TAX INCREMENT FINANCING GUIDELINES
What is it?
Tax increment financing (TIF) is a concept, which was developed as an
economic development strategy for assisting in the development or redevelopment
of economically distressed or blighted areas of a municipality, where
such development or redevelopment would not occur solely through private
investment within the reasonably foreseeable future.
How is it used?
Tax increments are simply increase in property tax revenues over and
above a base value established by the municipality in the base year. The
purpose of TIF is to facilitate development or redevelopment of an economically
disadvantaged area. This is done through the use of the tax increment
captured to make public improvements, or assisting in private initiatives,
within the zone, thereby enhancing the value of real property located
within the zone and any structures attached thereto. This can be done
through either direct cash payments to fund project costs or through various
financing methods, including the issuance of TIF bonds and notes.
Examples:
- A developer may pay the cost of approved public improvements associated
with a private development and be reimbursed over time from the increment
associated with the development of the area.
- Public improvements may be paid for directly with increment funds
to encourage further development in the zone.
- Public improvements may be funded by the sale of bonds that will be
repaid over time out of tax increments.
Reinvestment Zones - Waco has three established tax increment financing
zones (see map):
- Reinvestment Zone Number One for Tax Increment Financing (TIF#1):
West of the river, the zone extends from Gurley Lane up to Lake Shore
Drive. East of the river, the zone extends from Chapel Hill to Waco
Drive, and from Herring Avenue to the confluence of the Bosque and Brazos
Rivers. The zone, which was established in 1982 in anticipation of mixed-use
development along the Brazos River expires in 2022.
- Reinvestment Zone Number Two for Tax Increment Financing (TIF#2):
Established in 1983 at the request of a developer, this zone is bounded
by the Brazos River and MLK Jr. Boulevard on the east and Waco Drive
and Herring Avenue on the north and south. The zone will expire in 2023.
- Reinvestment Zone Number Three for Tax Increment Financing (TIF#3):
Bounded by the Bosque River, Lake Shore Drive and North 19th Street,
this zone, which was established in 1986 at the request of a developer
in anticipation of a mixed-use development project will expire in 2026.
TIF funds can be used to fund the following types of projects:
- the installation of public works/utilities;
- project costs related to the cost of buildings, schools or other educational
facilities owned by or on behalf of a school district, community college
district or other political subdivision of the state
- railroad or transit facilities;
- affordable housing;
- the remediation of conditions that contaminate public or private land
or buildings;
- the preservation of the façade of a private or public building; or
- the demolition of a public or private building.
The following is a sample of TIF approved projects:
- Museum District Plan: plan that addresses traffic flow, landscaping,
pedestrian and vehicular circulation, and parking in Texas Ranger/Sports
Hall of Fame, Baylor University area. $53,061
- Sul Ross Project: funded property acquisition, landscaping,
fencing, plumbing and parking lot improvements associated with Sul Ross
Elementary. $199,000
- Behrens Loft Apartments: water and sewer utilities extension,
streetscaping and lighting, sidewalk improvements. $77,500
- MLK Bicycle/Pedestrian Trail: extension of the riverwalk from
Herring Avenue on the west side to area adjacent to the old railroad
depot (Bridge Street). $157,850
- American Football Coaches Association: parking lot, sidewalk
and landscape improvements, water and sewer services, concrete and drainage
work. $346,135
Project Eligibility:
The following questions are provided to help potential applicants determine
project eligibility:
- Does the proposed project leverage dollars? Are other sources of support
being sought, if so from whom? How much of the projects cost will come
from sources other than the TIF?
- Will the proposed project benefit the general public?
- Is the project consistent with TIF Goals and Objectives? The City
of Waco's Comprehensive Plan? Brazos Corridor Development Plan?
- Does the completion of this project assist in the development or redevelopment
of an economically distressed area where development/redevelopment is
not occurring solely through private investment?
Administrative Structure & Process:
The City Council appoints a Board of Directors to oversee the development
of project and financing plans and act in an advisory capacity concerning
development activity and expenditure of increment funds. The board consists
of eight members - the City Council appoints five members, and the participating
taxing entities (McLennan Co., Waco ISD, McLennan Community College) appoint
one member each.
Initially a business ascertains whether the proposed project may be eligible
for funding. If so, a TIF Funding Request Application may be submitted
to the Board Chair, the City Manager or a representative of the three
other taxing entities. Project Plans must be prepared by a registered
professional engineer and approved by the City of Waco Engineering Department,
before the request is submitted to the TIF Board for consideration. If
the request receives preliminary approval from the TIF board, a recommendation
will be submitted to the City Council for final approval. If approved,
all work must comply with applicable City codes and construction standards,
and the contractor(s) doing the work must secure appropriate permits before
any TIF funds are expended.
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