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Thread: Calculating a TIF "but for" test

  1. #1

    Calculating a TIF "but for" test

    For anyone who works with TIFs...what is the method you use for the "but for" test? Does anyone have a specific calculation (or general idea)? Currently, our board that reviews the TIF apps. has a bad understanding of the test. They almost always approve for 50% support (because our app says "up to 50%"). So is there a better way to convince them that we don't always need to fund 50%? That is why I was thinking a calculation based on what the owner can actually put towards the project. Any suggestions?

  2. #2
    Cyburbian mike gurnee's avatar
    Registered
    Feb 1998
    Location
    Greensburg, Kansas
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    2,954
    A "but for" test begs the applicant to lie. I have had developers call their accountants to change a pro forma, a net worth statement, etc. just to meet the program requirements. And they have done this with me in their offices.

    Good luck.

  3. #3
    Cyburbian Cardinal's avatar
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    Aug 2001
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    The Cheese State
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    9,938
    Echoing Mike's comments, the only way to second-guess the developer's statements (and documentation) is to have some qualified expertise in development. It is unusual, but sometimes we are asked to prepare a development feasibility study in advance of any proposals within a TIF. We will essentially prepare a likely redevelopment scenario, run the numbers, and advise the city on project feasibility or how much they should expect to need to provide in assistance. This is different than the normal cost estimates for public improvements in a TIF district.
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