(WKOW) — Tax increment financing or TIF is the primary tool that cities use to help spur redevelopment in aging or deteriorating areas and to spark new economic growth. In the city of Oshkosh, tax incremental financing was used to improve several city projects.
“Our downtown convention center now has a hotel attached to it. We developed the Menomonie Nation Arena in downtown Oshkosh,” Mark Rohloff, city manager for Oshkosh said.
“It’s brought people to downtown Oshkosh that would not have otherwise come.”
Once a TIF district is designated, a financial “snapshot” is taken of the property value for the area at that point int time. What the land was worth before the TIF is considered the tax base. What the land is worth, above the base, after the property is improved, is the increment.
“One is for redevelopment, primarily in older areas of the city, old industrial areas that are in need of redevelopment, and the other area is for new industrial parks that are getting developed to serve the needs of modern industry,” Rohloff said.
As the property value increases, the taxes also grow, but the added taxes are first used to pay for public improvements such as streets and sidewalks, as well as water and sewer connections. Once the TIF district expires, the increase in value of the property adds to the city’s tax base for years to come.
“What TIF does is, it helps offset those costs to give them the ability to still do a development in a cost-effective fashion,” Rohloff said.
TIF financing requires all local taxing jurisdictions to wait for the new tax revenue until the development costs are paid. Therefore, there has to be agreement from the county, school district and technical college before TIF funding can move forward.
“There’s a great deal of collaboration with all of the taxing entities that are essentially foregoing tax dollars for a number of years, that there will be a benefit to them in the long run as a result of developing these properties,” Rohloff said.