Glossary of Economic Development Terms
Tax Increment Financing Area (TIF)
TIF is a financing strategy designed to improve a targeted project area or district without drawing on general fund revenue or creating a new tax. TIF does not capture or use residential taxes. The TIF is voted on and established by the County Redevelopment Committee and Council.
- For example, assume a vacant 500-acre parcel in a TIF currently pays $100,000 in taxes. A company buys the parcel and builds a structure that will generate $1 million in annual property taxes. The TIF will capture $900,000 of the new taxes ($1,000,000 new tax - $100,000 old tax) for infrastructure and other public improvements within the TIF.
- The $100,000 taxes from the original vacant land will continue to be disbursed as it was before the company's purchase.
Real & Personal Property Taxes
- Real Property includes land plus the buildings and fixtures permanently attached to it.
- Personal Property is property that is not permanently affixed to land, i.e., equipment.
Abatements
- The purpose of tax abatements is to encourage investment and the development of jobs and to promote other community objectives, such as affordable housing, which might not otherwise occur.
- A tax abatement is a cost phase-in offered by a state or municipality to businesses, including but not limited to the purchase or development of buildings and manufacturing equipment.
- Generally, new businesses require significant upfront investments before the start of production. The Tax Abatement phases-in property taxes to help offset the initial startup costs.
- Tax abatements have a set number of years. After the abatement expires, the Company is responsible for the total taxes owed to the County.
- A tax abatement is not cash or up-front money taken from somewhere else. It is a tax and rate break on new potential revenue that would otherwise not exist.
- For example, a new building on a 500-acre parcel has a 100% tax bill of $1 million. The company has an 80% tax abatement for ten years (maximum years permitted for real property abatement). Under the 80% tax model, the new building will generate $200,000 in annual taxes and $2 million over the 10-year abatement. The Company is responsible for the total annual $1 million property tax when the abatement expires.
- Joseph County Tax Abatements
- Joseph County Tax Abatement Ordinance
Shovel Ready
- Shovel-ready generally refers to commercial and industrial sites that have completed all the planning, zoning, surveys, title work, environmental studies, archeological studies, soil analysis, and public infrastructure engineering.
- Shovel-ready sites are growing in demand among companies and site selection consultants due to the reduction in time for a company to begin constructing a new facility. It is a competitive advantage for a community to have large industrial sites 100% shovel ready.