Tax Increment Financing (TIF)
Cities and counties may award incentives to companies locating in Economic Development Areas (EDA), Urban Renewal Areas (URA) or Community Development Areas (CDA). The city or county determines EDA/URA/CDA areas on a local level. Incentive dollars are generated through the creation of new “property tax increment” that a development will generate. When a company constructs a new building, for example, its property tax increment is the result of the assessed value of the building multiplied by the property tax rate. In an EDA or URA, all public entities entitled to property tax agree to rebate their increment back to the new development for a specified period of time to incent the development to occur. In a CDA, public entities must opt-in on a property tax rebate if they see fit. Incentives are awarded as a percentage of the tax increment created by the development.
EDA | URA | CDA Designation
EDA – Economic Development Areas: intended for development on land sites that will result in the value-added creation of jobs. There is no requirement for blight in an EDA and the property can be vacant or partially improved land.
URA – Urban Renewal Areas: “blighted” areas that require local assistance to reasonably justify any type of economic renewal.
CDA – Community Development Areas: intended to undertake any economic or community development purpose of the city or county, including job growth and/or retail sales.