The average American might reflect daily on the household budget, the rising cost of essentials like fuel, food, clothing or how to pay for the childrenâs higher education.
Not much thought is probably given to the benefits associated with increased economic development.
Following that logic, the âman or woman on the streetâ may not have much understanding at all of what a TIF, or Tax Increment Financing district is or what role it plays in a communityâs growth.
âFrom my perspective, I would guess that most people have heard about TIF, but probably do not know much about what it really means and what it does,â said David Sewell, Executive Director of Planning and Building for Whitley County.
Alan Tio, Executive Director of the Whitley County Economic Development Corporation agreed with Sewell that a better understanding of the TIF concept could help citizens grasp how businesses get drawn into an area.
âA lot of people donât understand TIF,â Tio said.
âWe do have people ask what a TIF is and what its benefits are. Itâs basically something designed to create a funding stream.â
That influx of capital acts as a seed to grow new business.
When a municipality designates an area as a TIF district, according to Tio, it doesnât do that until it knows it has at least one potential client, or new business from which to draw property taxes.
âTo get the financing, youâre going to need to have at least one project to work with,â Tio said.
With that client in place, the municipality can approach a lending institution or issue bonds with the promise of future tax revenue as collateral.
From there, the funds generated with the loan, or bond can be used to build valuable infrastructure that will make the area attractive to even more new businesses, creating what economic development personnel hope will be a snowball effect.
âWhat you (a business considering a new facility within a TIF) get with a âshovel-readyâ location is less time in the building process,â said Tio, explaining that the longer it takes for a business to get up and running, the longer it takes to start generating revenue from the business.
âIf you donât already have sewer and water in place, well, itâs going to take more time (from the beginning of construction to the first day of business).â
TIF guidelines say that any money generated from pre-existing taxpayers, or those businesses or residents that were in place before the area was designated a TIF, go directly to the coffers of the taxing bodies. That means if you were there before the area was made a TIF, your tax dollars finance the city, or county or township.
The revenue generated by newcomers to the district go to pay back the loan.
Whitley County has four TIF districts, including two within the jurisdiction of Columbia City.
In the county, TIF District 1 is described by Sewell as âU.S. 30/Lincolnway to the CSX Railroad, East County Line to Williams Rd.â
County TIF District 2 is CSX Railroad at County Roads 600 East to 300 South to 500 East.
In Columbia City, TIF District 1 is located in the cityâs downtown area from Jackson to Spencer streets and from Walnut to Whitley streets.
The cityâs second district, or City Economic Development Area No. 1 is located on or along U.S. 30 from Armstrong Dr. extended south 900 feet west to Lincolnway north to U.S. 30.
TIF districts have their origins in California, where the first such area was designated in 1952. According to Wikipedia, the Golden State has more than 400 TIF districts today.
Indiana joined the TIF bandwagon in 1975 with its own legislation to make the districts legal for Hoosier municipalities.