Importance of Timing when creating TIF
Residential TIFs expire 30 years after creation so the city will want to time the creation correctly to maximize the amount of money collected. In the examples below I show that in general building too late costs a lot more than building too early. For instance, in the Lexington Place expansion the developer expects to build 120 houses. If just 20 houses are built before the TIF goes into place this costs the city about as much as if the TIF went into place 6 years too early. Your council members need to demand from staff that they get them two important pieces of information. The planned build out of the Lexington Place development and the actual timing the county uses for putting houses on the tax rolls.
We have not seen any definitive answer on when the county counts property value increases when it comes to TIF calculations. Our city experience tells us that twice in the past we have held emergency sessions the last week of December in order to create TIFs. Getting a definitive answer from the county must be done in order for your council to make the best decision on timing.
Here are a few examples to highlight the importance of the timing of TIF creation. In all of these examples I use 120 houses to be built. For simplicity sake all the houses are considered to have the same property tax and the amount per year the city would get is $1,000 per house.
Example one: The developer builds all their houses in the same year the TIF is created. In this case all the houses are counted in the TIF for every year. This is the maximum scenario.
Example two: The developer builds all the houses six years after the TIF is created.
Example three: The developer builds 20 houses before the TIF is created and the other 100 in the first year the TIF is created (so only 100 houses are ever counted in the TIF)
These next few examples are more likely.
Example four: The developer builds 30 houses the first year the TIF is created then 60, then 20, then 10
Example five: The developer builds 30 houses 2 years after the TIF is created then 60, then 20, then 10
Example six: The developer builds 30 houses before the TIF is created then 60, then 20, 10 after
As you can see, creating a TIF too late costs the city much more than if they create it too early
This five minute discussion shows at least one member of council understood what needed to be done way back at 29 March 2019.
In this video from 29 March the other important detail council needs was discussed. Again Mr. Campbell took the lead in asking staff to provide accurate and verifiable information. I am disappointed this information has not been provided in any of the read ahead materials for the meetings since then.