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Thread: How is local tax abatement different from a TIF

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    Cyburbian gicarto's avatar
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    How is local tax abatement different from a TIF

    I have recently been exposed to the term local tax abatement in Iowa. It sounds like a good idea but it sounds a lot like a TIF.
    Trying to get my grubby hands on as much stimulus money as I can.:D

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    Cyburbian Jeff's avatar
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    OK....I'll bite. TIF?

    Currently we are giving 10 year tax abatements in Philly for new construction. Basically, you dont pay property taxes for 10 years.

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    moderator in moderation Suburb Repairman's avatar
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    Property tax abatement provides an incentive for property owners to make improvements to property by exempting the resulting increase in valuation from property taxation for a period of time. The new valuation is "abated" and not subject to tax. Under tax increment financing (TIF), all increases in value are subject to the total property tax levies of all jurisdictions (city, county, etc.), but those revenues which are produced from the increased valuation are allocated back to the city or county that established the tax increment area. Those revenues must be spent for projects within the tax increment area. TIFs are often used for infrastructure improvements in an area to facilitate development that otherwise would not be possible. For example, a city might establish a TIF to finance a new water trunk line to a property in order to attract a computer chip manufacturing company. I think of TIF as a city's version of betting on horses.

    You shouldn't use abatements and TIFs together unless you are really, really careful because an abatement would cancel out part of the increment.

    Laws on TIFs vary greatly from state-to-state, so you might call up your legal department for a serious run down of the cans and can'ts.

    That's my understanding of them, but Cardinal could probably elaborate more.

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

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    Cyburbian Cardinal's avatar
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    Quote Originally posted by Suburb Repairman View post
    ...That's my understanding of them, but Cardinal could probably elaborate more.
    Thanks for the vote of confidence, but you got it right.

    I generally discourage tax abatements, and encourage people to use TIF sparingly and mostly for public improvements, even when private grants are allowed.
    Anyone want to adopt a dog?

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