is a once-dilapidated office building that gets turned into a brand new set of offices for multiple businesses to use. More jobs turns into more money spent within the district. 

Disadvantages of TIF

Division Among Communities

Not everyone is in favor of TIF. Some fear that significant changes could increase property values and make affordable housing a thing of the past. Others don’t fully understand how TIFs work; it’s not a common term, after all. You could face opposition from the public and your competitors in your quest to utilize TIF. 

Getting TIF Approval Isn’t Always Easy

There are many hoops to jump through before you can secure approval for your project through TIF. You must obtain approval from all tax entities within the district including schools, libraries, and local governments. Expect to attend several meetings and presentations before you can even begin the project. 

Not All Projects Succeed

An unfortunate reality of TIF projects is that not all are successful. Some simply fail to generate the predicted tax revenue, while others face hurdles that make it impossible to complete. Your TIF project should plan for multiple scenarios so you have more chance for success no matter what’s thrown at you.

Get Legal Advice For Your TIF

No matter where you are in the process, you can contact the law team at Attolles Law, S.C. for quality legal advice. Our public financing lawyers have helped municipalities across Wisconsin with creating TIF strategies that set the district up for economic success. Schedule a consultation to discuss the ways we can assist with your project.