TAX INCREMENT FINANCING
When a City or County adopts a TIF Plan, the expectation is that increased taxes (the new increment) will result from the new development. The new increment comes from the increased real property value being applied to most (but not all) real property tax levies, and 50% of the increased economic activity being applied to most sales and utility (and in some cities, earnings and profits) tax levies.
This new increment is captured and used to pay for certain project costs. Existing taxes are not impacted. The creation, approval and implementation of TIF Plans are governed by the TIF Act, although the decision to adopt a TIF Plan and the extent of TIF assistance provided rests with the local governing body.
Instead, TIF alters the distribution of the tax revenue stream. The taxes existing prior to TIF designation continue to flow to the taxing districts that previously received those tax dollars.
The new increment of taxes over the “base” level is set aside as it is generated over time (up to 23 years) in a separate fund, and used to either reimburse the developer for certain specified project costs as TIF revenue is generated over time or make periodic payments to pay private financing or (at the discretion of the governing body) bonds that financed the reimbursable project costs.
This can include, among other things, costs of studies, architectural, engineering, legal, marketing, financial and planning costs, property assembly costs, demolition, clearing and grading of land, costs of rehabilitation, reconstruction, or repair or remodeling of existing buildings and fixtures; costs of construction of public works or improvements and financing costs.
However, the TIF Act includes certain limitations on the use of TIF revenues that apply to specific types of projects or to specific areas or types of areas.
In the City of St. Louis and in any County (other than St. Louis County), the TIF Commission is made up of those nine members. In St. Louis County and cities in St. Louis County, three additional members are appointed by St. Louis County, making a 12 member TIF Commission.
All other Cities have 11-member TIF Commissions comprised of the nine basic members plus, two members appointed by the affected county.