Tax increment financing

[Joe Schiessl]

Washington State recently (about three weeks ago) signed into law a bill allowing a form of tax increment financing. Does anyone have any success, failure, interesting,... stories to share with a newcomer to this form of project finance?

 

[Kate Singleton]

Yes, we use them in Texas a great deal with mixed results. Obviously, when the economy is good, then the TIF does very well. Fort Worth instituted one in downtown before the economy took a dive in the late 80's and the TIF had to be pulled. They reimplemented it as the economy started to pick up (which is another trick--the right timing) and it has done ok this time around. Remember that you cannot do tax abatement and a TIF and you must weigh what will get you the best results--a property owner may prefer a tax abatement over what a TIF can offer at first or you may need to "donut" out some properties that may need the abatement more. We did that in Dallas because we have an abatement for historic properties and that was worth more than the TIF improvements (they really needed both) and that worked fine.

 

[hankejm]

Yes, we use them in Texas a great deal with mixed results. Obviously, when the economy is good, then the TIF does very well. Fort Worth instituted one in downtown before the economy took a dive in the late 80's and the TIF had to be pulled. They reimplemented it as the economy started to pick up (which is another trick--the right timing) and it has done ok this time around. Remember that you cannot do tax abatement and a TIF and you must weigh what will get you the best results--a property owner may prefer a tax abatement over what a TIF can offer at first or you may need to "donut" out some properties that may need the abatement more. We did that in Dallas because we have an abatement for historic properties and that was worth more than the TIF improvements (they really needed both) and that worked fine.