Tax Increment Financing (TIF)
The Swift County Rural Development Authority is willing to consider the employment of Tax Increment Financing (TIF) for eligible projects. In a nutshell, the difference between a property’s original property taxes and the property taxes due on a property after it has been improved (called the “tax increment”) can be captured and used to help finance the project.In all cases the proposed project must pass what is called the “but-for test,” meaning that unless Tax Increment Financing is utilized, the project will not be economically feasible. In other words: if the project can be done without TIF, then it is ineligible for this assistance.For economic development purposes, two types of Tax Increment Financing districts are available: Economic Development TIF districts for new developments and Redevelopment TIF districts to help with the costs of renovating or replacing substandard buildings.The Swift County Board of Commissioners, following a public hearing on the proposed project, must approve all TIF Districts.All TIF districts in Swift County will be set up on a “pay-as-you-go” basis – meaning that tax increment will flow back to the developer in semi-annual payments.If the project requires “up-front” financing, a loan may be secured from a private lender, with the projected tax increment being pledged to service the loan.
Different rules apply to each type of TIF district (see below):
ECONOMIC DEVELOPMENT TIF DISTRICT
A 9-year district that can provide funds for land acquisition, infrastructure (street, water & sewer, parking, etc.), grading & excavating and / or site improvements. Primarily for industrial-type projects.
- Industrial, warehousing, research & development and call centers are eligible.
- The TIF district must promote new employment, tax base or retain business in the state.
- Districts can provide tax increment for up to 9 years.
REDEVELOPMENT TIF DISTRICT
A district that can go up to 25 years and will provide funds for the removal of blighting conditions on a lot (sub-standard buildings, site clean-up, etc.).
- Proposed district must contain existing “blighted” development
- At least 70% of the area must be occupied by buildings or other improvements.
- At least 50% of the buildings themselves must be substandard, based upon an internal inspection.
- A building is considered substandard if it would cost at least 15% of a new building to bring the existing building up to current building code requirements.
- As long as the above requirements are met, any type of project (commercial, retail, industrial) is eligible.
- At least 90% of the tax increment generated must be used to correct the blighting conditions.
- Redevelopment TIF district can provide tax increment for up to 25 years.
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