Top 10 TIF Misconceptions – Creating Additional Project Value and Avoiding Costly Mistakes (Part 2)

Originally published in Development Incentives Quarterly.

By: Scott Ziance

This is final installment of a two-part series covering the top 10 misconceptions associated with Ohio Tax Increment Financing (TIF). TIF is a funding vehicle for public infrastructure and, sometimes, site improvements. Below are the second five misconceptions.

Misconception 6: All taxing units with jurisdiction over an area must consent to the TIF. Simply a misconception, but for incentive districts, the General Assembly required either sharing of TIF funds or approval of the county commissioners or township trustees for TIF exemptions that are greater than 75% or more than 10 years, and to maximize value, board of education approval is needed.

Misconception 7: Taxing units necessarily lose revenues as a result of TIF ordinances and resolutions. Taxing units, in fact, continue to receive tax revenues from base value and also benefit from resulting economic development.  

Misconception 8: TIFs can only be established by cities and only in blighted areas. There are simply more choices available for blighted areas of cities, and some less urbanized political subdivisions use TIFs as one facet of “pay as you grow” strategies toward development.

Misconception 9: TIFs prevent the utilization of other tax incentives. TIFs are regularly layered with other types of property tax incentives, such as CRA exemptions, and combined with tax credits, grants, etc.

Misconception 10: School districts cannot benefit from TIFs. TIFs often can be structured to benefit local school districts. Thorough understanding of the interaction of TIF and school funding is needed, including understanding of the type of TIF (sometimes); the current and future school district “guarantee” situation; and components of the school district’s effective millage.

Check out the first installment of TIF misconceptions in the Spring 2017 issue.