Director’s Cut – What You Need
to Know About TIFs!
Tax Increment Financing, or TIF, is one of the more common incentives in the United States and is increasingly being used in Colorado. Here’s what you need to know about TIFs:
Every private property generates taxes. If the property is developed, or redeveloped, the amount of tax it generates will increase. The difference between the new, higher taxes and the older, lower taxes is the “increment.” A TIF allows that increment to be used to pay for improvements to the property.
In some states, TIF can be used to pay for private improvements like the building or buildings themselves. Here in Colorado TIFs are almost always used for public improvement such as sewer, water, and roads (and sometimes building facades for redevelopment).
TIFs are time-limited. Once a TIF expires, all taxes revert to their public jurisdiction. TIFs may also only use some of the incremental taxes generated. For example, one community may use all incremental taxes for 20 years for a TIF, while another community may use incremental taxes for 10 years and exclude new taxes for the local school district.
In Colorado, a local government has to declare a property “blighted” to use TIF. Calling someone’s property “blighted’ can be controversial, so TIF can be hard to implement. Also, you cannot use TIF on properties designated agricultural, so it limits their ability to be used for new development.
TIFs can be helpful, but if used improperly can lead to trouble for local governments. We will address that in a later update. For now, if you have any questions please feel free to write me at roger@yeslpc.com and we can talk some more!
Roger Zalneraitis
Executive Director
La Plata County Economic Development Alliance
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