Black Hills Knowledge Netowork

February 27, 2012

Tax Increment Financing Information

Tax Increment Financing (TIF) is the process of creating Tax Increment Districts (TID, although TIF or TIF district is often used to refer to the area). Creating TIFs is one of the few options available to South Dakota cities for promoting development.
 
TIF works by borrowing against future property tax increases. A city council selects an area for development and sells bonds for the project. Once the area is developed, the city continues to collect the original property tax, while the increased value is used to pay off the bonds (usually over a period of 20 years).
 
Example: An area produces $1000 a year in property taxes. Once developed and new buildings are added, it now generates $3000 in property taxes. The city continues to receive the $1000, while the other $2000 goes to pay off the bond. Once the bond is paid off, the city would receive the entire adjusted property tax value (plus whatever value the improvement has added to the city).
 
Some critics of TIFs feel they are used too casually or that they divert revenue away from the city to a private party. Supporters feel that TIFs allow for development in areas that would not otherwise be developed.
 
Resources:
 
TIF Review Committee: Rapid City's committee providing recommendations on creation of TIFs.
Tax Increment Financing: Expanded information on what a TIF is and how it is used
South Dakota Municipal League on TIF: South Dakota specific information
TIF: Entry in the Black Hills Knowledge Network's online news archive.
 

Related items

  • New Mobile Food And Beverage Vending Ordinance Comes To Spearfish

    In August, the Spearfish City Council is scheduled to consider a revised proposal to clarify license requirements for mobile food and beverage vendors. According to…
  • Ascent Innovation Expands To Downtown Rapid City

    Formerly known as the Black Hills Business Development Center, Ascent Innovation will be expanding its facilities to include a new downtown location, reports the Rapid…
  • Future Paleontologists Attend SDSM&T Fossils Camp

    This week students from across the country attended the South Dakota School of Mines and Technology’s Fossils Camp, a weeklong experience that explores different South…

525 University Loop, Suite 202
Rapid City, SD 57701
(605) 716-0058   [email protected]