What is Tax Increment Financing?
A TIF (tax increment financing) is a financing tool that allows the URA (Urban Renewal Authority) to capture the increase in property taxes created by redevelopment projects and reinvest it into URA projects. The local government can then use these funds to attract private investors for a project by making improvements in the project area. The investments catalyze new growth and tax revenues, contributing to the broader economy.
How, when, and where is the increment collected?
Future property taxes are only collected within a defined project area; typically, only a few parcels of land are selected for this area. When an area is designated as a TIF, the current property value of all real estate within it is designated as the “base”. The base will generate revenue through property taxes and that revenue will be committed to the applicable taxing agencies. During this time, the existing real estate and new development will cause an increase in property value in the district. Funds that are over and above the “base” will be allotted into a separate fund to be reinvested into URA projects.
How are Urban Renewal Projects initiated?
Urban Renewal Projects will go through an application process and be selected by the Urban Renewal Board. The board of the URA will be composed of professionals with experience in community planning, urban renewal, and business management. Projects will need to meet criteria in Wyoming Statute § 15-9-107 to qualify. Projects that qualify for Urban Renewal funds exhibit characteristics of blight and rehabilitation, conservation, redevelopment or a combination thereof of the area or areas, which is necessary in the interest of the public health, safety, morals or welfare of the residents of the municipality.
What is “blight”? What is a “slum”?
When determining if an area is eligible for Urban Renewal, it must meet the criteria of blight or slum found in the State Statutes. Words like “blight” and “slum” have a negative connotation and might suggest unsafe places and structures. Blight is not something we visualize when we think of Cheyenne. However, something as simple as damaged curb and gutter could meet the definition of blight. In the context of Wyoming Statute § 15-9-103, “blight” is a legal term that the Urban Renewal Authority must use to meet requirements to declare a project area eligible.
How does TIF affect tax mills and taxing districts?
TIF does not affect funds for other tax mills, like the school district or the Downtown Development Authority. It only uses the future increase in property taxes that comes from an increase in property values when redevelopment happens within the boundaries of the project area. The base tax mills within that area will remain the same as they would have had the TIF not existed.
Why does Cheyenne need an Urban Renewal Authority?
Through a URA, Cheyenne could have multiple TIF districts to fund different projects. Some notable examples for areas that could be designated as a TIF district include The Hitching Post and The Hole. Both properties have great potential to become developments that contribute to the community and strengthen the economy, but have a set of unique issues which makes them unattractive to private developers on their own and have therefore, been vacant and/or decaying for years. Urban Renewal allows properties like this to attract investment and help the community around them thrive.