Tax Increment Financing, or TIF is a tool to assist in financing redevelopment projects in designated blighted and substandard areas of the city. The City of Fairbury issues bonds or a promissory note to finance any approved project. The property taxes generated from the increased valuation of the development are captured for a period of up to 15 years to repay the public investment.
The purpose of TIF is to help communities undertake redevelopment activities for urban renewal and municipal growth. TIF allows a city to pay for the public improvements that are part of a private redevelopment project. TIF is not a grant and it is not a primary funding source for a redevelopment project, but does provide an incentive for private development that will increase the tax base of the Fairbury community and create additional jobs.
Tax Increment Financing can be used for the following purposes:
- Total amount of public improvements associated with a redevelopment project which are located in a redevelopment area
- Acquisition of redevelopment sites including all costs associated with acquisition
- Site preparation, demolition, grading, special foundations, and other work prior to construction of the project
- Utility extensions
- Marketing and promotions
- Rehabilitation of structures within the redevelopment area
- Construction of structure within the redevelopment project area
Tax Increment Financing is primarily designed to finance public improvements associated with a project. However, residual funds can be used for other allowed purposes after allowing for the cost of public improvements.
HOW IT WORKS (LINK)
FAIRBURY'S TIF POLICY
Projects applying for TIF assistance must qualify by meeting certain criteria. Mandatory criteria must be met in order for the project to be considered. Discretionary criteria will enable the Community Redevelopment Authority (CRA) to further determine the benefits of the project. The project application must demonstrate how the project meets the required criteria.
In order to be considered for TIF, a project must meet each of the following mandatory criteria:
- The project must be located within a substandard and blighted area or an area eligible for a designation of substandard and blight as required and set forth by State Statute.
- The project must be located within a substandard and blighted area prior to the preparation of a Redevelopment Plan.
- The project must further the objectives of the City's Comprehensive Plan. (link to Comp Plan pdf)
- The use of TIF for the project will not result in a loss of pre-existing tax revenues to the city and other taxing jurisdictions.
- If tax increment financing is used for the project, a cost-benefit analysis must be completed prior to project recommendation.
- The developer must be able to demonstrate that the project would not be economically feasible without the use of Tax Increment Financing. In addition, when the project has site alternatives, the proposal must demonstrate that it would not occur in the area without TIF.
In addition, the project should meet several of the following discretionary criteria.
- The project will show a positive cost/benefit ratio to the community for the principal value of the TIF loan.
- TIF proceeds are used for the construction of public improvements.
- The project involves the rehabilitation of a designated city landmark, or a building listed on or eligible for listing on the National Register of Historic Places.
- The project will directly benefit low- and moderate-income people, as defined by the Community Development Block Grant Program.
- The building or site to be redeveloped itself displays conditions of substandard and blight as established by Nebraska State Statute.
- The project involves the start-up of an entirely new business or business operation within the City of Fairbury.
- The redevelopment site has displayed a recent pattern of declining real property assessments, as measured by the Jefferson County Assessor's Office.
CITY OF FAIRBURY'S TIF APPLICATION