District Improvement Financing DIF Tax Increment Financing TIF Smart Growth / Smart Energy Toolkit Smart Growth / Smart Energy Toolkit DIF/TIF
What is DIF/TIF? • District Improvement Financing (DIF) and Tax Increment Financing (TIF) are both economic tools that promote redevelopment by the use of tax increments. • TIF offers tax breaks to developers. • DIF channels tax dollars into targeted redevelopment districts. Smart Growth / Smart Energy Toolkit DIF/TIF
The Problem MANY municipalities in Massachusetts are faced with high unemployment rates and blighted, distressed, or simply underutilized areas. Many of these sites contain abandoned or contaminated facilities, while others are characterized by dilapidated infrastructure and commercial operations that simply are not economically viable. Smart Growth / Smart Energy Toolkit DIF/TIF
Both DIF and TIF provide municipalities with innovative tools to target districts or specific projects for redevelopment. Smart Growth / Smart Energy Toolkit DIF/TIF
DIF Authority: M.G.L., Chapter 40Q FIRST STEPS: • Designate a district • Certify district: State Economic Assistance Coordinating Council ("EACC") • Term of District: 30 years maximum Smart Growth / Smart Energy Toolkit DIF/TIF
DIF The development program spells out the goals of the district and the means to achieve them. The program will identify the following: • Existing uses and current zoning, • Proposed uses and any needed zoning changes, • Existing buildings Planned construction or renovation, • Current and planned infrastructure, • A financial plan. Smart Growth / Smart Energy Toolkit DIF/TIF
Application Forms are available from: MA Office of Business Development (MOBD) Boston Regional Office One Ashburton Place Suite 2101 Boston, MA 02108 Voice: (617) 788-3637 Fax: (617) 788-3695 www.mass.gov/mobd/ Smart Growth / Smart Energy Toolkit DIF/TIF
Once a District & Program Have Been Certified: TOOLS FOR IMPLEMENTATION: • Acquiring land • Constructing or reconstructing improvements (such as buildings, roads, schools and parks) • Incurring indebtedness and pledging tax increments and other project revenues for repayment of these debts • Posting of a bond by the City or Town (for initial funding) Smart Growth / Smart Energy Toolkit DIF/TIF
TIF Authority: M.G.L., Chapter 40d§59 FIRST STEPS: • Developer Agreement • Term of TIF: 20 years maximum Smart Growth / Smart Energy Toolkit DIF/TIF
TIF A city or town must initiate a TIF by a vote of its governing body approving the TIF Plan which must include: • Designation of the area that will be the TIF zone; • Description in detail, including plans and specifications where appropriate, of all construction and construction related activity; • Projection of public and private costs and a betterment schedule for the defrayal of public costs; Smart Growth / Smart Energy Toolkit DIF/TIF
TIF AND • Authorization of tax increment exemption from property taxes; • Establishment of a maximum percentage of costs of public construction that can be recovered through betterments or special assessments against any parcel in the TIF zone eligible for exemptions; Smart Growth / Smart Energy Toolkit DIF/TIF
TIF AND • Identification of property owners in the TIF Zone; • Executed Agreements between the city or town and each owner of property within the TIF zone; • Delegation of authority to enter into development agreements to one municipal agency, board or officer; Smart Growth / Smart Energy Toolkit DIF/TIF
TIF A TIF Zone must be in an area approved by the EACC as an Economic Opportunity Area (EOA) or found to be an area "presenting exceptional opportunities for economic development" by the Director of Economic Development. Smart Growth / Smart Energy Toolkit DIF/TIF
SUCCESS REDEVELOPMENT BRINGS: • Increased tax revenue; • Improved infrastructure; • Improved transportation services; • Increased housing supply; and • New jobs Smart Growth / Smart Energy Toolkit DIF/TIF
SUCCESS Is tied to careful planning which identifies the needs of the district and combination of uses most likely to succeed. While TIF focuses on job creation, DIF allows significant flexibility in planning for the district's housing and commercial needs. Smart Growth / Smart Energy Toolkit DIF/TIF
SUCCESS The role of private partners is crucial to achieving the desired effects. In both cases, public/ private agreements provide details and guidelines. Smart Growth / Smart Energy Toolkit DIF/TIF
SUCCESS DIF and TIF programs will satisfy many of the Commonwealth's Sustainable Development Principles, including: Smart Growth / Smart Energy Toolkit DIF/TIF
REDEVELOPMENT FIRST The use of DIF and TIF encourages redevelopment of existing dilapidated sites, urban infill and revitalization. Smart Growth / Smart Energy Toolkit DIF/TIF
CONCENTRATE DEVELOPMENT Both DIF and TIF facilitate concentrated development in areas in or adjacent to existing downtowns. They make use of existing infrastructure and mass transit. Smart Growth / Smart Energy Toolkit DIF/TIF
ARE FAIR DIF and TIF provide economic incentives to developers and encourage true economic partnerships between developers and municipalities. Smart Growth / Smart Energy Toolkit DIF/TIF
EXPAND HOUSING OPPORTUNITIES DIF allows the use of tax increments to fund both affordable and market priced housing projects. TIF can be used as an incentive for housing development in urban centers. Smart Growth / Smart Energy Toolkit DIF/TIF
INCREASE JOB OPPORTUNITIES By virtue of their economic objectives, TIF and DIF Agreements are directly tied to the creation of new jobs. Smart Growth / Smart Energy Toolkit DIF/TIF
PLAN REGIONALLY DIF and TIF can satisfy regional needs for industry, consumer services, health care, and employment. Smart Growth / Smart Energy Toolkit DIF/TIF
FINANCIAL CONSIDERATIONS Both DIF and TIF provide funding mechanisms for development in targeted districts: • COSTS : - Planning/administrative • BENEFITS: - Increased tax revenues - Improved standard of living Smart Growth / Smart Energy Toolkit DIF/TIF
FINANCIAL CONSIDERATIONS TIF provides a direct upfront benefit to a Developer in the form of tax relief. The money saved on taxes can pay the project's construction costs. Developers utilizing TIF benefits can also often access other state financial incentives such as Investment Tax Credits, Abandoned Building Tax Deductions and Research and Development Tax Credits. Smart Growth / Smart Energy Toolkit DIF/TIF
FINANCIAL CONSIDERATIONS DIF provides financial benefits to developers by providing infrastructure and surrounding amenities to support their projects. Early public funding takes the initial burden off the developer and minimizes risk. Smart Growth / Smart Energy Toolkit DIF/TIF
TIF CASE STUDY Worcester, Massachusetts St. Vincent's Hospital relocation The City entered into a TIF Agreement with St. Vincent's Hospital which enabled the hospital to move to a downtown site and expand, creating the new Worcester Medical Center. Smart Growth / Smart Energy Toolkit DIF/TIF
TIF: ST. VINCENT’S HOSPITAL TIF AGREEMENT: • Tax exemptions by declining formula; • Term of 18 years; • 55 full time jobs; and • 41 part time jobs . Smart Growth / Smart Energy Toolkit DIF/TIF
TIF: ST. VINCENT’S HOSPITAL The expectations have been exceeded, with the creation of 117 full time jobs and 215 part time jobs to date. Smart Growth / Smart Energy Toolkit DIF/TIF
TIF: ST. VINCENT’S HOSPITAL Smart Growth / Smart Energy Toolkit DIF/TIF
TIF: ST. VINCENT’S HOSPITAL The new Worcester Medical Center provides needed state of the art medical care to area residents in a beautifully designed setting, with the convenience of a downtown location. It is surrounded by shops, restaurants and a 1900 space parking garage. It offers needed jobs to the community and has greatly increased the city's tax base. At the end of the TIF's term, the city will realize the benefit of the increased tax revenue. Smart Growth / Smart Energy Toolkit DIF/TIF
DIF CASE STUDY Concord, New Hampshire Redevelopment of 40 acres abandoned lumberyard and adjacent mill building Smart Growth / Smart Energy Toolkit DIF/TIF
DIF: CONCORD, NH Location was a highly visible location, at the intersection of I-93 and I-393,on the edge of the Concord’s downtown. Travelers passing through Concord to mountain vacation spots, saw only the blight. Nothing invited them to explore the otherwise, vital and charming downtown district. Smart Growth / Smart Energy Toolkit DIF/TIF
DIF: CONCORD, NH PLANNING BY THE CITY: • Identified area need for hotel/conference center; • Acquired land; • Issued bonds; and • Partnered with private developer. Smart Growth / Smart Energy Toolkit DIF/TIF
DIF: CONCORD, NH 99 room Marriott Courtyard and Grappone Conference Center Smart Growth / Smart Energy Toolkit DIF/TIF
DIF: CONCORD, NH The site now houses adjacent office buildings. The abandoned mill has been converted into elderly housing. Smart Growth / Smart Energy Toolkit DIF/TIF
DIF: CONCORD, NH Medical Center at DIF Site Smart Growth / Smart Energy Toolkit DIF/TIF
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