01 - Intro to the TIF issue

16th June 2014, 6:32 AM
Tax Increment Financing (TIF)
The City of Huber Heights has a number of TIF districts.  The basic idea of a TIF is to re-categorize money from property tax into "special assessment".  This re-categorization also changes the use of the money.  TIF is a complex issue which I have yet to find a good source to give us an accurate and complete description of how it works. 
The follow on articles will present some of the references I could find about TIF regulations and presentations made to council.  At the end of this article you can find a list of website references.
I planned to create this issue section ever since I started the website.  I had a conversation with a couple of school board members after the Dec 20th, 2012 school board meeting and came away with the impression they didn't have any better understanding of TIF districts than I did.  As a result I figured it was time for me to put together what I know.
Here is an open items I hope get answered as part of the development of this issue.
  • When the public approves a new property tax such as the one we approved for the libraries how are the collections associated with this levy parceled out to government agencies?  We know that one of the reasons the city creates TIF districts is because it allows them to funnel some of the money voters approved for one purpose into TIF funds but I'm not sure about the specific details.
Here is a question that I wondered about when I started this article.  I have found the Ohio Code (5709.82) that addressess it.
  • This evening I just read the Ohio State paper on TIF districts.  In that paper it tells us that for municipalities collecting an income tax the city must execute a revenue-sharing agreement ordinance with affected school districts in cases where the new investment results in annual payroll for new employees of $1,000,000 or more within six months of adopting the ordinance.  I wonder if the city and school have such a revenue sharing agreement. -  ORC 5709.82 tells us in sectiion (C) that if the city and the school made a revenue sharing agreement in section (B) then the income tax revenue sharing does not apply.
Of course the first paragraph of this article is my characterization of TIF.  Here is a friendlier characterization as found on the State of Ohio's website:
"Tax Increment Financing (TIF) is an economic development mechanism available to local governments in Ohio to finance public infrastructure improvements and, in certain circumstances, residential rehabilitation. A TIF works by locking in the taxable worth of real property at the value it holds at the time the authorizing legislation was approved. Payments derived from the increased assessed value of any improvement to real property beyond that amount are directed towards a separate fund to finance the construction of public infrastructure defined within the TIF legislation."
Web References for TIF Financing:
State of Ohio Development Services Agency, information on Tax Increment Financing.  This site contains an overview definition and contains links to white papers on general purpose/parcel TIFs and Incentive distrct TIFs.  It also has a link so you can find existing TIF projects
Ohio Revised Code 5709.40.  When the City of Huber Heights sponsored TIF legislation on Dec 20, 2012 they reference ORC 5709.40 through 5709.43. 

Ohio Revised Code 5709.82 Compensating school district for revenues lost due to tax exemptions 
Ohio State University Extension Fact Sheet - Ohio's Tax Increment Financing Program
Huber Heights Planning Commission April 12, 2011 Minutes.  Starting the last paragraph of page 4, Steve Stanley explains TIF as it relates to the Huber Heights Recreational facility planning.