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Tax increment financing

  2. Tax Increment Financing andTax Abatements JANUARY 25, 2018 CITY COUNCIL OF BREEZY POINT
  3. TAX INCREMENT FINANCING Tax increment financing is a procedure utilized by local governmental entities for the purposes of property redevelopment. It can also be used for the expressed function of projects that can improve the condition of existing structures. Financing of these improvements is assessed to future tax revenues that will generate by the taxing government entity that levies taxes against the property.The local governmental unit is responsible for determining how much property valuation will increase and then needs to decide how much revenue would exist in association with the improvement to offset the related construction or development costs.
  4. IMPORTANT POINTTO NOTE It is also imperative that the property in question be located within the governmental entity and that the proposed redevelopment be in accordance with relevant zoning guidelines.
  5. COOPERATION WITH COUNTY GOVERNMENT IS VITAL FOR SUCCESS !!!!! Since many municipalities utilize tax increment financing to develop properties that may exist in the periphery of the city or town, it is important to involve the County governmental entity in successful planning. Sometimes, this may mean the establishment of positive communication channels and the development of additional resources. Since many Municipalities utilize tax increment financing to develop properties that may exist in the periphery of the city or town, it is important to involve the County governmental entity in successful planning.
  6. TAX ABATEMENTS  Tax abatements are a form of tax reduction that is utilized by a governmental entity to encourage or promote economic development. A common example of a tax abatement is one that is given to a business as an incentive for the organization to move into a municipal location or to expand commercial operations within the geographic area. Tax abatements operate within a defined time period and allow for the business owners to invest additional revenues into the enterprise.
  7. GASB INFORMATION  It is important to note that when a governmental entity decides to utilize tax abatements that they provide public information to citizens and stakeholders about the rationale for their decision making. General Accounting Standards under GASB Statement No. 77,Tax Abatement Disclosures, require state and local governments to disclose key information about their tax abatement agreements that has not been consistently or comprehensively available before. In addition, key information about related tax abatement agreements need to be clearly and consistently discussed with all interested parties.
  8. It is important for legislators to realize that under a tax abatement agreement, a government reduces or removes the taxes a company or business entity would otherwise owe. In return, the business entity stipulates that action be conducted that expressly contributes to economic development. It is vital that the expansion of services or job creation is beneficial to the taxing entity and its citizens. An excellent example of this would be a corporation that decides to build a new business center that could potentially 500 new employees.
  9. Manylocal andmunicipal governments havetax abatement programs inplace. Whenoperatingsuccessfully,theseprograms canimprovecommunityeconomic developmentand contributeto overall growthandtax baseincrease. Inaddition to improvingrevenueflow,theseprograms canalso increasemunicipal business expansionandcan createhousingand transportationimprovements. Further, complementarybusinesses mayexperienceadditionalimprovements based upon increasedtrafficand consumptionassociatedwiththeseimprovements
  10.  While utilizing tax abatements and tax increment financing, it is Important that government officials fully disclose to the community, citizens, the media and stakeholders all related information concerning these agreements. It is important that the following information is provided; the purpose of the tax abatement program, the tax being abated, the dollar amount of taxes abated, provisions for recapturing abated taxes, the types of commitments made by tax abatement recipients and other commitments made by a government in tax abatement agreements. In addition, information should also be made available that includes infrastructural assets.
  11.  It is also important that any legal guidance that addresses tax abatements that result from agreements entered into by the reporting government, as well as those that are initiated by other governments and reduce the reporting government’s tax revenues need to be disclosed. Finally, regarding the latter, the reporting government will disclose the governments entering into the agreements, the specific tax being abated, and the amount abated. Governmental officials can and have gotten into difficulties where clear reporting procedures are not utilized.
  12. Recommendations for Breezy Point  Tax increment financing is a good policy to implement if you are looking to redevelop a neighborhood. However, in a municipality of 3,000 population or less there are other techniques that may work better. Neighborhood associations sometimes can receive funds from organizations such as the Main Street Main Street America Institute. The MSAI can equip downtown and commercial district leaders with the tools they need to lead results-oriented and preservation-based community revitalization organizations. This organization can secure financing and can also assist in historic and cultural heritage preservation activities.
  13. In addition, local business groups such as the Chamber of Commerce can assist in securing financing for business and commercial operations within the metropolitan region. My recommendations is that prior to tax increment financing, the City examine all possible sources of assistance and look into cooperative endeavors with the area townships and County government. Projects need to be clearly defined and business developers need to be consulted about both future revenue flows and potential expenditures and/or liabilities that may exist as a result of a project.
  14. The utilization of a tax abatement for a municipality may operate effectively in the event that the proposed project allows for the creation of a successful business operation or provides a clear and well delineated municipal project. It is vital that citizens be actively involved in the project and that the goals and objectives be clearly defined and established. Residents must also be willing to support the project in both the short and long term setting. In addition, business leaders must find the project to be equitable and not disadvantageous to their own interests.
  15. It is important that community leaders have the opportunity to positively discuss the project(s) being viewed for consideration. I was very impressed with the community comprehensive plan that was developed by Breezy Point. This was well developed and allows for positive resource coordination
  16. RECOMMENDATIONS  B21AF7FD9977%7D/uploads/%7BCD15A5DA-634B-4478-B696-4ECE7A2084CE%7D.PDF Using this strategic comp plan and utilizing positive community resource allocation, I would encourage the City Council of Breezy Point to use citizen and stakeholder involvement prior to the commencement of any tax abatements. The State of California has experienced much litigation over tax increment policies and these once productive activities have been eliminated as a result. Some municipalities have seen job creation programs go into arrears soon after a business has established itself and transportation costs are often not entered into contingent liability derivation. Sand companies in the State ofWisconsin have not generated some of the stipulated economic gains and the cost of transportation infrastructure was not properly calibrated by some local governments.
  17. I would strongly recommend business development that contributes real job creation with employment opportunities that provide substantive career development. No municipality wants to deal with creating the future toxic company that once promised real jobs, environmental protection and now has left the country.

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